Disaster recovery grants for small business: how they work

A disaster recovery grant is money that doesn’t have to be paid back — which makes it the first thing any affected business should look for. It’s also the most misunderstood part of disaster help. Owners hear a figure on the news, assume it applies to them, and are surprised to find it’s capped, conditional, event-specific and often paid after they’ve spent the money.

Here’s how these grants generally work, so you can apply with your eyes open.

Where do disaster recovery grants come from?

Most are funded under the Disaster Recovery Funding Arrangements (DRFA), a cost-sharing framework between the Australian Government and the states and territories. DisasterAssist describes the assistance available to businesses under the DRFA as including clean-up and recovery grants to help businesses, including farm businesses, resume trading as soon as possible.

State agencies deliver them. In NSW that has recently meant Service NSW and the NSW Rural Assistance Authority; in Queensland, QRIDA; in Victoria, Business Victoria. The Queensland Reconstruction Authority notes that Category C and Category D assistance is for exceptional circumstances in severely affected communities — which is where many small business recovery grants sit.

What do recovery grants usually cover?

Guidelines differ, but the common thread is getting the business trading again:

Usually covered	Usually not covered
Clean-up and removal of debris	Lost profit or income
Repairs to premises and equipment	Costs already paid by insurance
Replacing damaged stock or materials	General business debts
Professional advice for recovery	Costs outside the program period
Reopening costs	Businesses outside declared areas

The cap matters. business.gov.au’s list has recently included grants of up to $25,000 for small businesses and not-for-profits through Service NSW after the May 2025 NSW East Coast severe weather. That’s meaningful help — and for many businesses, well short of the full cost of recovery.

Who is usually eligible?

Each program sets its own tests, but common ones include:

• the business was operating in a declared local government area at the time of the event
• it suffered direct damage (some programs also accept certain indirect losses)
• it has an ABN and meets a small-business size test
• it intends to re-establish in the area
• it can provide evidence of costs, and details of any insurance

business.gov.au recommends keeping your Australian Business Register details current with a street address, not a PO box, to help show eligibility. Start with our guide to finding disaster help.

What evidence will you need?

Get this together from day one — it’s much harder to rebuild later:

1. Photos and video of the damage, dated
2. A loss and damage list
3. Quotes, tax invoices and receipts
4. Proof of address and trading (lease, rates notice, utility bills, BAS)
5. Insurance policy and claim outcome
6. Bank details matching the business name

If a grant reimburses costs you’ve already paid, you’ll need a way to pay them first. If that’s the sticking point, you can ask about bridging it — no credit check is involved in the first enquiry.

Are recovery grants taxable?

The ATO’s position is clear: government disaster support grants for businesses are assessable income unless they appear on its list of non-assessable non-exempt (NANE) payments and you meet the criteria. If your grant isn’t on the list, include it in your tax return. Spending the grant on business costs follows the normal deduction rules — for example, replacement stock or repairs to business premises. Our page on whether disaster grants are taxable goes further.

How do grants fit into a recovery plan?

Think of a grant as one layer:

Layer	Role
Insurance	The main source for insured losses
Recovery grant	Clean-up, repairs and reopening — often uninsured costs
Concessional loan	Low-cost borrowing where activated, slower to approve
ATO, bank and landlord hardship	Buys time on existing obligations
Recovery funding	Covers timing gaps and whatever is left

Illustrative example only: a hairdresser in a declared flood area needs new chairs, basins and flooring. Insurance covers the fit-out but not the flooring upgrade the landlord requires; a recovery grant covers part of it once receipts are provided. A short loan pays the tradespeople up front and is partly repaid when the grant arrives.

How do you write a strong grant application?

Assessors process many applications quickly after a big event. Make yours easy to approve:

• Answer every question, even if the answer is “not applicable”.
• Match your costs to the eligible categories in the guidelines, using the same words.
• Label every attachment clearly: “Quote — roof repair”, “Invoice — skip bin hire”.
• Show your address and trading status with documents that match your ABR record.
• Explain insurance simply: what’s claimed, what’s covered, what isn’t.
• Keep a copy of everything you submit, and note the reference number.

If you get stuck, the Small Business Debt Helpline (1800 413 828) offers free help with finding and applying for grants.

Need to fund the gap while you wait?

Apply for every grant you’re eligible for. If the cap or the timing leaves a hole, we can look at bridging it.

An enquiry doesn’t touch your credit file; that only comes up if you choose to go ahead. You won’t get a wave of calls from lenders you’ve never heard of, because we don’t pass enquiries around. A specialist looks at your situation properly before picking up the phone.

Accurate details on the form (amount, purpose, state, any property) are what let us match you properly on that first call. Tell us what happened.