In the wake of recent natural disasters, including the devastating Los Angeles wildfires and other significant emergencies, small businesses across the United States face unprecedented challenges. The Los Angeles wildfires, which started early January 2025, have resulted in at least 24 fatalities, forced nearly 180,000 evacuations, and destroyed or damaged more than 12,401 structures. In late September, 2024, Hurricane Helene ripped through the Southeast U.S. with what President Biden called “history-making” effects. 2024 was marked by a record 27 weather and climate disasters in the U.S., each causing over $1 billion in damages. Unfortunately, small businesses face significant challenges after a natural or unexpected disaster. While the impact of disaster varies on location, industry, and disaster level, there are a few key actions any small business can do to lessen the economic impacts of natural disaster and to acquire disaster loans.
The Key Steps for Small Business Recovery:
- Assess Physical Damage
- File Insurance Claims Promptly
- Apply for SBA Disaster Loans
- Develop a Business Continuity Plan
- Stay Informed About Federal Assistance
1. Assess Physical Damage to Property and Assets
Buildings, inventory, and equipment can be damaged or destroyed by high winds, floods, and debris associated with natural disaster. Businesses can often face delays or denials in their insurance claims, which delays cost repair or stretches the timeline for repairs.
To do: Assess the damage quickly and file insurance claims for your small business immediately. It can be difficult to remain levelheaded after disaster, but remember to take many photographs, keep records of the damage, and work with reputable contractors to get estimates for repairs or replacements.
2. File Claims & Apply for Loans Promptly
Forced closures during and after a disaster result in a significant loss of revenue, especially for businesses that rely on a daily sales cycle like restaurants, retail stores, and service-based companies. Transportation and logistics networks may be disrupted, making it difficult for businesses to receive supplies. And in dire cases of emergency, customers may leave an area temporarily or permanently, reducing the demand for services. The least of a business owner’s concern during a state of emergency is to gather their needed paperwork needed to make a claim.
To do:
- Initiate claims with your insurance provider as soon as possible to expedite the recovery process.
- Apply for SBA disaster loans or local assistance programs to cover lost income and operational costs while your business is closed.
- Safely maintaining business documents on Loan Mantra’s platform will allow a small business owner the ability to apply for assistance as soon as it is made available, even if they don’t have their paperwork in-hand. An owner can also promptly send their documents to their insurance company for quick response.
- Consider moving operations online or offering limited services to keep cash flow going and to maintain a customer base during unexpected times.
3. Develop a Business Continuity Plan
A Business Continuity Plan (BCP) is a strategic framework designed to help businesses prepare for, respond to, and recover from disruptive events such as natural disasters, cyberattacks, or other emergencies. Its primary goal is to minimize downtime, protect critical assets, and ensure the organization can continue operating during and after a disaster. For example, a natural disaster may disrupt the transportation of goods and supplies, causing delays or shortages. Power outages disrupt business operations, including online orders, point-of-sale systems, and production. And, during an emergency, employee absenteeism is high. Employees may be physically unable to report to work due to displacement from their homes or other transportation challenges. A BCP will help you account for these potential challenges and maintain a stripped-down version of your business during emergency.
To do: Identify potential threats and assess their impact on business operations. Then determine which operations are critical to maintain the business and the resources needed to support them. Outline the actions and communications needed to ensure safety, mitigate damage, and provide for ongoing operations.
4. Stay Informed About Federal Assistance
While disaster loans and grants are available, the application process can take time, and many businesses may face immediate cash flow problems while awaiting assistance. Likewise, it can be daunting to navigate the complex paperwork required for disaster loans, insurance claims or government aid.
To do: Reach out to a trusted financial advisor to help you sort through complex paperwork or claims. Financial experts, such as Loan Mantra, can help you determine the best economic recovery strategies and help you find assistance.
Types of Federal Assistance Available During Disaster
After a natural disaster like the Los Angeles Wildfires or Hurricane Helene, small businesses can access various U.S. Small Business Administration (SBA) Disaster Loans. The SBA offers disaster assistance through low-interest loans designed to help businesses repair or replace real estate, inventory, equipment, and other assets damaged or destroyed. Businesses of all sizes, private nonprofits, and homeowners or renters (depending on the loan type) may apply.
Applications are typically available through the SBA website or local disaster recovery centers. Businesses will need to provide financial statements, tax returns, and other documents to prove damage and financial loss.
Here are the primary types of disaster loans available:
SBA Disaster Loans for Physical Damage
Business Physical Disaster Loan: Available to businesses of all sizes to repair or replace real estate, equipment, inventory, and other business assets damaged during a disaster.
Loan Terms: Up to $2 million with terms as long as 30 years, depending on your ability to repay. Interest rates for businesses without credit elsewhere are low (around 4%) and slightly higher for businesses with credit elsewhere.
SBA Economic Injury Disaster Loans (EIDL)
Economic Injury Disaster Loan (EIDL): This loan provides small businesses with working capital to meet necessary financial obligations that they could have met if the disaster had not occurred. It's designed to help businesses recover from the economic impact of a disaster, such as revenue loss.
Loan Terms: Up to $2 million at interest rates around 4% or lower for businesses without credit elsewhere, with a term of up to 30 years. These loans are only for essential needs, such as payroll, rent, or operating expenses.
SBA Military Reservist Loan Program
Military Reservist Economic Injury Disaster Loan (MREIDL): For small businesses whose employees are essential to the operations of the business but are called to active duty. It helps the business meet operating costs until the employee returns.
State and Local Loan Programs:
State and Local Relief Programs: Some state and local governments offer disaster relief programs, which may include low-interest loans, grants, or temporary tax relief.
Private Loans and Grants:
Non-SBA Lenders: Some banks and credit unions may offer special disaster recovery loans for businesses, often at low or no interest. Additionally, businesses can look for grants from nonprofit organizations or industry-specific programs.
Federal Assistance through FEMA:
FEMA Grants and Assistance: While FEMA generally helps homeowners and individuals more than businesses, it can offer assistance to some small businesses, particularly agricultural enterprises or non-profits, as well as provide information on SBA disaster loans.
Next Steps:
Natural disasters and climate events can hit small businesses hard. Most small businesses will likely encounter some sort of emergency in their lifetime. Implementing ideal recovery strategies to minimize the damages is necessary. Prepare now to secure financial assistance, communicate with employees and customers, and prepare for future disasters, to weather the storm in the future.