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How the SBA Helps Small Businesses Recover and Thrive After Disasters

Small Businesses


Natural disasters such as hurricanes, earthquakes, wildfires, and floods can wreak havoc on communities and businesses alike. For small businesses, recovering from these catastrophic events can be a long and difficult process. Fortunately, the Small Business Administration (SBA) offers a variety of programs and resources to help small businesses get back on their feet and thrive after disasters. In this article, we will explore how the SBA aids small businesses in the aftermath of a disaster, highlighting their various programs and sharing real-life examples of their impact.

Types of disaster loans

Physical damage loans

Physical damage catastrophe loans are available to businesses of any size, including nonprofit organizations, for the purpose of repairing or replacing commercial assets that have been damaged by a natural disaster. Land, buildings, machinery, automobiles, and inventory are some examples of the types of assets that could fall under this category. Individuals and homeowners who have suffered physical damage to their principal housing or other property can apply for disaster loans to replace or restore both their primary residence and their personal property.

Economic injury disaster loans (EIDL):

EIDLs can be used by small businesses, charitable organizations, and agricultural cooperatives to pay for necessary operational expenses until normal operations can be reinstated. For instance, an EIDL may be utilized to pay for rent, utilities, or the necessary payments on loans that have already been formed. However, the COVID-19 EIDL program, which was established to assist small businesses in recovering from the COVID-19 epidemic, is no longer accepting application submissions.

Emergency financial assistance for military reservists:

Loans for military reservists are a specialized kind of economic damage disaster loan that is intended to assist businesses in overcoming the financial challenges that arise as a result of the return of their employees to active duty. It is possible to use the funds from these loans to cover operating expenditures; but, they cannot be used to replace profits or make payments on other loans.

Help with mitigating the effects:

A catastrophe loan that has been approved by the SBA can have its amount increased by up to 20% through the use of a mitigation assistance loan, which can then be used to pay for upgrades that make buildings or equipment more resilient to the effects of future disasters. The scope of a project might be rather broad, ranging from relocation to structural reinforcements to even alterations in the landscaping.

Help in the Event of a Hurricane:

When a storm causes such severe damage to property and companies that a federal disaster is declared, the Small Business Administration (SBA) produces a special fact sheet that describes what geographical area is affected, what kinds of disaster loans are available, and how to apply for one.

SBA disaster loan requirements

You must satisfy all of the following requirements in order to be eligible for a catastrophe loan from the SBA:

  • Maintain operations of your company while being located in a location that has been labeled a disaster zone.
  • An individual, a nonprofit organization, or any size business can submit an application for a physical damage loan; the SBA does not restrict eligibility to only “small” businesses.
  • Submit your application before the specified cutoff time:
  • Loans for physical damage will be available sixty days after the disaster declaration.
  • EIDL: Nine months since the announcement of the catastrophe
  • In addition, the following standards, which are customary for SBA loans, are also applicable to catastrophe loans:

If you want to borrow more than $200,000, you need to provide a personal guarantee from each owner who holds more than 20% of the company.

  • The SBA requires a credit score that is suitable for their purposes.
  • The company is required to furnish an Employer Identification Number (EIN) and must be controlled by U.S. citizens, non-citizen nationals, or eligible aliens in a percentage equal to or more than 20%. 
  • Applicants applying as individuals are required to either produce a Social Security number or evidence that they are a non-citizen national or eligible immigrant.
  • Gambling, adult entertainment, and insurance are examples of business types that are ineligible for assistance from the Small Business Administration.

The SBA’s Role in Disaster Recovery

The SBA’s mission is to empower entrepreneurs and small businesses through access to capital, counseling, and government contracting opportunities. After a disaster, the SBA’s role expands to include providing financial and technical assistance to help small businesses rebuild and recover. The agency offers several programs specifically tailored to support businesses affected by disasters, including the following:

  • Disaster Loan Program

The SBA’s Disaster Loan Program is a crucial resource for small businesses impacted by disasters. Through this program, businesses can secure low-interest, long-term loans to repair or replace damaged property, machinery, and inventory. The loan amounts can be up to $2 million, with repayment terms extending up to 30 years.

For example, when Hurricane Harvey hit Houston in 2017, the SBA approved more than $3 billion in disaster loans, helping thousands of small businesses rebuild and resume operations.Leo Ye, CEO and Founder of Cubo Online Office, stated, “When a disaster strikes, SBA disaster assistance loans are often the primary financial tool available to small businesses to help them recover. These loans can be used for a variety of purposes, including repairing or replacing damaged property, machinery, equipment, and inventory. They can also be used to cover expenses related to business interruption, such as payroll, rent, and other operational costs.

  • Economic Injury Disaster Loans (EIDL)

In addition to physical damage, disasters can lead to significant economic losses for small businesses. To address this, the SBA offers Economic Injury Disaster Loans (EIDL) to help businesses meet working capital needs caused by the disaster. These loans can cover expenses such as payroll, rent, and utilities, allowing businesses to maintain operations during the recovery process.

For instance, during the COVID-19 pandemic, the EIDL program played a significant role in supporting businesses impacted by the crisis. One business owner remarked, “The EIDL loan was a game-changer for us. We were able to keep our employees on payroll and continue serving our customers during an incredibly challenging time.”

  • SBA Resource Partners

The SBA partners with various organizations to provide technical assistance and counseling services to small businesses. These resource partners include Small Business Development Centers (SBDCs), SCORE, Women’s Business Centers (WBCs), and Veterans Business Outreach Centers (VBOCs). Following a disaster, these partners can offer invaluable guidance on disaster recovery planning, financial management, and marketing strategies to help businesses rebound and grow.

After Hurricane Irma in 2017, many small businesses in Florida turned to their local SBDC for support. Nilesh Rakholia, Director at Abelini, explained, “Our local SBDC helped us navigate the complex process of applying for disaster loans and provided invaluable advice on how to adjust our business model to better withstand future storms.”

  • Federal Contracting Opportunities

The SBA also helps small businesses secure federal contracts, which can provide a much-needed revenue stream during the recovery process. Through the 8(a) Business Development Program and the HUBZone Program, the SBA connects small businesses with federal contracting opportunities, ensuring that they can compete for and win government contracts.

An example of this is a construction company in Puerto Rico that secured a contract with FEMA after Hurricane Maria. Huzaifa Usmani, Head of Marketing at Star And Link stated,  “Winning a federal contract was a turning point for our business. Not only did it provide us with a steady source of income during the recovery, but it also allowed us to contribute to rebuilding our community.”

  • Disaster Preparedness and Resilience

In addition to helping businesses recover from disasters, the SBA promotes disaster preparedness and resilience. By providing resources and training on disaster preparedness, the SBA ensures that small businesses are better equipped to handle future crises. This includes webinars, workshops, and online resources to help business owners create disaster recovery plans and implement strategies to minimize the impact of future disasters.

For example, following the devastating wildfires in California, the SBA partnered with local organizations to offer workshops on disaster preparedness for small businesses. One participant, expressed her gratitude, saying, “The SBA’s disaster preparedness workshop opened my eyes to the importance of having a plan in place. Now, my business is better prepared to face whatever challenges come our way.”

  • Training and Counseling:

“In addition to financial assistance, the SBA offers counseling and training to small business owners affected by disasters. This support is available through the SBA’s network of Small Business Development Centers (SBDCs), SCORE chapters, and Women’s Business Centers (WBCs). SBDCs, SCORE chapters, and WBCs provide free or low-cost resources to help small business owners recover from disasters.” Says Abdul Saboor Khan Head of Marketing at Your PCB, These tools offer assistance with company continuity planning, financial management, and catastrophe recovery planning. Additionally, they can help with filing insurance claims, requesting government aid, and navigating the reconstruction process. Additionally, training programs and workshops on disaster preparedness and recovery are offered by SBDCs, SCORE chapters, and WBCs. These initiatives aim to provide small business owners with the tools and knowledge they need to lessen the effects of upcoming calamities.


Natural disasters can be devastating for small businesses, but the SBA plays a critical role in helping them recover and thrive. Through its various programs and resources, the SBA provides much-needed financial assistance, technical support, and guidance to business owners during the recovery process. By partnering with the SBA and taking advantage of these resources, small businesses can not only rebuild but also grow stronger and more resilient in the face of future disasters, Small businesses are the backbone of our communities, and their success is essential to our nation’s economic recovery. 

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