How Small Businesses in LA County Can Get $2 Million—Even If They Weren’t Damaged

Small businesses in Los Angeles County are facing yet another hardship in the wake of the devastating wildfires that destroyed thousands of homes and businesses. While the financial toll is massive, here’s the good news—a federal program is designed to help businesses recover, even if they didn’t suffer physical damage themselves.

For small business owners, navigating recovery after such a disaster is daunting. But if you’re in LA County or one of the nearby affected areas, you may be eligible for an SBA (Small Business Administration) Disaster Loan of up to $2 million. Even if your business wasn’t directly burned or damaged, the economic impact on your revenue may qualify you for this low-interest lifeline. Read on to discover how this program works, who qualifies, and how to apply.

What Is the SBA Disaster Loan Program?

The SBA Disaster Loan Program was created in 1953 to provide financial support to businesses impacted by a federally declared disaster. Unlike traditional loans, these funds are specifically meant to help businesses recover faster, prevent closures, and rebuild after both physical and economic damages caused by disasters like wildfires, hurricanes, and earthquakes.

For businesses affected by the recent Los Angeles wildfires, the SBA offers two key types of loans:

1. Physical Damage Loans – These can be used to repair or replace damaged buildings, equipment, inventory, and other physical assets. Qualified businesses can borrow up to $2 million for these purposes.
2. Economic Injury Disaster Loans (EIDL) – Even if your business wasn’t physically damaged, you might still qualify for an economic injury loan. These loans provide financial assistance to cover day-to-day operating expenses when normal revenue is disrupted as a result of the disaster.

The best part? These loans are direct from the SBA, meaning you won’t need approval from a traditional bank. With an interest rate as low as 4% and repayment terms of up to 30 years, this could be the financial cushion many businesses desperately need.

What Are the Key Benefits of SBA Disaster Loans?

Beyond just the flexible terms and low interest rates, SBA Disaster Loans offer unique advantages tailored to the tough recovery process small business owners face:

• Delayed Interest Accrual: Interest doesn’t start to accrue until a year after you receive the funds.
• Flexible Use of Funds: Loans can cover everything from payroll to operational costs, repairs, and marketing efforts to regain lost customers.
• Collateral for Larger Loans Only: For loan amounts under $25,000, no collateral is required. For loans exceeding this, you’ll need to put up assets like property or equipment.

The SBA also allows businesses to combine physical damage and economic injury loans (if applicable), although the total borrowing cap is generally $2 million. Exceptions may be granted when a loan is critical to preserving jobs.

Who Qualifies for an SBA Disaster Loan?

To qualify for an SBA disaster loan in Los Angeles County, your business must fall within one of these categories:

1. Direct Damage: Your business suffered direct losses due to the fires, such as a burned building, destroyed inventory, or damaged equipment.
2. Indirect Economic Impact: Your business wasn’t physically impacted by the disaster, but your revenue has suffered because you depend on customers or supply chains located in areas devastated by the fires.

Even nonprofits, homeowners, and renters are eligible for SBA disaster loans under specific terms, with reduced interest rates.

For Los Angeles County businesses, the SBA officially declared the area a disaster zone on January 7, 2025. Neighboring counties affected by the economic ripple effects can also qualify.

Step-by-Step Guide to Applying for an SBA Disaster Loan

Securing these critical funds starts with knowing how to apply. Here’s a simple guide:

Step 1. Gather the Required Documentation

Before applying, gather your financial statements, tax returns, profit-and-loss reports, and proof of any damage or loss (if applicable). The SBA will also require details of your business plan and how you intend to use the funds.

Step 2. Apply Online

Visit the SBA’s Disaster Assistance portal to begin your application. The process is straightforward, but if you experience challenges, you can visit a Disaster Recovery Center nearby for guidance.

Link to SBA application page: https://disasterloanassistance.sba.gov

Step 3. Await Confirmation

The SBA typically processes applications within 2–4 weeks, although delays may occur based on demand. Keep track of your application progress and respond promptly to any additional documentation requests.

Step 4. Accept Funds & Plan Restored Operations

If approved, the SBA will release funds directly to your account, giving you the flexibility to address critical needs like repairs, payroll, or other operating costs.

Pro tip: Before using the funds, consult your accountant to ensure compliance and optimize their impact.

Critical Deadlines You Should Know

Mark your calendar to make sure you don’t miss these key application deadlines:

• Physical Damage Loan Deadline: March 10, 2025
• Economic Injury Loan Deadline: October 8, 2025

Depending on the situation, these deadlines may be extended, but it’s always best to apply as soon as possible.

Why SBA Loans Often Lead to Business Success

While taking on debt after a disaster can feel risky, research consistently shows that businesses receiving SBA disaster loans are much more likely to recover successfully. For example, a study by the Center for Economic Studies found that businesses receiving such loans were 13% more likely to remain operational after a disaster than those without access to this critical financial aid.

Additionally, businesses using SBA disaster loans report faster revenue recovery and improved overall stability.

Considerations Before Borrowing

While the SBA disaster loan program can be a lifeline, it’s not without risks. If your future revenue is uncertain due to customer migration or a weakened local economy, carefully evaluate whether taking on a loan is the right choice.

“Taking on debt can feel overwhelming when so much is up in the air,” says Maria Watson, a University of Florida researcher who has studied SBA disaster loans. “But remember, applying doesn’t lock you into borrowing—you still get to decide whether accepting the funds aligns with your business plan.”

If you’re eligible, Watson encourages applying even if you’re unsure whether to go through with it. “Understanding your options helps you feel confident about next steps.”

Final Thought

Whether your small business suffered physical damage or financial losses from the wildfires, the SBA disaster loan program offers you essential support. With its low-interest rates, flexible terms, and focus on helping small businesses thrive, it’s a powerful tool for navigating recovery and building resilience.

Time is of the essence, so complete your application today and take a critical step toward rebuilding your business.

Need help? Visit the official SBA Disaster Loan Assistance portal or contact your nearest Disaster Recovery Center for personalized support.