The Small Business Administration always finds itself struggling to get funding. Depending on who sits in the White House, it’s oftentimes a tough sell to argue for more money to support small businesses in lieu of spending on social programs, the military or (increasingly) the interest on our national debt. But there could be an unlikely solution to the agency’s funding challenges: climate change.
If you’re familiar with the SBA, then you know that the agency does not actually give out loans. It guarantees the loans made by banks to higher-risk, small business applicants. But there is one case where the SBA actually does lend money, and the need is significantly growing.
In its last fiscal year, the administration issued more than $7bn in direct loans to small businesses, non-profits, homeowners and renters affected by hurricanes, floods, droughts, tornadoes and other natural disasters around the country.
Just last week, for example, the agency announced that it will issue about $1bn in loans as part of the recovery from Hurricane Florence, according to one report. In October, more funding was announced for disaster victims in nearly a dozen states across the country including Oregon, Washington, Kansas and North Dakota.
Typical of previous offerings, businesses – and private non-profit organizations – of up to any size can usually borrow up to $2m to repair or replace disaster-damaged or destroyed real estate, machinery, equipment, inventory and other business assets. Not only that, but the financing can also include changes that would protect a property from future damages, like a safe room, storm shelter, sump pump, french drain or retaining wall. There’s also working capital loans available and even individual homeowners and renters can apply for some money. All of these loans are made at rates currently ranging from about 2% to less than 4% and can be paid back over as many as 30 years.
“It’s really critical to try to get some of these businesses back on their feet because a lot of times you know, they’re the supply chains for other businesses, so how do you continue to deliver your goods and services when you have that break?” the SBA chief, Linda McMahon, told a group in South Carolina during a whirlwind round of visits to disaster-affected areas over the past few weeks. “And communities are very dependent and reliant on their small businesses … Whose name do you see on the back of the little league shirt? It’s a small business.”
Small businesses in the areas affected by this week’s Hurricane Michael are just now starting to pick up the pieces – and the SBA is already moving in. The governors of Alabama and Florida have already announced that their administrations are working with the agency to get help and field offices are in the process of opening. If you need assistance go here.
All of these natural disasters are terrible news for their victims and particularly the small business owners who have had their livelihoods upended. But the silver lining in the clouds could be for the SBA. If global warming is behind the frequency and strength of these storms, then more business owners will be needing the assistance that the agency offers, which will serve to increase the awareness of what the agency does and the services it provides. No one will want to admit it, but that will certainly help McMahon and her successors when they find themselves arguing for more dollars from Congress.
