Small Business Disaster Assistance

When a disaster hits, it affects the entire community. A small business is especially vulnerable because it does not necessarily have the resources to respond to a disaster or to catastrophic damage. In fact, it is reported that approximately 25 percent of small businesses that close due to a disaster never reopen, and 40 percent of small businesses hit directly by a serious natural disaster do not recover. This is true regardless of what kind of disaster is involved, from a hurricane, a tornado, an earthquake, flooding, winter storms, or even civil unrest or terrorism. Small businesses experience a number of different problems when a disaster hits. As expected, there is the physical damage that results from a disaster, which is a more serious issue when the business is not insured or is underinsured for the damage. However, the most serious and critical problem for small businesses is the loss of profits due to closure or loss of customers as a result of a disaster. Sixty-two percent of businesses report the loss of sales as their main problem after a disaster. Unfortunately, a large percent of businesses does not carry insurance to cover continuing operations. Fortunately, some economic assistance is available to small businesses that have suffered losses due to disasters. Immediate disaster assistance is led by state governments, which is complemented with federal assistance for disasters that qualify. Federal disaster assistance, which is generally the same regardless of the location and form of a disaster, is discussed first in the Article. This is followed by a discussion of state disaster assistance, using the state of Florida to exemplify two approaches taken by state government to provide small-business disaster relief