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Businesses Can Get Drought Recovery Assistance from SBA

Businesses Can Get Drought Recovery Assistance from SBA

By Carol Chastang, SBA Official
Published: July 23, 2012 Updated: July 23, 2012


With small businesses that rely on agriculture facing financial hardship as a result of the worst drought to hit the United States in more than 50 years, the U.S. Department of Agriculture last week declared drought disaster areas in nearly half of the counties in the U.S. (1,430 counties out of 3,033) in 32 states. 

A USDA disaster declaration is different from a declaration by the U.S. Small Business Administration. As you might expect, the declaration makes assistance available to farmers and ranchers in the form of low interest loans from the USDA. It also automatically pulls in SBA to offer help in the form of loans to the small non-farm businesses that are affected economically by the drought.

Specifically, these businesses – including small, agricultural cooperatives – can apply for SBA Economic Injury Disaster Loans, or EIDLs.  Counted among the eligible are businesses that provide seed for crops and feed for livestock, nurseries, small businesses engaged in aquaculture, and most private, nonprofit organizations of any size.   

While those involved in food-producing businesses obviously are hurt financially by the lack of rainfall, some effects are less obvious. For example, serious drought also decreases water levels in lakes, which means recreational boating businesses lose money because people aren’t renting houseboats or jet skis.

Through SBA’s disaster assistance program, small businesses and private nonprofits are eligible to apply for up to $2 million.  These are working capital loans and can be used to cover operating expenses – like utilities, rent, and monthly overhead that would have been paid if the disaster had not occurred.  The interest rate is 4 percent for businesses, 3 percent for nonprofits, with terms up to 30 years.  

To find out if your county has been declared a drought disaster area, contact SBA’s disaster assistance Customer Service Center by e-mail at, or by calling (800) 659-2955.   Those with speech or hearing impairments may call (800) 877-8339.

The SBA recently simplified its online disaster loan application. You can apply using the Electronic Loan Application (ELA) at SBA’s secure website.

The USDA’s web page is a good resource that includes a link to maps of current disaster declaration areas and a weekly weather and drought blog.

Visit SBA’s website for more information about the disaster assistance program.

About the Author:

Carol Chastang

SBA Official