Magazine article Partners in Community and Economic Development

Help for Small Business in the Wake of the Storm: Small Business Recovery after a Natural Disaster Is a Slow and Difficult Process. This Proved Particularly True in Florida and Other Affected Areas of the Sixth District in the Wake of This Summer's Destructive Hurricane Season

Magazine article Partners in Community and Economic Development

Help for Small Business in the Wake of the Storm: Small Business Recovery after a Natural Disaster Is a Slow and Difficult Process. This Proved Particularly True in Florida and Other Affected Areas of the Sixth District in the Wake of This Summer's Destructive Hurricane Season

Article excerpt

Fortunately, the lessons learned from previous natural disasters can be useful for small business owners as they access resources for rebuilding now and adopt loss-mitigation strategies for the future.

An immediate issue for a damaged business is loss of cash flow. Affected businesses may have to shut down operations for weeks or even months. The resulting loss of revenue makes it difficult for a small business to keep staff on the payroll. Even if a business is ready to open again following a disaster, loss of power and stranded suppliers may make it impossible to resume operation.

Furthermore, since most small business owners live and work in the same community, they may also have to deal with personal losses.

Hurricane Andrew provided many lessons to relief experts in 1992. First, assistance efforts need to start immediately, and it should be clear to the community that resources are sufficient to sustain the recovery. Furthermore, both business owners and residents need a constant stream of information and guidance about how to deal with their losses.

All of this activity directed toward recovery fosters a sense of hope in the community so they can focus on rebuilding rather than on all that. was lost.

Planning ahead for the unexpected

Planning ahead improves the recovery process following a disaster. Emergency management teams work before, during, and after large disasters. Businesses need to adopt the same philosophy by rotating an emergency plan that identifies resources to protect its assets from loss--even in a recovery.

Many businesses think that having insurance is all the preparation they need. However, it is far more likely for businesses to be under-insured and to lack coverage for certain types of damages. Taking some time, at least once a year to make sure that critical assets are protected is important.

Although insurance will be the first line of defense in covering the physical damages to the business, there are other damages that will take weeks or months to settle in addition to those that fail outside the realm of insurance. For example, insurance cannot replace employees who move away to find housing. It also will not help with impassable roads, lost customers, or wealth erosion in the community.

Accessing public and private resources

When a business's insurance and its own savings are not enough for rebuilding, help must be sought from outside. Public and private resources are available to relieve devastated areas, but businesses must take the initiative to seek help.

Federal resources are most often mentioned in relation to relief efforts; however, these resources are the most overlooked and under-utilized. Many residents and small business owners either do not realize that they are eligible for relief or wait for it to come to them without making a request to an agency.

Government disaster relief resources for small businesses and employees

Federal assistance for communities dealing with disasters comes from the Federal Emergency Management Agency (FEMA). FEMA directs three general types of programs: individual assistance, public assistance, and hazard mitigation. These federal relief programs target uninsured and under-insured losses, both to individuals and to businesses. FEMA also helps local governments replace or repair public property, such as traffic lights, parks, or schools.

Federal assistance is offered through both loans and grants. Low interest, long-term loans are the most common form of support for businesses. These loans are available through the Small Business Administration (SBA), which acts as a direct lender. The SBA usually only offers guarantees on small business loans made by lenders using SBA guidelines, but it makes exceptions after a natural disaster to expedite relief efforts.

John Dunn, assistant director of development, says that the SBA extends more flexibility in its business-size eligibility and underwriting standards to provide disaster relief. …

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