The deadline to apply for disaster assistance from the Federal Emergency Management Agency passed yesterday, but that doesn’t mean businesses and nonprofits damaged by May’s EF3 tornado are out of luck.
The Small Business Administration will continue to take applications for loans for physical damage, economic losses and mitigation assistance, says Raenada Mason, a public information officer with the SBA’s Office of Disaster Recovery and Resilience. She says the SBA offers a 60-day grace period after the FEMA deadline to apply for loans to help with physical damage and up to nine months for loans to cover economic losses.
Keep up with local business news and trends
Subscribe to the St. Louis Business newsletter to get the latest insights sent to your inbox every morning.
“Some [businesses] chose to wait and see if they need to use the funding,” she says. “Although we push that you apply now, because you’re not obligated to take [the loan] if you’re approved.”
And sometimes businesses or nonprofits don’t see an immediate economic loss if they weren’t directly damaged by a disaster, Mason says.
“They may not necessarily initially see that loss, but over time, they start to recognize by looking at their bookkeeping and everything that there has been a drop,” she says.
How SBA disaster loans work
SBA disaster loans come with different terms than what a business or nonprofit could get at a regular bank. Mason explains the SBA can lend up to $2 million to an individual business or nonprofit, but the amount is based on demonstrated need.
The SBA has loss verifiers who review physical losses sustained, such as machinery, equipment, or real estate, or economic losses sustained based on a comparison to past business performance, she says. Then the discussion shifts to loan terms on what is reasonable to help a business or nonprofit recover without extra financial burden, Mason adds.
“It’s in a way that’s flexible to that business, because the whole goal of SBA is to help you get to a position where you were before the storm,” she says.
For nonprofits, interest rates on these kinds of loans are 3.625 percent, and for businesses the interest rates start at 4 percent and can come with repayment terms up to 30 years, Mason says. That’s to help lower monthly costs to these organizations when they have to begin paying them back, she says.
“The loans are built and set up in a way to make sure that it’s affordable to that individual,” Mason says.
She adds these SBA loans come with an initial 12-month grace period where the loan won’t accrue interest, for example, if a business is still waiting for an insurance payout, but needs a bit of capital to make ends meet. Mason says the loans also don’t have a prepayment penalty if a business bounces back sooner than expected and wants to pay down the debt faster.
“We’re just setting it up in a way that when you do begin those repayments, it’s not so overwhelming or not so heavy on you as a business owner that’s trying to go through a recovery process at the same time,” she says.
Plus, for entities that own their real estate, the SBA offers disaster loans geared toward mitigation, which Mason says can help harden a physical structure ahead of the next natural disaster as they grow increasingly frequent.
“It doesn’t have to pertain to the type of damages that they’ve sustained,” she says. “We’re here currently for tornadoes, but we were just here a couple of years ago for the floods. That business owner, nonprofit, can say, ‘You know what, while we’re rebuilding or repairing, let’s take into consideration how we can protect this structure from any other type of natural disaster that may be out there.’”
How and where to apply
Businesses and nonprofits that need additional support can apply online, though Mason encourages them apply in-person at one of the local business recovery or disaster recovery centers the SBA has representatives, to help streamline the application process:
- St. Louis Community College Harrison Education Center Room #107 – 3140 Cass Avenue St. Louis, MO 63106
- Union Tabernacle Missionary Baptist Church – 626 N Newstead Avenue St. Louis, MO 63108
- Urban League Entrepreneurship & Women’s Business Center – 4401 Natural Bridge Avenue St. Louis, MO 63115
- Mid-County Branch Library – 7821 Maryland Avenue Clayton, MO 63105
- St. Louis County Library Florissant Valley Branch Quiet Room – 195 S New Florissant Road Florissant, MO 63031
