Bipartisan Legislation to Protect Small Businesses from Natural Disasters

U.S. Senators Marco Rubio (R-FL), Angus King (ME-I), Ben Cardin (D-MD), John Kennedy (R-LA), Ron Wyden (D-OR), Susan Collins (R-ME) and Joni Ernst (R-IA) introduced the Providing Resources for Emergency Preparedness and Resilient Enterprises (PREPARE) Act. This bipartisan legislation, which matches companion legislation in the U.S. House of Representatives, would allow the Small Business Administration to make low-interest, fixed rate loans of up to $500,000 to small businesses to invest in their properties to protect their facilities, real estate and contents from natural disasters.

“Recreational boating businesses – most of which are small and family owned operations – are among the most susceptible to the devastation of erosion, rising water levels and many additional effects of climate change,” said Nicole Vasilaros, senior vice president of government and legal affairs at the National Marine Manufacturers Association. “Thanks to the leadership of Senator Rubio, Senator King, Senator Cardin, Senator Kennedy, Senator Ernst, Senator Wyden, and Senator Collins, we are one step closer to passing the PREPARE Act and providing coastal communities with the resources they need to invest in climate-resilient infrastructure.”

According to FEMA, roughly 40-60 percent of small businesses never reopen following a disaster. Research shows that every $1 the government spends on disaster mitigation, such as improving existing infrastructure or elevating homes and businesses, saves taxpayers an average of $6—something that is particularly important at a time when the economic impact of disasters has cost the U.S. over $800 Billion in the last decade.

A study by the MRAA and the Association of Marina Industries found that marine businesses need significant funding to protect from flooding, requiring an average of $260,000 to invest in projects like elevating buildings, bulkheads, constructing flood barriers or levees, dry and wet floodproofing, yard regrading, and sewer back up protections.

“The PREPARE Act would allow small businesses the opportunity to invest in mitigation before a disaster strikes,” Chairman Rubio said. “Investing in disaster mitigation on the front end saves business’, as well as taxpayers’, dollars, while reducing potential risks to property. I am proud to introduce this bipartisan, bicameral legislation that would improve the SBA’s previous program and allow businesses to be more prepared and more resilient in the future.”

“If we didn’t already know before, the coronavirus pandemic further proves that it’s much better to prepare for a potentially catastrophic disaster rather than having to react to one after it’s happened,” Senator King said. “That’s why Senator Rubio and I are introducing this bill to help our small businesses and local governments strengthen their physical infrastructure in case of a flood – an issue particularly important to coastal small businesses in Maine given their proximity to the ocean. Now more than ever, small business owners around the nation need peace-of-mind, and this bill will support that by providing funding to prepare for natural disasters to minimize their impact rather than only paying after the fact.”

“Communities are enduring stronger and more frequent storms due to climate change, so it is now more important than ever for small businesses to be prepared,” Ranking Member Cardin said. “I am proud to join Chairman Rubio and Senator King to introduce the PREPARE Act, which will empower small businesses to build resilience to survive natural disasters by proactively investing in hazard mitigation efforts.”

“No one knows better than a Louisianian how to prepare for natural disasters, and this bill will make it easier for our small businesses to prevent loss,” Senator Kennedy said. “Too often, hardworking Americans are forced to weather storms first and federal bureaucracy second. I’m thankful to work with Sen. Rubio and colleagues to pass the PREPARE Act before another category four hurricane batters our state.”

“Between the derecho and recent flooding, natural disasters have caused significant challenges and economic harm to Iowa’s small businesses in recent years,” Senator Ernst said. “This bipartisan effort will help our small business owners access resources to protect their property from potential disasters, and help them avoid unforeseen expenses in the future.”

"With the rapidly growing climate crisis, our communities are being hit with bigger and more dangerous natural disasters,” Senator Wyden said. “In the West, this wildfire season has brought tragedy and destruction with massive infernos leveling entire communities to ash. "The federal government has an obligation to help our communities -- especially our small businesses and the hundreds of thousands of workers they employ -- mitigate the worst. Federal support for disaster preparation is especially important for states like my home state where small businesses are the backbone of the economy."

“Small businesses are the engine of our economy, but one disaster could quickly wipe out a small business that a family spent years or even generations to build,” Senator Collins said. “This bipartisan bill would provide low-interest loans to allow small businesses to protect their property from future disasters, limiting potential damage and helping them to recover more quickly when catastrophes strike.”

“The marina and boatyard industry often face the brunt of repeated natural disasters and flooding damages each year, which is why the PREPARE Act has wide-reaching benefits to our industry,” said Eric Kretsch, legislative and outreach coordinator for the Association of Marina Industries. “Small businesses constitute a large portion of our industry, and by nature, we’re located in vulnerable areas. The PREPARE Act will provide a key mechanism to marina and boatyard operators so they can upgrade their infrastructure and increase their resiliency to natural disasters.”

“The many businesses that make up the marine industry in South Florida are no strangers to the disastrous effects of damage and flooding being at the epicenter of many of the seasonal hurricanes and tropical storms,” said Lori Wheeler, vice president at the Marine Industries Association of South Florida. “Passing the PREPARE Act will provide the means for businesses so affected to prepare better and recover more quickly. We Senator Rubio, Senator King, Senator Cardin, Senator Kennedy, Senator Ernst, Senator Wyden, and Senator Collins for their work on this.”

The Senate’s PREPARE Act, which builds upon similar legislation (H.R. 7552) introduced by U.S. Representative Joseph Morelle (D-NY):

  • Creates an updated Pre-Disaster Mitigation Program for small business concerns to proactively take out a low-interest loan (up to $500,000) for the purpose of implementing mitigation measures to protect their property from future disaster related damage.
  • Authorizes $25 million annually (FY2021 to FY2025).
  • Tasks SBA with establishing and carrying out an advertising and outreach program related to pre-disaster mitigation.
  • Tasks SBA with issuing guidance to ensure borrowers purchase and maintain insurance coverage over the duration of the loan.
  • Requires SBA to conduct initial reporting and a program evaluation annually thereafter.
  • Increases, from 20 to 30 percent, the limit on existing SBA Physical Business Disaster Loans a borrower may use towards post-disaster mitigation.

If passed, this landmark legislation would significantly increase the tools that small business owners have at their disposal to prepare their facilities for natural disasters, and would be the only SBA program focused solely on small business disaster prevention. The PREPARE Act would also take steps to expand SBA’s Disaster Loan program to provide more resources for disaster mitigation when repairing and rebuilding private sector disaster losses.