How to Pay for Damages Caused By Civil Unrest

As nationwide protests against the killing of Black Americans by police engulfed the country this summer, many small businesses unintentionally found themselves in the crosshairs of conflict. Pockets of looting and destruction left behind shops with smashed windows and damaged merchandise, and owners wondering about who would foot the bill. 

It’s unclear just how extensive the losses are at present. A preliminary estimate from insurance industry analysts as of June 4, put the range of covered losses between $500 million and $900 million. Should things continue at this pace, this year’s incidents of civil unrest could rival the Rodney King riots, which occurred from April 29 through May 4, 1992, in Los Angeles. The event caused $775 million in insured losses or about $1.4 billion in 2020 dollars, according to Property Claim Services, a unit of Jersey City, New Jersey-based data analytics firm Verisk Analytics.

Even if a protest doesn’t turn violent, demonstrations themselves can take their toll on U.S. businesses. Case in point: in July, after several nights of protests, which were mostly peaceful, downtown Portland, Oregon, turned into a no-go zone as protests monopolized parts of the city and shop owners preemptively boarded up store windows and doors. The pandemic was also to blame, but abandoned streets didn’t help matters.

While riot-inflicted damage to a physical structure–like a business’ storefront–is typically covered under a company’s business owners policy, or a BOP, each claim is different and insurers may not cover all damages. Some businesses may not have been insured to begin with. Help is available, however: The U.S. Small Business Administration is offering low-interest loan programs to businesses with collateral damage–physical or otherwise.

Businesses that need to rebuild and are located in seven states may now access two types of disaster loans through the U.S. Small Business Administration. The loans–dubbed the Physical Disaster Loan and the Economic Injury Disaster Loan (EIDL)–are capped at $2 million, come with 30-year repayment terms, and interest rates as low as three percent. The SBA notes that loan amounts and terms are set by the organization and are based on each applicant’s financial condition. The loans can be used for working capital, daily operating expenses, and especially in the case of civil unrest, replace damaged property.

The latter of the two programs is unrelated to the Cares Act, which allowed companies impacted by the pandemic to seek federal aid, regardless of whether they are based in a declared disaster zone. Businesses need not to have suffered any physical property damage to access the EIDL. What’s more, even if your business already received a Cares Act EIDL, you can apply for this loan. 

To be eligible for either program, companies must meet SBA size guidelines and have a location in a SBA-declared disaster area. Additional credit standards may apply. Below is a list of affected areas, along with application deadlines. 

Counties affected: Philadelphia, Bucks, Delaware, and Montgomery

Date of damages: May 30 through June 8, 2020

Type of loan: Physical Disaster Loan, or EIDL

The filing deadline for physical property damage is Oct. 6, 2020. The deadline to return economic injury applications is May 7, 2021.

Counties: Burlington, Camden, and Gloucester

Date of damages: May 30 through June 8, 2020

Type of loan: Physical Disaster Loan, or EIDL

The filing deadline for physical property damage is Oct. 6, 2020. The deadline to return economic injury applications is May 7, 2021.

Counties affected: Hennepin, Anoka, Carver, Dakota, Ramsey, Scott, Sherburne, and Wright

Date of damages: May 27 through June 8, 2020

Type of loan: Physical Disaster Loan, or EIDL

The filing deadline for physical property damage is Oct. 2, 2020. The deadline to return economic injury applications is May 3, 2021.

Counties affected: Charleston, Berkeley, Colleton, Dorchester, and Georgetown

Date of damages: May 28 through June 30, 2020

Type of loan: Economic Injury Disaster Loans (EIDLs)

The deadline to return economic injury applications is May 17, 2021.

Counties affected: Cook, Dupage, Kane, Lake, Mchenry, and Will counties and Lake County, Indiana

Date of damages: May 27 through June 8, 2020

The filing deadline for physical property damage was Aug. 24, 2020. The deadline to return economic injury applications is March 23, 2021.

Counties: Alameda, Los Angeles, Contra Costa, Kern, Orange, San Bernardino, San Francisco, San Joaquin, San Mateo, Santa Clara, Stanislaus, Ventura,

Date of damages: May 27 through June 8, 2020

Type of loan: Physical Loan, or EIDL

The deadline to apply for property damage was September 16, 2020. The deadline to apply for economic injury is March 17, 2021.

Counties: Sacramento, San Diego Amador, Contra Costa, El Dorado, Imperial, Orange, Placer, Riverside, San Joaquin, Solano, Sutter, and Yolo counties

Date of damages: May 27 through June 8, 2020

The deadline to apply for economic injury is April 7, 2021.

Counties: King, Chelan, Kitsap, Kittitas, Pierce, Snohomish, and Yakima

Date of damages: May 26 – ongoing

The deadline to apply for economic injury is June 16, 2021.