1 Federal Disaster Recovery Assistance from the US Small Business Association (SBA) for Private, Nonprofit Organizations Presented by Mark Randle 3 December 2014
4 QUESTIONS? Lori Foley Katelin Lee
5 Today s Instructor Mark Randle Public Information Officer US Small Business Administration Office of Disaster Assistance
6 SBA Disaster Assistance U. S. Small Business Administration DISASTER ASSISTANCE Federal Disaster Loans for Homeowners, Renters and Businesses of All Sizes
8 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.
9 Property Damage SBA disaster loans for property damages are available to homeowners, renters, businesses of all sizes, and private, nonprofit organizations.
10 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.
11 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.
12 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
13 SBA s Role in Disaster Recovery Disaster Declaration Process Types of Disaster Declarations SBA s Disaster Loan Program Prepare for the Unexpected
14 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)
15 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.
16 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.
17 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)
18 Presidential Disaster Declaration 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.
19 Presidential Disaster Declaration (IA) 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
20 Presidential Disaster Declaration (PA) 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
21 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.
22 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.
23 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.
24 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.
25 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.
26 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.
27 Presidential Declaration SBA Eligibility IA declaration PA declaration Humboldt Elko Humboldt Elko Washoe Sto Carson City rey Douglas Pershing Lyon Churchill Mineral Lander Eureka Nye White Pine Washoe Sto Carson City rey Douglas Pershing Churchill Lyon Mineral Eureka Lander Nye White Pine Esmeralda Lincoln Esmeralda Lincoln Clark Eureka is the primary county Clark
28 SBA Administrative (Agency) declaration For smaller disasters, SBA s Administrator can issue an SBA only declaration (called an Administrative or Agency declaration). This activates SBA s physical and economic injury disaster loan programs. SBA Administrator Maria Contreras-Sweet
29 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.
30 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.
31 Disaster Area Eligibility SBA Administrative (Agency) declaration Presidential IA declaration Humboldt Elko Washoe Washoe St Carson City ore Douglas y Lyon Churchill Mineral Humbold t Pershing Esmeralda Lander Nye Eureka Elko White Pine Lincoln Clark Sto Carson City rey Douglas Eureka is the primary county Pershing Lyon Churchill Mineral Esmeralda Lander Eureka Nye White Pine Lincoln Clark
32 Economic Injury Disaster Loans (EIDLs) 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.
33 Governor s Certification 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.
34 Secretary of Agriculture Declarations 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.
35 Secretary of Commerce 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.
36 Military Reservist EIDL (MREIDLs) 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.
37 Making Recovery Affordable 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)
38 Current Interest Rates Interest Rates for disasters occurring on or after October 17, 2014 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% 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.
39 Disaster Home Loan Limits 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
40 Disaster Business 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)
41 SBA Loan Requirements 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.
42 Loan Eligibility Restrictions 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).
43 Loan Terms SBA determines the term of each loan in accordance with each borrower s repayment ability. The maximum term is 30 years.
44 Loan Eligibility Restrictions The following types of businesses are not eligible for EIDLS: Speculative businesses Multi-level sales organizations (pyramids) Hobby Businesses
45 Refinancing 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.
46 Collateral Requirements Physical loans over $14,000 for Agency declarations, over $25,000 for Presidential IA declarations. EIDLs over $25,000 require collateral. 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.
47 Insurance Requirements SBA requires borrowers to obtain and maintain appropriate insurance as a condition of most loans. 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.
50 Three Ways to Apply 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
51 Online Complete the application online using SBA s Electronic Loan Application (ELA) at:
52 At a Center in the Disaster Area SBA representatives provide personal service at: Disaster Recovery Centers SBA Disaster Loan Outreach Centers SBA Business Recovery Centers No appointment is necessary
53 Personal Assistance with Application 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.
54 Mail a completed application to SBA U.S. Small Business Administration Processing and Disbursement Center Kingsport Road Fort Worth, Texas,
55 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
56 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.
57 SBA Disaster Assistance Resource Partners 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)
58 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
59 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
60 SBA Disaster Assistance Resource Partners For information, or to find a counselor, visit their websites: Small Business Development Centers (SBDCs) SCORE Women s Business Centers
61 Emergency/Disaster Preparedness Be ready Be proactive Plan to survive a disaster and recover quickly
62 Prepare for the Unexpected
63 Prepare for the Unexpected Insurance coverage for buildings, contents and business interruption Copy and back up important records
64 Prepare for the Unexpected
65 Plan to Stay in Business
66 Disaster Recovery Plan to stay in business Prepare for the Unexpected Report damage Apply for available assistance
67 For Additional Information U. S. Small Business Administration Disaster Assistance Customer Service Center (800) TTY (800) or Visit our Web site at:
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