Approximately 99.7% of businesses have fewer than 500 employees, and it’s such small businesses as these in flood-ravaged areas of Louisiana that are still struggling to recover all that they lost.
Very few businesses in Louisiana have flood insurance, and even those who do are still seeking disaster recovery loans up to $2 million from the Small Business Administration.
The Louisiana Economic Development agency estimates the flooding damaged more than 6,000 businesses financially. Businesses suffered roughly $2.3 billion in physical damage to structures, equipment, and inventory. Another $1.1 billion was accounted for in other losses.
Commercial losses are estimated to come to a total of $3 to $5 billion.
As of September 8, the SBA had approved $214.7 million in loans, only $15.4 million (seven percent) of which went to businesses.
Reports note that while business owners recognize that they need the loans, they may feel that it’s too soon to apply.
“If you’re that guy with the flooded home and the flooded business and the flooded cars, do you even know yet if you’re in a position to take out a 4% loan, when you don’t even know if your customers are coming back?” said Louisiana Association of Business and Industry President Stephen Waguespack. “It’s like being an air traffic controller: What do you land first?”
As business owners struggle to recover all that they’ve lost, some have begun to wonder if their efforts are worth it.
The fact of the matter is that most recovery efforts and funds tend to focus mostly on homeowners and not business owners. As a result, many small business owners fear they may not receive the help they need, even though they’re essential to community recovery.
“When small businesses come back, it’s more likely for the households in a nearby area to come back. Small businesses are the anchor for the community,” said Yu Xiao, an associate professor at Texas A&M University, who has studied the business impacts of Hurricanes Ike, Katrina, and Sandy.
The importance of these small businesses is a significant factor behind LABI and the Baton Rouge Area Chamber’s creation of the Louisiana Small Business Rebirth Fund.
The fund, aimed at helping small businesses, has started giving out microgrants ranging from $1,000 to $10,000.
So far, the fund has managed to raise approximately $360,000 and an estimated 620 businesses have applied.
However important they may be, these microgrants aren’t designed to restore businesses. Rather, they’re a temporary solution to help business owners take the time necessary to figure out next steps.
In badly damaged areas, the grants may not help at all, as the question is not how to rebuild, but rather if rebuilding would be worth it at all.
“What I’m hearing people ask is, will the community come back with me?” Waguespack says. “Their concern is not whether they can get the cash to rebuild, but will everyone else rebuild, too?”
Only time and more recovery efforts may tell.