• Slug: News-Small Business Fire Relief, 1100 words.
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By Zach Bradshaw
Cronkite News

LOS ANGELES – In the aftermath of the devastating Palisades and Eaton fires in Southern California, experts predict many will never return to the communities they once called home.

Because of this, the U.S. Small Business Administration is stepping up to provide a bevy of relief. From emergency funds to low-interest loans, government officials are offering support for the thousands of individuals to rebuild what was destroyed.

But some wounds never heal. Despite the extensive measures, the reality for some business owners and homeowners is that no amount of money can restore what was lost.

“I can imagine a lot of these businesses will decide not to rebuild,” said Nicholas B. Irwin, research director at the Lied Center for Real Estate and associate professor of economics at the University of Las Vegas. “It’s going to take a long time to rebuild these houses, and if you just want to saddle up and move somewhere else, I can see that being attractive for many people.”

While there’s no current total of how much money was lost when the fires ripped through homes, businesses and structures across the San Fernando Valley, but early estimates are between $28 billion and $250 billion.

Loans might not be enough to encourage small businesses and homeowners to return to the affected areas, even when coupled with fundraisers or relief funds, Irwin said.

“The costs are going to be absolutely enormous … and they’ve never had to rebuild after something like this,” Irwin said. “From an economic standpoint, rebuilding may be impossible for many folks.”

Irwin spoke of three distinct reasons homeowners and business owners may be discouraged from ever returning or rebuilding in the area.

First, there’s the insurance factor.

“The insurance companies, at the end of day, are for-profit companies, and they are going to try to minimize their payouts,” Irwin said. He expects most homeowners and business owners who did have insurance will receive a fraction of what all their items and buildings were worth, especially since many people don’t keep inventories of every single item they own.

Then, there’s the land factor. While the physical buildings where homes and businesses were located may not have been worth very much, it’s the ground underneath them that is so coveted, Irwin said.

For that reason, he expects developers to offer landowners hefty amounts of money for their properties. Since many people lost their homes, Irwin speculates they might find it more difficult to rebuild and restart than purchase new homes with the money they obtain from selling.

This could lead to developers giving low-ball offers in the short-term, a real-estate phenomenon Irwin referenced called “salience effects.”

“In the immediate aftermath of a disaster, prices of homes will weaken and that will apply to the land as well. They go down as people are more aware of the risk,” Irwin said. “So I would imagine the land may sell for less than what it would on the open market prior to it.”

That amount of money, however small, is often enticing for people who have just lost their homes and possessions, he said. For many of the property owners, it may be smarter in the short term to take the money and run.

There’s also a price to rebuilding.

“Rebuilding can be very expensive because you’re going to be competing with a lot of other people that want to rebuild,” Irwin said. “It’s going to drive up costs because there’s only so many framers and roofers and other contractors who could work on these properties.”

The combination of factors may leave many people wondering whether moving back is even worth it. Economically, those affected are already in the red and moving back might only make it worse.

Irwin, though not a real estate expert, anticipates surrounding states will see an uptick in population, especially in his city, Las Vegas.

That’s why the SBA is partnering with the Santa Monica Chamber of Commerce to open temporary Business Recovery Centers, where business owners and homeowners can meet with specialists to apply for disaster loans and access recovery resources.

“Disasters don’t know city boundaries, so the impact is felt all across LA,” said Judy Kruger, president of the Santa Monica Chamber of Commerce. “Santa Monica is a shining light. … All the businesses are really engaged in helping those who have lost. They’re getting the resources they need.”

The recovery center in downtown Santa Monica was set up so those affected by the nearby Palisades Fire could easily access recovery funds. The SBA offers low-interest loans that can be used to rebuild homes and businesses, pay for long-term Airbnb or hotel stays, and finance business operating expenses.

“These loans are very different than anything else you can get in the private market or from a bank loan because the interest rates are very low,” said Africa Rosas, an SBA spokesperson.

Small business owners, private nonprofits, homeowners and renters for small businesses can receive up to $2 million in combined disaster loans, while homeowners can receive up to $500,000.

The interest rates for the homeowner loans can be as low as 2.56%, and 3.56% for nonprofits. Loans for small businesses can be as low as 4%. The SBA also doesn’t reject applications because of low credit scores.

“This is something that is historic for the LA area, but we are here to help,” Rosas said. “We have all the resources. We will stay here for as long as they need it.”

The SBA is especially concerned with helping those who were un- or under-insured, according to agency spokesperson Romuald Jovero. Considering a large number of homeowners and business owners were dropped by their insurance companies in 2024, the SBA said it’s especially important to distribute funds to those who wouldn’t otherwise get them.

“We highly encourage those that suffered damages or were affected by the wildfires to visit one of our disaster relocation centers,” Jovero said. “The interest rate is definitely the lowest you’ll get in the market.”

Rosas said the SBA understands many people will opt to leave Los Angeles, but the organization’s efforts remain.

“For many, moving isn’t an option, and it’s those people that are in the recovery stage of this disaster,” Rosas said. “The goal is to help small businesses and homeowners to recover and be in the same way they were before the disaster happened.”

Small business owners, homeowners and property owners who would like to find a space set up by the SBA to help with loan and financing assistance can click here.

Learn more about SBA’s physical damage loans here.

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