Small Business Administration Can Fill In Gap For Underinsured In LA Amid Wildfires

The SBA can assist homeowners, renters, and businesses with emergency loans, which became available after President Joe Biden declared the wildfires in California as a major disaster.

The recent wildfires in Los Angeles come as the state deals with an unprecedented crisis on two fronts. The state has an affordable housing shortage, and the highest number of people experiencing homelessness live there. Many also don’t have enough insurance to cover their losses. As homeowners, renters, and businesses tackle the difficult task of rebuilding, the U.S. Small Business Administration (SBA) could offer some much-needed relief.

As the Los Angeles Times points out, thousands of homeowners have lost their home insurance over the last decade as insurance companies have either left fire-prone areas or increased their prices. According to SiliconValley.com, nearly 10% of homeowners in Los Angeles County are uninsured.

The SBA can provide emergency loans to homeowners, renters, and businesses. These loans became available after President Joe Biden declared the California wildfires a major disaster.

“There will be residual effects around the whole community,” Small Business Administration head Isabella Casillas Guzman told the publication. “Insurance will not cover this disaster.”

Who Is Eligible For A Small Business Administration Loan

Businesses, nonprofits, and small agricultural cooperatives can apply for an economic injury or physical damage loan through SBA. Meanwhile, homeowners and renters are eligible for physical damage loans.

Nonprofits and businesses applying for economic injury loans will have access to funds intended to help them meet ordinary financial demands. Physical damage loans help with repairs and restoration. Renters can receive up to $100,000 in assistance, homeowners can access up to $500,000, and businesses can apply for up to $2 million. Those in need of assistance can apply online. Loans must be repaid within 30 years.

The SBA will offer loans with an interest rate of 2.5% to homeowners and renters who cannot access credit elsewhere. If they can access credit from other sources, the SBA will offer a loan with an interest rate of 5%. Loans for businesses will range between 4% and 8%.