Drought Disaster Assistance
Small, nonfarm businesses, small agricultural cooperatives, small businesses engaged in aquaculture and most private nonprofit organizations of any size affected drought (in a federally declared drought area), may qualify for Economic Injury Disaster Loans (EIDLs) of up to $2 million to help meet financial obligations and operating expenses which could have been met had the disaster not occurred.
By law, SBA makes EIDLs available when the U. S. Secretary of Agriculture designates an agricultural disaster.
Businesses primarily engaged in farming or ranching are not eligible for SBA disaster assistance. Agricultural enterprises should contact the Farm Services Agency (FSA) about the U. S. Department of Agriculture (USDA) assistance made available by the Secretary’s declaration. However, in drought disasters nurseries are eligible for SBA disaster assistance.
Disaster loan information and application forms are also available from SBA’s Customer Service Center by calling SBA toll-free at (800) 659-2955, emailing firstname.lastname@example.org, or visiting www.sba.gov/services/disasterassistance. Individuals who are deaf or hard-of-hearing may call (800) 877-8339.
Disaster Loan Assistance Available from SBA for Drought impact:
Economic Injury Disaster Loans (EIDLs) – Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, 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 disaster. These loans are intended to assist through the disaster recovery period.
EIDL assistance is available only to entities and their owners who cannot provide for their own recovery from non-government sources, as determined by the U.S. Small Business Administration (SBA).
- Credit History – Applicants must have a credit history acceptable to SBA.
- Repayment – SBA economic injury assistance is in the form of loans. Applicants must show the ability to repay the loan.
- Collateral – Collateral is required for all EIDLs over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 4 percent.
The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
Loan Eligibility Restrictions:
- The applicant business must be located in the declared disaster area.
- Nurseries are only eligible for economic injury caused by declared drought disasters.
- Applicants who have not complied with the terms of previous SBA loans are not eligible. This includes borrowers who did not maintain flood and/or hazard insurance on previous SBA or Federally insured loans.
- Loan assistance is available only to the extent the business and its owners cannot meet necessary financial obligations due to the disaster. This determination is made by SBA.