Kentucky Floods Small Business Loans

In this article:

  • Flooding in Kentucky
  • Local resources for small businesses impacted by floods
  • Financing options for businesses impacted by a disaster
  • Other small business loan options

Flooding in Kentucky

During the last week of July 2022, several severe thunderstorms were reported in Eastern Kentucky and central Appalachia causing heavy rain, flash flooding, and river flooding. The historic rainfall led to 44 deaths in the area and resulted in catastrophic damage to homes and deadly traveling conditions.

During the five-day storm, weather radars estimated a total of 16 inches of rainfall with up to 10 inches falling during a single 24-hour period between July 27th and July 28th. The counties impacted the most included Clay, Owsley, Knott, Leslie, and Letcher, although damage from the disaster seemed to spread throughout the entire state and into Virginia, including severe flooding, landslides, and mudslides in areas downstream of those counties. During periods of heavy rainfall, rescue teams were recovering residents by helicopter and swift boats as no road vehicles could access the areas. According to, “these rainfall totals over a five-day span were incredibly rare, with less than 1 in 1,000 chance of occurring.”

Now five months after the storm, as 2022 comes to an end, Kentucky residents and business owners are still dealing with the impact of floodwaters. According to one MSN reporter, primary concerns for residents currently include:

  • Limited federal and local financial assistance, despite above-average FEMA involvement
  • Damage to transportation-related infrastructures, like roadways and bridges
  • Limited resources to deal with property damage and displaced renters

A shocking number of homeowners are still living in temporary housing, like shelters, trailers, campers, and even tents. Countless small businesses have not been able to resume ordinary operations, and those that have are overwhelmed with the amount of restocking and repairing necessary to reopen. As if the floods were not devastating enough, they came at a time when so many businesses were still recovering from the impacts of the Coronavirus pandemic, the war in Ukraine, the previous year’s supply chain issues, and the devastating tornadoes that struck another part of the state just months prior.

Local resources for small businesses impacted by floods

There are several resources available for residents and small business owners that were impacted by what Governor Andy Beshear described as, “one of the most significant and deadly floods.” As with most declared disasters, government agencies at the local and federal levels as well as multiple nonprofit organizations worked to communicate available resources. The Commonwealth of Kentucky was officially declared a state of a major disaster by President Joe Biden on July 29, 2022, which meant federal funding would be allocated to aid in recovery efforts.

Business recovery centers

The U.S. Small Business Administration opened three SBA business recovery centers near disaster-impacted areas in Kentucky. The centers were opened at the following locations to provide assistance to small business owners interested in applying for disaster loans, federal assistance, or connecting with other business resources. 

  • Perry County – Opened August 3, 2022, at Hazard Community and Technical College
  • Clay County – Opened August 4, 2022, at Eastern Kentucky University – Manchester
  • Letcher County – Opened August 4, 2022, at Appalachian Groundswell

Local relief funds

Once declared a disaster, local government agencies and nonprofit organizations were able to apply for federal funding to help impacted residents and businesses. In addition to federal funds and grants made available, many organizations gathered donations nationally and within the communities affected.

Local disaster assistance

In addition to raising funds, local agencies, news outlets, social media campaigns, and unaffected businesses worked together to help affected individuals find access to help.

  • Telecommunications relay services – Governed by the Kentucky General Assembly, the Public Service Commission established a Telecommunications Relay Service (TRS) Program to communicate disaster-related information to deaf, hard-of-hearing, and speech-impaired individuals.
  • org – Crisis Cleanup is an organization that brought volunteers, local relief funds, and community groups together to help small business owners and homeowners rebuild following the severe flooding in Kentucky. Services they provide at no charge include muck-outs, roof tarps, debris removal, mold mitigation, and appliance removal.
  • Kentucky Power – Electrical safety is a must during flood recovery efforts. Kentucky Power provided free resources, including inspections and replacement meters to homes and businesses affected by the storm.

Income Tax Relief

Households and businesses affected by the flooding or storm damage in Kentucky were eligible for Income tax relief in the following counties: Breathitt, Casey, Clay, Cumberland, Floyd, Harlan, Johnson, Knott, Lee, Leslie, Letcher County, Lincoln, Magoffin, Martin, Owsley, Perry, Pike County, Powell County, Whitley, and Wolfe. Affected taxpayers that had filed for a valid extension with the IRS had until November 15, 2022, to file Kentucky tax returns for individual income tax, corporate income tax, and limited liability entity tax. In addition to those extensions, estimated income tax payments that were due on September 15, 2022, were also extended to a November 15th due date. 

Sales Tax Relief

To qualify for sales tax relief, the personal property damage, property loss, or business interruption had to occur in one of the 13 counties that received a federal disaster declaration. The relief included a refund of Kentucky sales and use tax paid for purchases of building materials used in recovery efforts.

Financing options for businesses impacted by a disaster

Beginning in August 2022, many federally funded financial assistance programs were implemented to help entrepreneurs affected by the Kentucky flooding rebuild. Disaster loans and financial assistance became available through the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA).

FEMA disaster assistance

FEMA made Kentucky a priority, once it was declared a disaster, for providing life-safety resources and disaster response services. Those impacted by damage from the storm are encouraged to apply for FEMA disaster assistance online at or by calling 800-621-3362. In addition to the major disaster declaration, FEMA set up several mobile registration centers to help small businesses and residents apply for federal disaster assistance and access other recovery resources.

The disaster recovery centers established by FEMA have now transitioned into Multi-Agency Resource Centers (MARCs) and are maintained by the commonwealth.  The purpose of a MARC is to be a one-stop shop for survivors to get any recovery help they need including, pending FEMA application updates, help filing applications and appeals, and providing disaster loan contacts.

SBA disaster loans

The U.S. small business administration (SBA) is a government agency that aids small business owners, including providing financial assistance and low-interest disaster loans. SBA loans offer low-interest rates, low down payments, and long repayment terms. Disaster loans are granted to businesses that operate within a declared disaster zone and some approved adjacent regions, including parts of Virginia during the Kentucky floods. To confirm if your area has been declared a disaster zone, check the SBA declaration status here.

  • Economic Injury Disaster Loans (EIDLs)EIDL loans are funding programs for small businesses, agricultural cooperatives, and most private for-profit or nonprofit organizations that have suffered economic losses as a result of a declared disaster. EIDL loan amounts of up to $2 million are available to eligible businesses in affected areas of Kentucky and approved based on the amount of documented economic injury to the business.
  • Physical Disaster Loans – Physical disaster loans cover the costs of repairing and replacing uninsured or underinsured property that was damaged by rainfall, flooding, landslides, or mudslides. The proceeds can be used to replace or repair commercial real estate, equipment, and inventory. These loans are issued for up to $2 million with repayment terms of up to 30 years. Unlike other types of business financing, the SBA may increase physical disaster loan amounts by up to 20% to protect the borrowers’ property against future damage.

How to apply for a disaster loan

Small businesses impacted by the July 2022 severe storms can apply for a disaster loan on the SBA’s secure website at or at an SBA disaster center. Before applying for any type of disaster assistance, business owners must first register with FEMA and obtain a registration number. Documentation that may be requested to complete the loan application process includes:

  • Contact information and proof of identification for borrowers, like a passport or social security card
  • FEMA registration number
  • Real estate deed or lease information
  • Insurance policy information
  • Business bank account details
  • Employer Identification Number (EIN), available from the IRS
  • List of damaged business assets

Other small business loan options

Physical and Economic Injury Disaster Loans can be an excellent financial resource for small business owners impacted by any natural disaster, but qualifying for the right loan and going through the approval process can take up to 90 days. It is also common for insurance claims to take more than six weeks until the covered business receives any reimbursements or recovery funding. Since getting operations back up and running is a priority for business owners, considering some faster funding loan options may be the quickest way to make repairs, rebuild working capital, and get back to work.

Term Loan

A term loan is a traditional type of loan where the borrower receives an approved amount of funding upfront and repays the loan according to the repayment terms. Business term loans can be secured or unsecured and may require a personal guarantee. Term loans can be approved for amounts up to $500,000 and require moderate creditworthiness of the business owner. The application process for a term loan can be done in person at a bank or online with online lenders, like Biz2Credit.

Business line of credit

A business line of credit is a type of revolving credit, like business credit cards, where the borrower is approved for a maximum credit limit and can withdraw cash whenever cash flow is low. The monthly payments for lines of credit include interest, which is only calculated on the total amount of funds withdrawn. Lines of credit are a great tool for business owners that can’t afford to wait for disaster loan proceeds or an insurance payout but do not have perfect credit. One property management company was able to secure a line of credit through Biz2Credit and get help repairing their business credit score at the same time.

Bottom Line

The rainfall that occurred in Kentucky in the summer of 2022 was unprecedented and left many small business owners in need of help to repair the damage. Local resources were made available to those affected through business recovery centers and local relief funds. Impacted entrepreneurs are encouraged to apply for FEMA disaster assistance and consider disaster loan options. Interested applicants may also want to explore faster funding loan options, like term loans offered by Biz2Credit, so they can resume ordinary operations as soon as possible.

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