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U. S. Small Business AdministrationOffice of Disaster AssistanceField Operations Center East

Atlanta, Georgia

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Current IL Presidential Declaration

Incident – • Severe storms and flooding

Occurrence - • July 19, 2010 through August 7, 2010

Deadline for Physical Disaster Loans – • November 17, 2010

Deadline for Economic Injury Disaster Loans – • May 19, 2011

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To help people recover from disasters and rebuild their lives by providing affordable, timely and accessible financial assistance to homeowners, renters, businesses and non-profit organizations of all sizes.

Goal in Disaster Recovery

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Following hurricanes, floods, tornadoes, earthquakes, wildfires and other disasters, the SBA is the primary source of federal funds for long term recovery assistance for homeowners, renters, businesses and non-profit organizations of all sizes.

SBA disaster program featuring low-interest loans, generous terms and conditions make disaster recovery less challenging.

The SBA’s disaster loan program is a critical source of economic stimulus in disaster-ravaged communities, helping to sustain employment and stabilize tax bases.

Role in Disaster Recovery

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• Presidential (Individual /Public Assistance)

• Administrative (Agency)

• Governor’s Certification

• Secretary of Agriculture

• Secretary of Commerce

• Military Reservist

Types of Disaster Declarations

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How Disaster Declarations Are Made

After a disaster occurs, an assessment of the damage may be performed to determine if disaster assistance is needed.

The Governor usually evaluates the survey results and can: (1) request a presidential declaration, which involves FEMA, (2) request an SBA administrative declaration or (3) handle the disaster recovery using local resources.

A presidential disaster declaration makes many federal and state programs available, including SBA disaster loans and Federal Emergency Management Agency (FEMA) grants.

In an SBA disaster declaration, only SBA loans are available.

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Once a disaster declaration is approved by President Obama disaster victims can apply for federal assistance.

Individual Assistance (I/A) – Including temporary housing, serious needs & necessary expenses for individuals and householdsPublic Assistance (P/A) – Aid to state/ local governments for infrastructure.

One form of federal assistance is low-interest disaster loans from the U.S. Small Business Administration is available with both types of declarations.

PresidentBarack H. Obama

Presidential Disaster Declarations

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Presidential Declaration for Individual Assistance (IA)

• If the President declares a major disaster declaration for Individual Assistance, SBA’s disaster loan program is automatically activated.

• Homeowners, renters and businesses of all sizes including private, non-profit organizations are eligible to apply for their uncompensated physical losses.

• Small businesses, small cooperatives and most private non-profits of any size, can apply for working capital loans to cover their economic injury losses.

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Presidential Declaration for Public Assistance (PA)

If the President declares a major disaster declaration for Public Assistance, SBA’s disaster loan program is activated only for eligible private, non-profit organizations.

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Administrative (Agency) Declaration

If SBA’s Administrator declares an SBA-only declaration (called an Administrative or Agency declaration), SBA’s disaster loan program is activated.

SBA AdministratorKaren G. Mills

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Basic Criteria for an Administrative (Agency) Declaration

The SBA can make an Administrative disaster declaration when:

1. At least 25 homes and/or businesses in a county have uninsured losses of 40% of their market value, or

2. At least 3 businesses have uninsured losses of 40% of their market value and at least 25% of the workforce in the community will be unemployed for 90 days, and if

3. The Governor of the state in which the disaster occurred submits a written request to the appropriate SBA office for a physical disaster declaration within 60 days of the date of the disaster.

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Governor Certification Declarations SBA makes an economic injury declaration following a state certification that at leastfive (5) small business concerns in a disaster area have suffered substantialeconomic losses as a result of the disaster and need financial assistance.

Secretary of Agriculture Declarations SBA makes an economic injury disaster declaration in response to a determination of

a natural disaster by the Secretary of Agriculture. The Department of Agriculture – Farm Service Agency (FSA) provides notifications to SBA that it has made emergency loans available to farmers.

Secretary of Commerce Declarations SBA makes an economic injury disaster declaration in response to a

declaration by the Secretary of Commerce, for commercial fishery disaster. The Governor must submit a request to the SBA.

Types of SBA Declarations

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Military Reservist Economic Injury Disaster Loans (MREIDLs)

SBA may make this type of loan available to an eligible small business employing a military reservist, if the reservist is ‘called-up’ to active duty during a period of conflict. The reservist must be an essential employee critical to the success of the business operation and the ‘call-up’ has caused or will cause the business substantial economic loss.

Types of SBA Declarations

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Presidential Versus Agency Declarations

In Presidential declarations, primary counties are eligible for both physical and economic injury disaster loans. The contiguous (neighboring) counties are only eligible for economic injury loans.

In an SBA administrative (agency) declarations, loans for physical damage and economic injury are available in both primary and contiguous counties.

The declared disaster area and eligibility is different:

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Initial registration process:

• In Presidential declarations, all applicants are encouraged to first register with FEMA. Based on information collected, many homeowners and renters are referred to SBA for disaster assistance.

• In Agency declarations, all applicants register directly with SBA, either face-to-face, online or by phone.

Differences in Presidential Versus Agency Declarations

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Differences in SBA and FEMA• SBA provides assistance in the form of loans to

homeowners, renters and businesses. FEMA on the other hand, provides assistance in the form of grants to individuals.

• SBA loan approvals are based on eligibility, satisfactory credit and repayment ability.

• The SBA program is designed to help with long-term recovery by providing funds to repair and/or replace the damaged property. FEMA’s programs are designed to help meet essential needs and assist individuals in taking the first steps toward recovery.

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SBA’s Office of Disaster Assistance offers loans to victims for uninsured or uncompensated for disaster losses.

Physical Disaster Loans

Home Loans – Homeowners and renters to repair or replace property losses.

Business Loans – Businesses and non-profit organizations to repair or replace property losses.

Economic Injury Disaster Loans (EIDLs)

Working capital loans to help small businesses, small agricultural cooperatives, and most private, non-profit organizations of all sizes meet their ordinary and

necessary financial obligations that cannot be met as a direct result of the declared disaster.

Types of Disaster Loans

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Borrower Purpose Max Amt Interest RateHomeowners Repair or replace

real property$200,000 Low rate not to exceed 4%

Market rate not to exceed 8%

Homeowners or renters Repair or replace personal property

$40,000 Low rate not to exceed 4%Market rate not to exceed 8%

Businesses and non-profit organizations of all sizes

Repair or replace real estate, equipment, furniture, etc.

$2 million Low rate not to exceed 4%Market rate not to exceed 8%

Small businesses, and most private non-profit organizations of all sizes

Economic injury disaster loans or working capital loans

$2 million The rate is set at 4 % for qualified applicants.

Homeowners, businesses and non-profit organizations of all sizes

Mitigate / prevent future loss to real property

20% of verified physical damage. Homeowners limited to $200,000.

Low rate not to exceed 4%Market rate not to exceed 8%

Loan Limits

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Renters and Homeowners are Eligible

• Loans to repair or replace disaster damaged real or personal property.

• The eligible loan amount is based on SBA’s damage assessment minus any duplication of benefits (i.e., funds from insurance, FEMA, grants and other sources).

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• Unlike traditional small business loans obtained from a private bank and guaranteed by SBA, disaster loans are direct from the federal government.

• Businesses of any size are eligible for funds for physical damage, funds to repair/replace damaged contents and real property.

• Non-profit organizations such as charities, churches, and private schools are also eligible.

• Small businesses, small agricultural cooperatives and most private non-profit organizations are eligible for economic injury funds for working capital to help meet working capital needs caused by the disaster.

SBA Disaster Loans for Businesses Are Unique

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EIDLs may be used to pay fixed debts, payroll, accounts payable and other business expenses that cannot be paid because of the disaster’s impact.

EIDLS do not replace lost sales or profit.

Economic Injury Disaster Loans (EIDLS)

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Features of SBA Disaster Loans

Loan terms – Up to 30 years based on ability to repay: fixed rate.

Relocation – Funds may be used to relocate.

Refinancing – Only for homeowners & businesses.

Administrative Loan Limit – May be waived if the applicant business is determined to be a Major Source of Employment (MSE) In the declared disaster area.

Loan Increase – Borrowers may request loan increasewithin 2 years from date of loan approval for disaster related damages.

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Centers are set up in close proximity to the disaster. This allows us to help people face to face.

How Do We Operate?

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Ways to Apply for an SBA Disaster Loan

• Disaster victims should first register with FEMA in a presidential declaration at 1-800-621-3362 or by visiting www.disasterassistance.gov.

– Not all individual applicants are referred to SBA.

• In all other disaster declarations SBA applicants obtain their disaster loan applications as a result of:• Calling 1-800-659-2955• Visit a temporary office located in the disaster area, or• Applying on SBA ‘s secure Web site –

https://disasterloan.sba.gov/ela/

• Eligible applicants receive their applications from SBA through the mail or in person.

– Only business loan applications can be downloaded from SBA’s Web site – www.sba.gov/services/disasterassistance

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Electronic Loan Application

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Requirements for Loan Approvals

• 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 the SBA loan.

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Homeowners and renters should provide the following documents:

SBA Disaster Loan Application (Form 5C) completed and signed by all applicants.

Tax Information Authorization (IRS Form 8821) completed and signed by all applicants.

Home Loan Application Filing Requirements

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Completed SBA Disaster Loan Application (Form 5)

Tax Information Authorization (IRS Form 8821) and copies of three (3) years Federal Tax Returns (FTRs)

Current Financial Statements – Profit & Loss Statement and Balance Sheet Schedule of LiabilitiesPersonal Financial Statement for each owner

Latest Federal Tax Return for each owner and affiliated business

Breakdown of monthly revenues for Economic Injury Application (SBA Form 1368 may be used)

Business Loan Application Filing Requirements

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Physical Loans over $14,000 require collateral.

EIDLs over $5,000 require collateral.

SBA will not decline a loan for lack of collateral, but requires collateral that is available.

Collateral Requirements

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To protect each borrower and the Agency, SBA may require the borrower to obtain and maintain appropriate insurance.

By law, borrowers whose damaged or collateral property is located in a Special Flood Hazard Area must purchase and maintain flood insurance for the full insurable value of the property for the life of the loan.

Insurance Requirements

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Are You Prepared for Disasters?

• Blizzards• Earthquakes• Floods• Hail storms• Hurricanes• Power outages• Tornadoes• Severe Storms

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Why You Should Prepare for Disasters

• Generally, it takes three to ten years to build a successful business, and only hours for a disaster to destroy it.

• Businesses that are unable to access their critical data for an extended period may have more difficulty recovering.

• Disasters can ruin your business and create financial hardship for your family.

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25 percent ofbusinesses thatclose aftera disasternever reopen.

- Institute for Business and Home Safety

Small Business Losses

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Disaster Response Plan

Disaster preparedness for a business should include aneffective response plan to protect lives and property.

Safety – Include an evacuation plan, with routes, meetingplaces and designated individuals to do a head count toensure that all employees have been accounted for.

Adequate Insurance – Periodically, review businessinsurance policies to ensure coverage is sufficient. Flood insurance is not automatically included in standard policies.

Information on flood insurance can be obtained at www.floodsmart.gov.

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Disaster Response Plan

Contact Information – Keep emergency telephone numbers handy and designate contact persons to reach other employees, family members, essential customers, vendors and insurance agents.

Maintain Contacts Through Web Site – Post information about your business recovery plans on a web site so that vendors, suppliers and customers can stay informed. Remain positive.

Make Copies of Important Records – Keep essential documents, including back-up data saved on computer hard drives at a distant offsite location. Store documents and compact discs (CDs) in fire/water proof containers or safe deposit boxes.

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Disaster Response Plan

Install Protective Mitigation Devices – Install hurricane shutters, impact-resistant window and door systems, seawalls, etc. to minimize property damage.

Disaster Survival Kit – The kit should include a flashlight, portable radio, extra batteries, first-aid kit, non-perishable packaged and canned food, can opener, bottled water, medicine, cash, etc.

Telecommute When Possible – The nature of your business should determine if some or all your staff could telecommute in the event your facility remains inaccessible for an extended period.

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Disaster Response Plan

Employees Awareness of Plan – Seek employees’ input in the planning phase of the response plan. Discuss the plan and provide copies to your staff. Ensure everyone understands their role and knows the line of succession.

Conduct Simulation Exercises – Periodically, test the effectiveness of the response plan with your employees using simulation exercises. Revise plan where necessary.

More information on disaster preparedness isavailable at:

www.ready.govwww.sba.gov/disaster_recov/prepared/getready.html

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Do you know your emergency manager?

Jonathon E. Monken, Director, Illinois Emergency Management Agency

Do you know your evacuation route?

Your Local Emergencies

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Illinois Emergency Management Agency (IEMA)

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For more information on disaster assistance, the public should call our

Customer Service Center at:1-800-659-2955

Send an e-mail to:disastercustomerservice@sba.gov

or visit:www.sba.gov

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SBA Disaster Assistance Program