Unfortunately, a natural disaster can happen at any time and cause substantial damage to your business property. Luckily business owners can turn to government agencies such as the SBA (Small Business Administration) for financial relief from storm damage. These type of financial loans have been available since before WWII and helped during major hurricane recovery across the nation.
After a major storm or hurricane, such as Harvey in 2017, the SBA receives thousands of loan applications from both residents and commercial concerns.
Even with this great government program in place, many small businesses do not survive and recover from major storm damage. Often this is because they do not have a disaster plan in place before the storm hits. In fact, recent studies discovered that up to 75% of small businesses have not done this type of critical storm damage planning.
According to FEMA, the Federal Emergency Management Agency, 40% of affected small businesses do not reopen after a natural disaster causes significate damage. This is because of the high cost of repairing damages.
When small businesses do reopen, over half of all owners say it takes at least three months to recover to their prior level of functionality and sales volume.
Here are three things you can do now to prepare your business to be emergency ready if ever a major storm hits your area.
- Know about Disaster Loan Options – Research your options for small business loans including the SBA loan programs. The two storm damage loan programs include one for physical damage sustained during a storm with a term of 30 years and an interest rate not to exceed 4%, and the other is for economic injuries. These loans go up to $2 million.
Also, the US Department of Agriculture loans may be an option for your company if you are a farmer or rancher and need to repair and rebuild after tornadoes, flooding or droughts.
If you do not qualify for the government programs you can get a working capital loan, read this review of Kabbage loans for short-term cash, or line of credit to cover the costs of repair. Don’t wait until the wind starts blowing, apply now to have a line of credit available if a storm hits. This way you will be able to rebuild right away without waiting for a long time for loan approval and access to funds.
- Save for that Rainy Day – Business experts suggest you have a minimum of 30 days worth of both fixed and variable expenses in a local and easily accessible bank. Use your cash flow statement to determine this number which includes salaries, rent, utilities, supplies and service payments.
- Contact your Banker Right After the Storm – Be sure to have your banker’s contact information in a safe location, away from the business, that will be safe after the storm so you can contact them and notify them of your storm damage. Often they will waive fees and defer your loan payments to help you recover from the natural disaster. Make this call your second one after you contact your insurance company first.