Natural disasters can be devastating for businesses of any size, but especially small operations, and many in the Northeast are still feeling the effects of 2012’s Superstorm Sandy. The Federal Reserve Bank of New York recently released the results of its small business survey in New York, Connecticut and New Jersey conducted online from Oct. 10 to Dec. 31.
Twenty-two percent of respondents said they suffered business losses of more than $100,000, and 61 percent reported operating at a profit or just breaking even. These numbers are even more dire considering that only businesses that survived were polled – many weren’t able to reopen after the storm due to extensive damage.
“Your costs to put the business back together don’t go down, they don’t disappear,” small business owner P.J. Whelan said to The Associated Press. “You still owe your creditors. You still owe your contractors.”
The survey found that 86 percent of business owners who suffered losses reported needing more financing to get back on their feet. Thirty nine percent said they will apply for credit in the first half of this year. Forty four percent said they applied for credit in the first half of 2013, but only 47 were approved.
Many respondents also reported not having insurance to cover the costs of damage and only minimal flood coverage. More than half paid for storm related expenses out of pocket.
Katrina had similar effect
Businesses everywhere should consider the potential impact natural disasters could have on their operations, but especially those in coastal areas. A year after it made landfall in 2005, the federal government’s Bureau of Labor Statistics released a report detailing Hurricane Katrina’s economic impact.
Nearly 100,000 jobs were lost in the Louisiana city 10 months after the storm hit, and lost wages amounted to about $2.9 billion – with about 76 percent of that felt in the private sector. New Orleans’ three main industries – tourism, port operations and education – were all devastated by the hurricane, which flooded about 80 percent of the city and displaced many residents, some of whom have never returned.
Small business owners who are still struggling to make ends meet can seek out working capital from nontraditional lenders like National Funding. These creditors make it easier for applicants to qualify for loans and offer flexible repayment terms.