Disaster Recovery for Small Businesses
In the immediate aftermath of a natural disaster, many small businesses will be powerfully impacted by damaged storefronts, lost inventory and equipment, downtime and the costs to recover. Rebuilding and mitigating losses is a tough, emotionally draining and worrisome season.
The first steps are to call your insurance companies (ASAP) to determine your coverage, assess damages and estimated losses and create a budget for rebuilding and replacement costs. Get the full picture of the impact on your company, so that you know what is needed to recover and can anticipate near-term and long-term financial needs and constraints.
Fortunately, there are resources and support programs to help get you through the recovery stage. Here are some of the U.S.-based resources and steps to take to help keep you operational, get you up and running as quickly as possible or to sustain you through lean times:
There are several U.S. and state-based programs that can help your business survive a disaster. First, fill out the questionnaire at DisasterAssistance.gov to determine what assistance programs may be available to you personally and professionally. Next, consider tapping into these federal agencies:
- FEMA: FEMA does not offer direct grant support for businesses (though they should for your residential home). However, they can help direct you to other resources and programs that support disaster-affected businesses. The FEMA Helpline number is 1–800–621–3362.
- Small Business Administration: The SBA offers low-interest disaster loans to small businesses and nonprofits in a declared disaster area, which can be used to repair or replace the following items: real estate, personal property, machinery and equipment, inventory and business assets. The loans can go up to $2 million. In some cases, the SBA may also be able to refinance all or part of a prior mortgage. Shavonnah Roberts Scheriber, founder of SNR Creative, wrote more info on SBA loans here. Apply for the SBA loan online here. If you want to talk to a SBA rep, you can reach out via 1–800–659–2955.
It can take some time to receive funds, so brace yourself for some red tape and some sitting on your hands. If you need immediate assistance, contact 211 for more information about United Way disaster and recovery resources available in your area.
If your business has insurance coverage, contact your carrier ASAP. Documentation is the name of the game here, so be sure you’re taking photos, tracking down financial and legal records, keeping lists of damages and repair estimates and staying in close touch with your adjuster.
Don’t be afraid to be in frequent touch with your adjuster but remember to be nice to him/her, too. This article from the Insurance Information Institute has a strong list of steps to take when preparing for your adjuster.
Unfortunately, bills and mortgages payments are not automatically erased or deferred during a disaster. Your creditors may be willing to work with you to suspend payments with no penalty for a specific length of time — usually a few months. Some tips to get this done:
- Call your credit card companies, mortgage lenders and/or vendors, as soon as possible, to request a payment suspension, if needed.
- Get the new agreement in writing and track correspondence with each creditor.
- Make sure that you understand the terms of the suspension. It is possible that the creditor will expect a balloon payment for all deferred installments at the end of the deferral period.
- Many banks are also waiving late fees and overdraft fees for a couple of weeks. Be sure you check with your bank though.
On the flip side, if you owe money to a small business, Sarah Schimmer reminded us that paying them on-time is critical revenue during recovery.
For affected businesses and individuals, the IRS has taken some steps to relieve some of the burden:
- If you extended your 2016 business or personal tax return, the new due date is January 31, 2018.
- You can defer personal and business estimated tax payments for September 15, December 15 and January 15 until January 31, 2018.
- Business payroll tax deposits that were due between August 23 and September 6 can be postponed until September 7, 2017.
- There’s also a chance that the IRS will waive the 10% Adjusted Gross Income reduction for theft and casualty deductions related to Harvey. Be sure to save your receipts for the insurance deductible and non-reimbursable out-of-pocket expenses related to theft and casualty.
If you’re business must be closed or you have limited operations, employees may be adversely impacted, as well. Here are a few things you need to know:
- Communicate frequently and transparently with your team.
- If possible, allow them to work from home and encourage flexibility, while they also deal with the disaster’s fallout.
- The Fair Standards Labor Act requires that you, as the business owner, continue to pay full-time exempt employees during the business’ closure. If you also employ hourly non-exempt employees, you are not required to pay them for hours not work, but you may consider offering as much of the lost wages as you can afford.
- Workers who have become unemployed may be eligible for the federal or state assistance programs. Information on the Texas Disaster Unemployment Assistance program is available here.
Your state bar association may have a disaster assistance program available to answer legal questions, particularly for low-income people. A list of all state and local bar associations is available here.
The State of Bar of Texas disaster site says, “The State Bar of Texas legal hotline — (800) 504–7030 — helps people find answers to basic legal questions and connects them with local legal aid providers following declared disasters. The toll-free hotline — answered in English, Spanish, and Vietnamese — is designed to connect low-income people affected by a disaster with legal aid providers in their area who can help with such issues as replacing lost documents, insurance questions, landlord-tenant problems, and consumer protection issues such as price-gouging and avoiding contractor scams in the rebuilding process.” A list of free legal clinics and other resources is also available on their site.
Getting Online and Back to Work
If you’re office was destroyed but electricity and roads are operational in your area, you’ll want to get up and running to keep income flow as steady as possible and to limit the revenue hit.
- I haven’t been able to find a computer lending or free replacement service yet, so you’re best bet may be to crowdsource a loaner laptop from friends and community members.
- Backup any cloud-based files and print out critical documents.
- Check with your local co-working spaces to see if they are offering free desks, wifi, etc. For example, Station Houston has an open house policy through at least the end of this week. Capital Factory and dozens of other spaces in Austin have opened their doors to affected entrepreneurs. DEC in Dallas and Propeller in New Orleans are also offering workspace to those displaced.
- Many coffee shops will welcome you with open arms for wifi and outlets.
This certainly isn’t a comprehensive list of all available resources or tips, so we will keep updating as more information becomes available. Please suggest any additional ideas in the comments section.
EDITOR’S NOTE: Alice and Circular Board were born in Houston, Texas, and while she is being raised in San Francisco, California, Houston will always be our hometown. For those impacted by Hurricane Harvey, here are a few additional resources and ways to support the recovery:
- Station Houston has aggregated a comprehensive list of emergency resources for rescue, relief and recovery.
- Shelter locations, as well as volunteer and supply needs, are being crowdsourced and updated via Sketch City here.
- Preparing for Action is also publishing ways to volunteer and donate.
- Consider a donation to Houston Mayor Sylvester Turner’s recovery fund at ghcf.org.