Rebuilding your Small Business after a Natural Disaster

5 places to find the capital you need to get your business back up and running

It’s difficult enough to recover personally from a natural disaster, but when you also have a small business to rebuild, it can be frustrating, exhausting and downright painful. Approximately 40% of small businesses never reopen after a disaster, according to the Federal Emergency Management Agency (FEMA). In the wake of Hurricanes Harvey and Irma, many U.S. small business owners are trying to figure out how to recover their losses and move forward with plans to reopen. If your losses are not covered by insurance and/or funding from FEMA, here are five places to start that journey.

  1. Your current bank or lender. Call your primary bank or lender to let them know about your emergency situation. Most financial institutions will work with you on a plan to defer payments (and waive any late fees) until your business is operational again. They might even be able to extend your line of credit or provide additional resources - it can’t hurt to ask!
  2. Small Business Administration (SBA). If your business is located in a declared disaster area, you may be eligible for a low-interest loan from the SBA. The SBA offers two disaster loan programs: one for physical damages with interest rates at or below 4% and terms of up to 30 years, and the second to cover the small business operating expenses you would have been able to pay before disaster struck. Small businesses can borrow up to $2 million with these loans.
  3. State loans. State governments may also provide emergency business loans in the wake of natural disasters. Following Hurricane Irma, Florida Governor Rick Scott activated the Florida Small Business Emergency Bridge Loan Program to provide short-term, interest free loans to businesses impacted by the storm. “Under the [state] program, eligible small businesses in all 67 counties with two to 100 employees may apply for short-term, interest-free loans for $1,000 to $25,000 for 90 or 180-day terms,” according to the Small Business Development Center. The deadline to apply is October 31.
  4. Loan from a Community Development Financial Institution (CDFI) or mission-driven lender. Founded with the goal of supporting and investing in underserved communities, CDFIs are uniquely positioned to meet the lending needs of small businesses recovering from natural disasters. After Hurricane Sandy, CDFIs played a critical role in the rebuilding of homes and businesses. Now, there are CDFIs and mission-driven lenders in Florida, Louisiana and Texas with the infrastructure and relationships in place to offer support for small businesses. To apply for financing, small business owners can find a CDFI in their area by using our mission-driven lender locator map (TIP: Learn more about mission-driven lenders here.)
  5. Business line of credit. If you don’t qualify for a disaster loan or are unsure how much working capital you will need to recover, a business line of credit may be an option to consider. With a business line of credit, you can borrow up to a certain amount and pay interest only on the money accessed. You can draw and repay funds as needed, as long as you don’t exceed your credit limit. This financing option can have extremely high interest rates, so it’s important to do your homework, especially when using an online lender.

The recovery process can be long and overwhelming, but there are resources to help. Just knowing what’s available can feel like clearing the first hurdle on the way back to business as usual! Want to learn more about small business financing? Follow us on Twitter and Facebook for helpful tips, articles and real-life success stories.

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