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Two Years After Katrina, New Orleans Businesses "Running on Fumes"
 

The Crescent City is still struggling with population loss, crime, and crippled infrastructure.
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Two years after Hurricane Katrina tore across the Gulf Coast, New Orleans small-business owners say they continue to grapple with many of the same issues they faced from day one  -- crippled infrastructure, rampant crime, and unreliable government aid.  

"People here just can't believe how this is still dragging on and on," said Laura Drumm, the owner of Tabasco Country Store. "We're working twice as hard, but feel like we're getting nowhere. Some of us are running on fumes."

Drumm, who helped launch a local small-business support group in the wake of the storm, said she's seen countless owners in the past year alone reluctantly shut down their businesses, including family-run stores and restaurants that were neighborhood landmarks for generations. "There's just too many problems and not enough business to keep them going over the slower months," she said.

According to researchers at Tulane and Louisiana State universities, the city lost nearly 3,000 employers in the weeks after the storm, which slammed into the Gulf Coast on Aug. 29, 2005 and caused widespread flooding in many residential and commercial districts. In some neighborhoods -- particularly, lower-income areas -- fewer than half of those businesses have returned. In heavier flooded areas, business-reopening rates have reached just 37 percent.

So far, new businesses are outnumbering reopened older business by a ratio of 3 to 1, researchers have found. Yet, even as new employers arrive, the city's population remains roughly half its size before the storm.

"If you asked 100 residents, well over 90 would say the recovery is too slow and that it's forcing people to leave," said Richard Campanella, a Tulane geographer who conducted a 15-month street survey of business closures and openings throughout the city.

"The real question is, 'Compared to what?" Campanella said. "There's nothing in recent American history to compare this event with."  

The Small Business Administration, which was heavily criticized for delays  in processing low-interest federal disaster loans for hurricane victims, has since approved $6.9 billion in loans on 119,086 applications from homeowners and businesses across the Gulf Coast region. In dollar terms, that's more than twice as high as the next biggest disaster in the agency's history.

In New Orleans this week, SBA administrator Steven Preston  outlined the many changes the agency has undergone as a result of the storm aimed at better handling large-scale disasters in the future, including the addition of 3,000 reserve employees and an improved computer system.

Still, Drumm and others have long argued that low-interest loans are not enough to keep employers from leaving the city. Last year, Second Wind, the group she co-founded, successfully lobbied the state government to issue long-term grants of up to $20,000 to help small-business owners get back on their feet. While the first installments were issued in May, they've since been postponed.

"It's frustrating," Drumm said, "but you're going to loose everything if you give up, so you just keep going day to day."

Last updated: Aug 28, 2007




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