As East Coast-based business owners begin picking up the pieces Wednesday following Hurricane Sandy’s devastation, many are trying to figure out next steps. Some entrepreneurs are facing the worst possible scenario--assessing how to start all over.
Fortunately there are a number of places to look for disaster assistance.
One of the first places you should check is the Small Business Administration, which has comprehensive disaster recovery services, available in some cases for business owners and non-owners alike.
Renters and homeowners, a group that includes most sole proprietors, can borrow up to $40,000 for repairs and to replace things like appliances, furniture, automobiles, and clothing. People who own homes can apply for as much as $200,000 for repairs to their primary residences.
Business owners, whether private or not-for-profit, whose organizations are damaged in a designated disaster area, can apply for loans up to $2 million for real property, machinery and other equipment, fixtures, and leasehold improvements. The loans can be used for both uninsured and underinsured damages.
The interest rate on both loans, for businesses that can’t find credit from other sources, won’t exceed 4% and repayment terms can last up to 30 years. For businesses that can obtain other credit, the percentage on the loans will not exceed 8%.
Similarly, the Federal Emergency Management Agency can provide critical financial assistance through the federal government, though it can be a bit trickier to obtain. In many cases, you must have applied for other forms of relief first, such as from your insurance carrier or through the SBA.
But FEMA provides a host of financial assistance for things like housing, repairs, medical and dental care, clothing, fuel, damages to vehicles, and moving and storage expenses related to the disaster.
FEMA also provides a number of other services, such as crisis counseling, disaster unemployment assistance, legal and tax services.
You should begin sorting out insurance claims as quickly as possible, especially because insurers typically have time limits for filing claims. The National Association of Insurance Commissioners recommends including a copy of your policy when you file. Homeowners will need to have an inventory of covered items, as well as one detailing damaged belongings.
If you have separate business owners' insurance, that should cover property and equipment, as well as business interruption for lost earnings, and liability insurance to cover personal injury or damage to someone else’s property.
The insurance claims process can be complicated and time consuming, however. For example, NAIC says if you own a car, and it was damaged inside your garage, your auto insurance will likely pick up the tab.
Also, flood damage is not usually included in the typical home or business owners’ insurance policies. You’ll have to make separate claims to the National Flood Insurance Program, through which many businesses will likely have gotten coverage to begin with.
If you discover more damage after you’ve filed your claim, contact your insurance company as it may be able to make an adjustment.
And if you’ve reached your limit for insurance, apply for additional federal assistance, such as from FEMA which can provide a supplement.
NAIC has various spreadsheets to help you make an inventory of what you have.
The Red Cross has a lot of advice about the insurance claims process, too. In addition to contacting your insurance broker or company as promptly as you can, prepare a list of damaged or lost items, including receipts. The Red Cross also recommends photographing or videotaping damage to support your claims, and to make copies of all information you send off to the insurance company.
Where finances are concerned, keep in mind that many banks are already lending a hand by waiving fees temporarily for things like account overdrafts, late payments on business and consumer loans, mortgages or for credit card balances.
Citibank sent this note to customers on Monday:
We hope you and your family are safe. We also would like to make you aware of services that are always available during any emergency situation. Please know we are ready to provide financial recovery solutions should you be in need of assistance, including access to cash and waiving fees, if you have been impacted by the storm. We encourage you to contact customer service and we will work to help with your individual needs.
Additionally, Wells Fargo will temporarily waive fees on other banks' ATMs in Maryland, Virginia, Washington, D.C., Delaware, Pennsylvania, New York, New Jersey and Connecticut.
If you’ve lost your home or business, it’s time to operate on a triage system to manage cash flow, the Red Cross says. Stop paying all unnecessary expenses, such as for phone, gas, or electric, and notify the utility companies immediately of your situation. But continue paying critical bills, such as insurance premiums, rent, and your mortgage. Call your creditors, explain your situation, and ask them to work with you.