Almost Half of U.S. Declared Drought Disaster Area: Small Business Loans Available

This summer, the U.S. has faced its worst drought in over 50 years. Farmers and other small businesses that depend  on the weather, are facing financial hardships because of it.

The U.S. Department of Agriculture (USDA) declared drought disaster areas in nearly half of the nation’s counties last week (see July 23, 2012 USDA map below).

drought disaster map - U.S.

This means that agriculture businesses and other drought-affected businesses in those 1,430 counties, which reach across 32 states, can apply for financial assistance from either the USDA or the U.S. Small Business Administration, depending on the type of business:

Agricultural businesses — The USDA’s declaration makes low interest loans available to farmers and ranchers in drought-affected areas.

Non-agricultural businesses — The SBA announced that it will offer financial assistance in the form of disaster loans to certain businesses that need help because of the lack of rainfall. The SBA announcement noted that it’s not always obvious which businesses are eligible for assistance:

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 the SBA’s disaster assistance program, affected small businesses and private non-profits are eligible to apply for up to $2 million in SBA Economic Injury Disaster Loans, which are working capital loans to help cover operating expenses such as rent and monthly overhead that would have been paid if the drought had not occurred.

The SBA loans include 4% interest for businesses and 3% interest for non-profits, with terms up to 30  years.

In addition, USDA Secretary Vilsack announced taking other steps to assist farmers and ranchers, including opening up conservation areas for haying and grazing by livestock.

Small businesses can visit the USDA’s drought assistance section of its website to see maps showing which counties have been declared disasters.  Or contact SBA’s disaster assistance Customer Service Center at (800) 659-2955 or email to find out if their county has been declared a drought disaster area.

Companies that fit the requirements for disaster loans can apply for assistance using SBA’s Electronic Loan Application.


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Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.

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