Small businesses face slow and difficult recovery from Ida
NEW YORK – Small businesses affected by Hurricane Ida face a slow and daunting recovery as they grapple with storm damage, a lack of electricity, water and internet service and a limited ability to communicate with clients or clients.
This is yet another blow for business owners who have faced the disruption caused by the coronavirus pandemic for more than a year.
“Our fear is that many companies may not be able to recover, given how much they have been through in the past 18 months,” said David Chase, vice president of outreach for the Small Business Majority advocacy group. .
More than a million homes and businesses in Louisiana and Mississippi were left without power as Ida went from Sunday to Monday morning. Officials said some areas could be without power for weeks.
Experts say there are several ways for businesses to start recovering from a disaster. First and foremost, make sure all staff and their families are safe. Then consider low interest government loans for natural disasters and insurance claims. The process could drag on for weeks or more.
“It’s a big, slow moving storm hitting a number of states,” said Todd McCracken, president of the National Small Business Association. “The higher the number of complaints, the slower the response. “
For Bill Rau, owner of MS Rau, an antique firm that has a gallery on Royal Street in the French Quarter of New Orleans, the biggest obstacle to recovery is not the damage to the physical location. . Instead, it is the fact that without electricity and water, no one can live sustainably in the city. He said most of his 62 employees in New Orleans had evacuated, spread across 11 states.
The gallery survived Ida with minor leaks. In 2005, the warehouse sustained millions of dollars in damage from Hurricane Katrina.
Rau says his employees are “safe and sound.” He evacuated to Bentonville, Arkansas, then New York. He had hoped to return on Tuesday, but is now resigned to wait for those in power to give the green light.
During Katrina, Rau handled up to 14 adjusters. But he hasn’t even started to wonder if he’ll apply for disaster relief this time around.
“It’s far too early to think about it,” he said.
As efforts to assess the damage are only beginning, an early estimate from Fitch Ratings indicates that Ida will cost insurance companies between $ 15 billion and $ 25 billion. That’s well below the record $ 65 billion in insured losses caused by Hurricane Katrina in 2005. But Ida will likely overtake the winter storm dubbed Uri that struck in February as the costliest storm of 2021.
Electricity and the internet are lifesavers for small businesses, said David Lewis, CEO of HR services company Operations Inc. Ideally, businesses had a hurricane plan and sent emails to the company. ‘advance, telling customers how to reach the company in the event of a power outage. .
Businesses that haven’t notified customers should try contacting them, by transferring a business phone to a cell phone, for example, or using a cell phone as a hotspot for an Internet connection. Although they had some issues with their mobile networks, Verizon, AT&T and T-Mobile all said they would offer customers in affected areas free calls, texts and data throughout the week.
“If you are able to have connectivity, you are often able to provide some level of continuity to customers,” Lewis said.
Business owners should also take a close look at their insurance policies to find out exactly what is covered. In the aftermath of Storm Sandy, it became apparent that some insurers were covering storm damage, but not wind damage, for example. Alternatively, homeowners can be covered for certain things they don’t realize.
Alex Contreras, director of preparedness, communications and coordination for the United States Small Business Administration’s Disaster Assistance Office, said areas affected by Hurricane Ida have been declared areas disaster, so businesses of all sizes can apply for physical disaster loans as well as working capital. ready. The maximum amount is $ 2 million for the two types of loans combined. The interest rate for business loans is around 2.9% and the money can be repaid over 30 years.
Contreras said businesses should apply for the loans as soon as they can. Those who wait could receive smaller-than-expected settlements from insurance companies and then find themselves in immediate need of cash. At that point, it may be too late for a loan, which takes around 16 days to process, depending on past disasters.
There is an online portal for businesses to apply and the SBA will have staff to assist the Federal Emergency Management Agency and state recovery efforts. Contreras says businesses aren’t required to take a loan but might take comfort in knowing it’s available if needed.
McCracken of the NSBA also advised homeowners to take out the largest loan they are eligible for because the loan process takes time and other issues could arise.
“Unfortunately, there is no quick fix, it’s a tough situation for everyone,” McCracken said.
Chase, of the majority of small businesses, also recommends that businesses look to funds from community development financial institutions. They focus on providing loans to underserved communities that the big banks might turn down. The loans are low interest rate but also low dollar amounts.
“A lot of small businesses may only need $ 20,000 or $ 50,000,” Chase said. “CDFIs may be an option if they don’t get a loan from a major bank or if they are having trouble getting loans from the SBA.”
Like this article ? Access all of our great content with a monthly subscription. Start your subscription here.