Small Business Disaster Assistance - Sacramento River Fall Run Chinook Salmon State of Emergency

Small Business Disaster Assistance Loan Guarantee Program

Purpose: The Small Business Disaster Loan Guarantee Program helps agricultural enterprises and other small businesses obtain financing needed to recover from losses caused by natural disasters in areas declared to be in a State of Emergency by the Governor. On April 10, 2008, Governor Schwarzenegger declared a State of Emergency because of adverse economic effects caused by the reduction in the Sacramento River Fall Run Chinook Salmon population and resulting closure of the 2008 offshore commercial salmon fishing season.

Eligible Applicants: Enterprises that are directly engaged in the production of Chinook Salmon, including raising, harvesting, and processing Chinook Salmon, are considered agricultural enterprises and are eligible for assistance under the agricultural component of the program. Assistance would be in the form of a loan made by a private lender and guaranteed by the state though a Financial Development Corporation. An applicant must have suffered economic injury as a result of the disaster. "Economic injury" means an economic loss resulting in the inability of a business to meet its obligations and to pay its ordinary and necessary operating expenses, including production losses. In addition, an applicant must not be able to obtain credit on their own.

For non-agricultural small businesses, an applicant must qualify and apply for disaster assistance from the U. S. Small Business Administration (SBA). Assistance through the Small Business Disaster Assistance Loan Guarantee Program would be in the form of a “bridge” loan guarantee to provide the borrower with working capital until its SBA financing is approved.

Guarantee Amount: Normally 80 to 95 percent of the loan is guaranteed, with the guaranteed portion of the loan not exceeding $500,000 for agricultural enterprises, and $200,000 for other small businesses.

Eligible Uses: Economic costs related to the disaster. For agricultural enterprises, an applicant may apply for a loan to sustain production equal to one year of normal operational costs.

Loan Term: For agricultural enterprises, the term may be a maximum of seven years; for other small businesses the term of a bridge loan may be up to 12 months.

Interest Rates and Fees: Interest rates range from Prime to Prime plus three percent, depending upon the amount of the loan that is guaranteed. Lenders may charge loan fees. For agricultural enterprises, the Financial Development Corporation may charge a guarantee fee of up to one percent of the guarantee amount.

Collateral: Collateral is typically required, but each loan is tailored to meet the borrower’s financial situation.

How to Apply: For assistance related to economic damage caused by closure of the 2008 offshore salmon fishing season, please contact the nearest Financial Development Corporation:

For More Information: Contact Glenn Stober at (916) 324-9538, or at gstober@bth.ca.gov.