By Brooke Mirenda, CEO of SEDCO
As a Small Business Administration lender, I received notice on Oct. 15, at 5:30 p.m., that the SBA has already exhausted its disaster funding for small businesses.
This occurred just six days after Hurricane Milton devastated Florida’s Gulf Coast. To be clear, this isn’t the fault of the SBA. The combination of back-to-back disasters—Hurricanes Helene (impacting multiple states) and Milton—along with a struggling economy, high inflation and increased demand for capital, has created an overwhelming need for resources, a perfect storm if you will, leaving lenders and business owners in challenging positions during these disaster-stricken times.
As other people watch the news, observing pictures and videos of the devastation, it pales in comparison to witnessing the reality, first-hand. From Naples, well past Clearwater Beach, the beaches, the hotels, the homes, the restaurants, the shops, the marinas, effectively gone or in ruin.
The result is what I’m calling, “The Ripple Effect.” Here are just a few examples of what that looks like:
Ripple: Families displaced from their homes.
Effect: Where will you live? How will you cover housing costs and your mortgage while waiting for insurance to assess any potential replacement value? If you’ve managed to salvage belongings, where do you store them? If you were renting, did you have renters’ insurance? If not, it could mean a total loss.
Ripple: Entrepreneurs lost their businesses.
Effect: With no revenue coming in, can you still afford to pay your employees? Can you cover your business loan? If you own your property, how will you manage the commercial mortgage? Do you have the necessary insurance coverage in place?
Ripple: Employees in the hospitality and service industry lost their jobs.
Effect: How will these employees cover their bills? Unemployment claims will rise. Many will seek new jobs, leading to staffing shortages for businesses affected by the disaster. There will be reduced consumer spending as unemployed individuals tend to cut back on non-essential spending, which can negatively impact local businesses and the economy.
SO, here we are. What do you do? Where do you even start? Do you just start over?
SBA Disaster Loans to the rescue! But, perhaps no. If the funds are exhausted. What now?
The tough reality is that the lending landscape had already shifted long before Hurricane Helene struck. Rising interest rates have squeezed banks’ net interest margins, leading to tighter lending and credit standards. Combine that with a capital shortage, higher debt levels and limited emergency savings and the result is severe financial hardships—both for individuals, and business, owners alike.
Unfortunately, it’s during challenging times like these that you’re forced to closely examine your financial position, both personally and in your business. When it comes down to it, without six to 12 months of reserves, it can be difficult to cover even basic living expenses.
Here are some steps you can take to help navigate some of these challenges:
Request a Loan Deferment: If you have any type of loan (auto, home or commercial mortgage), or credit cards, request a deferment. Be sure to ask if there are any associated fees or interest increases and clarify how the deferment will work. Will the missed payments be added to the end of the loan term or is
there a “catch-up” period, like with SBA 504 loans?
Apply for an SBA Disaster Loan: If you’re still interested in an SBA disaster loan, submit your application now. Even if the program isn’t currently open, your application will be in line when it reopens or when Congress takes action.
Support Local Businesses: Utilize local businesses for your needs and buy locally. Supporting them helps strengthen the local economic ecosystem.
Adapt Your Business Model: Just as businesses did during the COVID-19 pandemic, think creatively about how to pivot your business model to meet a need and generate revenue, while you rebuild.
Build a Relationship with Your Banker: Get to know your banker well. Having an established relationship can make it much easier to get the information and assistance you need.
Document Everything: Make sure to obtain all agreements and decisions in writing.
If there’s any silver lining in all of this, it’s the incredible response from first responders, linemen, friends, families and local businesses. They’ve come together, doing everything within their power to lend a helping hand and offer support wherever it’s needed.
We are Floridians, we are strong, we are entrepreneurs and our stories are not yet finished.
Brooke Mirenda is the president and chief executive officer of Sunshine State Economic Development Corporation, headquartered in Clearwater. SEDCO is a nonprofit certified development company, certified by the US Small Business Administration.
