December 8, 2009
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FedEx Global Brand Management Director Monica Skipper shares a cost-effective way to build a bigger brand for your small business.
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When a natural disaster hits your business, whether it’s hurricane, flooding, or mass fire, your first response after panic is probably to call your insurance company.
But insurance doesn’t always cover everything, and they can’t always get you funds immediately. That’s where Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) comes in.
We spoke with SBA spokesperson Carol Chastang about how to maximize government programs in the wake of mother nature’s wrath.
1. Call FEMA
As soon as the President declares your county a disaster area, call FEMA at 1-800-621-FEMA, or go to www.fema.gov to register yourself as a disaster survivor and as a candidate for assistance.
“By contacting FEMA first, you can learn more about what other forms of assistance may be available, not just from the federal government but also from state emergency and economic development agencies,” says Chastang.
After you register, FEMA and SBA work together to make a preliminary damage assessment and determine the best places for you to go for recovery funds.
2. Apply for loans through SBA
After the FEMA assessment, you could be sent to SBA for a Business Physical Disaster Loan and/or Economic Injury Disaster Loan.
You can fill out applications by going to disasterloan.sba.gov/ela (they have an online tutorial, too). You can also pick up an application packet at any Federal/State Disaster Recovery Center or SBA Outreach Center in the disaster area. They’ll mail applications out to anyone who registered with FEMA, too.
Through these loans, you can borrow up to $2 million for items not covered by insurance.
The Physical Disaster Loan can cover costs of repairing or replacing damaged or destroyed real estate not covered by insurance. The loans can also be used to replace inventory, supplies and machinery that are – again – not covered by insurance.
The Economic Injury Disaster Loan is working capital to cover normal operating costs through the disaster recovery period.
“These funds are used to cover operating expenses they would have been able to handle had the disaster not occurred and had they not had to shut down,” says Chastang.
You can still be eligible for an Economic Injury Disaster Loan even if your building didn’t suffer any physical damage. If the natural disaster forced you to close down, you can still get help.
The cap on loans is $2 million total. You can’t, for example, get $2 million in Physical Disaster Loans then another $2 million in Economic Injury Disaster Loans. It’s $2 million out of both pools.
The interest rate for both types of loans, which have terms of up to 30 years, are determined on a case by case basis. If you don’t have other sources for credit, says Chastang, the max interest rate is 4 percent. If you do? The cap is 8 percent.
If you own or rent a home in the disaster area – including if you work out of your home – you might also be eligible for a homeowner loan from SBA. They’ll fund up to $200,000 to repair uninsured damages to property if you own, and up to $40,000 to cover any items in the home, like furniture and rugs -- also not covered by insurance – if you own or rent.
3. Do steps 1 and 2 ASAP
The most common mistake disaster-struck small business owners make, says Chastang, is waiting.
“Waiting for insurance proceeds can take a really long time, and we encourage you to get in your application as soon as possible,” says Chastang, who says she is still getting calls from Katrina survivors looking for assistance.
You can apply for the loans even if your documents were destroyed in the natural disaster, too – SBA can help you fill in missing pieces on your applications. They have, for example, formed a partnership with the IRS and can get you your tax returns for you.
Typical turn around on applications, says Chastang, is 14 days, so applying the moment the President declares your county a disaster area can get you back on your feet quickly, and get you back in business.
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