3 December 2014

Federal Disaster Recovery Assistance from the US Small Business Association (SBA) for Private, Nonprofit Organizations

Presented by Mark Randle

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Lori Foley

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Katelin Lee klee@heritagepreservation.org

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Today’s Instructor

Mark Randle

Public Information Officer US Small Business Administration Office of Disaster Assistance

U. S. Small Business Administration

DISASTER ASSISTANCE Federal Disaster Loans for

Homeowners, Renters and Businesses of All Sizes

SBA Disaster Assistance

SBA’s Role in Disaster Recovery

• After an SBA disaster declaration for hurricanes, floods, tornadoes, earthquakes, wildfires and other disasters, SBA disaster loans are the primary source of federal assistance to help private property owners pay for disaster losses not covered by insurance or other recoveries.

• SBA offers low-interest federal loans to residents, nonfarm businesses of all sizes and private, nonprofit organizations.

Property Damage

• SBA disaster loans for property damages are available to homeowners, renters, businesses of all sizes, and private, nonprofit organizations.

Property Damage

Eligibility • Privately owned nonprofit organizations (PNPs),

including but not limited to PNPs that provide essential services of a governmental nature, charitable and religious organizations, social organizations, and homeowners’ associations, are eligible.

• Nonprofit organizations owned by a government entity are not eligible.

Working Capital

• SBA offers working capital loans called Economic Injury Disaster Loans (EIDLS) to small businesses, small businesses engaged in aquaculture and most private, nonprofit organizations of all sizes having difficulty meeting obligations as a result of the disaster, even if they had no property damage.

Working Capital

Eligibility • Privately owned nonprofit organizations (PNPs),

including but not limited to PNPs that provide essential services of a governmental nature, charitable, social organizations, and homeowners’ associations, are eligible.

• Nonprofit organizations owned by a government entity are not eligible.

• Religious organizations are not eligible

• Disaster Declaration Process • Types of Disaster Declarations • SBA’s Disaster Loan Program • Prepare for the Unexpected

SBA’s Role in Disaster Recovery

Assessing Damages After a Disaster

After a disaster, the state may request a Preliminary Damage Assessment (PDA) from either: • The Federal Emergency

Management Agency (FEMA) or

• The U.S. Small Business Administration (SBA)

Preliminary Damage Assessment (PDA)

• When the state requests a Presidential PDA from FEMA, SBA participates with FEMA, state and local agencies to assess the damages.

Preliminary Damage Assessment (PDA) • When the state requests

an SBA-only PDA for an Agency declaration, SBA conducts the survey with state and local officials to assess the damages.

• FEMA does not participate.

Types of SBA Disaster Declarations

Physical damage/Economic Injury • Presidential (Individual and/or Public Assistance) IA and or PA • Administrative (Agency) Economic Injury • Governor’s Certification • Secretary of Agriculture • Secretary of Commerce • Military Reservist (PNPs not eligible)

• In a Presidential Declaration, many Federal agencies provide assistance.

• FEMA is the coordinating agency and delivers assistance designated in the declaration:

• Individual Assistance (IA) - provides aid for temporary housing, serious needs & necessary expenses for individuals and households.

• Public Assistance (PA) - provides aid to state and local governments for infrastructure.

Presidential Disaster Declaration

Presidential Declarations for Individual Assistance (IA) • When the President declares a

Major Disaster for IA, SBA’s disaster loan program is activated for residents, businesses of all sizes and most private, nonprofit organizations.

President Barack H. Obama

Presidential Disaster Declaration (IA)

Presidential Declarations for Public Assistance (PA) • When the President declares a

Major Disaster for PA, SBA’s disaster loan program is activated only for certain private, non-profit organizations that provide essential services of a governmental nature

President Barack H. Obama

Presidential Disaster Declaration (PA)

Private Nonprofit Organizations (PNPs)

Under Presidential PA declarations only: • PNP organizations should contact state and local

emergency management officials to obtain information about PA applicant briefings.

• FEMA will determine if the PNP provides an “essential governmental service” and is a “critical facility” as defined by law.

Private Nonprofit Organizations (PNPs)

• FEMA defines critical services as fire and emergency services, electric power, water supply and some irrigation, telephone communications, sewer and wastewater treatment, direct medical, etc.

Private Nonprofit Organizations (PNPs)

• FEMA defines non-critical services as museums, educational facilities, zoos, custodial care facilities, libraries, alcohol & drug rehabilitation centers, community centers, battered spouse programs, homeless shelters, low-income housing, shelter workshops, food programs for the needy, senior citizen centers, daycare centers for special needs, etc.

Private Nonprofit Organizations (PNPs)

• A PNP facility which provides noncritical essential services of a governmental nature must first apply to SBA to be considered for a disaster loan for permanent repairs and/or replacement before it may seek FEMA grant assistance.

• For emergency repairs and debris removal, these PNPs may apply directly to FEMA.

Private Nonprofit Organizations (PNPs)

• If SBA determines the PNP noncritical facility is ineligible for a disaster loan, or the PNP has obtained the maximum amount for which SBA determines the facility is eligible, the PNP may then apply to FEMA for grant assistance for permanent repairs for its unmet disaster-related needs.

Presidential Declarations SBA Eligibility

IA Presidential Declaration • SBA disaster loans for Physical Damage and

Economic Injury are available in the Primary counties

• SBA disaster loans for Economic Injury are available in the Contiguous (neighboring) counties.

PA Presidential Declaration • SBA disaster loans for Physical Damage and

Economic Injury are available to certain private, nonprofits in the primary counties only.

Presidential Declaration SBA Eligibility

IA declaration PA declaration

Storey Carson City

Douglas Lyon

Lander Eureka

Churchill

Mineral

Pershing

Esmeralda

Washoe

Humboldt Elko

White Pine

Nye

Lincoln

Clark

Storey Carson City

Douglas

Lyon Lander

Eureka Churchill

Mineral

Pershing

Esmeralda

Washoe

Humboldt Elko

White Pine

Nye

Lincoln

Clark Eureka is the primary county

• This activates SBA’s physical and economic injury disaster loan programs.

SBA Administrator Maria Contreras-Sweet

SBA Administrative (Agency) declaration

For smaller disasters, SBA’s Administrator can issue an SBA–only declaration (called an Administrative or Agency declaration).

SBA Administrative (Agency) declaration

• SBA makes an Agency physical disaster declaration at the request of the state, and based on surveyed documentation of at least 25 homes and/or businesses that each sustained at least 40% uninsured property damage/losses.

SBA Administrative (Agency) declaration

In an SBA Administrative/Agency declaration

• SBA disaster loans for property damage and economic injury are available in both the primary and contiguous (neighboring) counties.

Disaster Area Eligibility Presidential IA declaration SBA Administrative

(Agency) declaration

Storey Carson City

Douglas Lyon

Lander Eureka

Churchill

Mineral

Pershing

Esmeralda

Washoe

Humboldt Elko

White Pine

Nye

Lincoln

Clark

Storey

Carson City Douglas

Lyon Lander

Eureka Churchill

Mineral

Pershing

Esmeralda

Washoe

Humboldt Elko

White Pine

Nye

Lincoln

Clark

Eureka is the primary county

• Are available to small nonfarm businesses, small agricultural cooperatives, small businesses engaged in aquaculture and most private, non-profit organizations (PNPs).

• Help meet working capital needs caused by the disaster, even if the business did not have physical damage.

Economic Injury Disaster Loans (EIDLs)

• When a Governor certifies that at least five (5) small businesses in a disaster area have suffered substantial economic injury as a result of a disaster, and need financial assistance not available on reasonable rates & terms, SBA activates its Economic Injury Disaster Loan (EIDL) program for specified primary and contiguous counties.

Governor’s Certification

• When the Secretary of Agriculture designates an agricultural disaster, SBA activates its Economic Injury Disaster Loan (EIDL) program for the specified primary and contiguous counties.

Secretary of Agriculture Declarations

• When the Secretary of Commerce makes a commercial fishery failure or fishery resource disaster under Section 308(b) of the Interjurisdictional Fisheries Act of 1986, SBA activates its Economic Injury Disaster Loan (EIDL) program for the specified primary and contiguous counties.

Secretary of Commerce Declarations

• If an eligible small business, without credit available elsewhere at reasonable rates & terms, is unable to meet its ordinary and necessary operating expenses because an essential employee is ‘called-up’ to active duty as a military reservist, the owner(s) of the small business may apply for an MREIDL.

• This program covers the entire United States and its territories.

Military Reservist EIDL (MREIDLs)

• The law gives SBA several powerful tools to make

disaster loans affordable: • Low interest rates • Long terms (up to 30 years) • Refinancing of prior debts (in some cases)

Making Recovery Affordable

Interest Rates for disasters occurring on or after October 17, 2014

Current Interest Rates

• The majority of SBA disaster loans are at the lower interest rates. Credit available elsewhere means that the disaster victim can provide for their own recovery through private sector borrowing on reasonable rates and terms without causing financial hardship, as determined by SBA.

Home Business EIDL Nonprofit No Credit Available 1.938% 4.00% 4.00% 2.625% Credit Available * 3.875% 6.00% N/A 2.625%

Home Repair/Replace:

Real Estate up to $200,000

Personal Property up to $ 40,000

Refinancing up to $200,000

Potential increase for Mitigation of 20% of verified loss

Disaster Home Loan Limits

Business Repair/Replace: Real Estate/Machinery/Equip. Furniture and Fixtures $2.0 Mil Working capital Economic Injury (EIDL) $2.0 Mil

Potential increase for Mitigation of 20% of verified loss

(Combined loan limit cannot exceed $2.0 Million)

Disaster Business Loan Limits

Requirements for loan approval • Eligibility - damaged property must be in a declared

county. • Credit History - Applicants must have a credit

history acceptable to SBA. • Repayment - Applicants must show the ability to

repay all loans.

SBA Loan Requirements

• Only uncompensated losses (disaster losses not compensated by insurance or other recoveries, such as grants, reimbursement by another party, settlement of a lawsuit, etc.) are eligible.

• Applicants are not eligible if they have not complied with the terms of previous SBA loan agreements (e.g. failure to maintain required insurance).

Loan Eligibility Restrictions

• SBA determines the term of each loan in accordance with each borrower’s repayment ability.

• The maximum term is 30 years.

Loan Terms

The following types of businesses are not eligible for EIDLS:

• Speculative businesses • Multi-level sales organizations (pyramids) • Hobby Businesses

Loan Eligibility Restrictions

• For substantially disaster-damaged homes and businesses, SBA may refinance recorded liens on real estate, and/or machinery & equipment.

• Liens eligible for refinancing include: • Home loans - real estate liens only • Business loans - real estate and chattel (UCC

filing) liens Refinance eligibility cannot be determined until insurance

settlements are final. Existing Federal loans are not eligible for refinancing.

Refinancing

• Physical loans over $14,000 for Agency declarations, over $25,000 for Presidential IA declarations.

• EIDLs over $25,000 require collateral.

Collateral Requirements

SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral; but, SBA requires that borrowers pledge available collateral.

Hazard insurance – Is required on all secured loans. Flood insurance - Is required for properties located in a Special Flood Hazard Area (SFHA), and for properties damaged in a flood disaster.

Insurance Requirements

• SBA requires borrowers to obtain and maintain appropriate insurance as a condition of most loans.

SBA.GOV

SBA.GOV

Apply online using SBA’s secure Web site Apply with an SBA representative at any designated

center in the declared disaster area. Apply by mailing a completed paper application to SBA

Three Ways to Apply

Complete the application online using SBA’s Electronic Loan Application (ELA) at: http://disasterloan.sba.gov/ela

Online

SBA representatives provide personal service at:

At a Center in the Disaster Area

Disaster Recovery Centers

SBA Disaster Loan Outreach Centers

SBA Business Recovery Centers

No appointment is necessary

SBA representative meet personally with individuals to answer questions about SBA’s disaster loan program, explain the application process and help each individual complete their application online.

Personal Assistance with Application

Mail a completed application to SBA

U.S. Small Business Administration

Processing and Disbursement Center 14925 Kingsport Road

Fort Worth, Texas, 76155-2243

Three Step Process for Disaster Loans

1. Apply for a loan

2. Property Verified and Loan Processing Decision Made

3. Loan Closed and Funds Disbursed

Application Filing Deadlines

• Filing Deadline for Physical Damage:* 60-days from the declaration date

• Filing Deadline for Economic Injury: 9-months from the declaration date

*In Presidential Declarations, FEMA may extend the

filing deadline for all Federal programs, including SBA.

Business counseling from SBA’s resource partners is a vital form of disaster assistance. There is no charge for this service from: • Small Business Development Centers (SBDCs) • SCORE • Women’s Business Centers (WBCs)

SBA Disaster Assistance Resource Partners

SBDCs, SCORE, WBCs (continued) Counseling can help a small business: • Recognize alternatives that mitigate the adverse

financial consequences of the disaster • Consider alternative sources of revenue • Identify ways to reduce costs

SBA Disaster Assistance Resource Partners

SBDCs, SCORE, WBCs (continued) • Discover ways to overcome disaster related

problems • Identify new opportunities created by the disaster • Plan how to survive through the disaster cycle

until resumption of normal business conditions

SBA Disaster Assistance Resource Partners

For information, or to find a counselor, visit their websites: • Small Business Development Centers (SBDCs) –

www.asbdc-us.org • SCORE – www.score.org • Women’s Business Centers –

www.sba.gov/content/womens-business-centers

SBA Disaster Assistance Resource Partners

Be ready

Be proactive

Plan to survive a disaster and recover quickly

Emergency/Disaster Preparedness

Prepare for the Unexpected

Prepare for the Unexpected

• Insurance coverage for buildings, contents and business interruption

Copy and back up important records

Prepare for the Unexpected

Plan to Stay in Business

http://www.sba.gov/content/disaster-preparedness

• Plan to stay in business • Prepare for the Unexpected • Report damage • Apply for available assistance

Disaster Recovery

For Additional Information

U. S. Small Business Administration Disaster Assistance Customer Service Center

(800) 659-2955 TTY (800) 877-8339

Email: disastercustomerservice@sba.gov or

Visit our Web site at: www.sba.gov/disaster

Please complete our webinar evaluation by Wed., Dec. 17

https://www.surveymonkey.com/s/3QYHTHQ

Thank you!

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