In 2012, Hurricane Sandy affected 60,000 to 100,000 small businesses, according the U.S. Chamber of Commerce. To help further illustrate the damage caused, The Hartford conducted a study of 451 small-business owners in New Jersey, New York and Connecticut: More than half lost sales or revenue; 75% had to close their stores for varied lengths of time, and 65% of surveyed businesses reported significant customer issues. The National Hurricane Center reported 19,000 businesses in New Jersey suffering damages of $250,000 or more.
The Federal Emergency Management Agency (FEMA) estimates that over 40% of small businesses close permanently following a natural disaster. Facing thousands of dollars in damages or having to shut down for days or weeks can be fatal to businesses that operate on thin margins or have slow cash flows. Luckily, the U.S. government provides financial recovery assistance for small businesses in the form of Small Business Administration (SBA) Disaster Loans.
The SBA has proven to be critical during these periods. Following Hurricane Sandy, the SBA had approved more than 38,000 loans, totaling $2.5 billion in financial assistance. On average, the APR for business disaster loans was roughly 4%— and 3% for nonprofit organizations. These are some of the most competitive rates we've seen. The SBA was also able to quickly process the loans, within 18 days on average. We took the time to sit down with Bob Whiteaker, owner of Nunzio's Pizzeria in Staten Island, to ask about his experience with Hurricane Sandy and how the SBA helped his business recover.
This interview has been condensed and edited for clarity. If you're a small-business owner interested in sharing your funding story, tweet us at @ValuePenguin.
First, did you have any insurance before Hurricane Sandy?
Of course, just didn’t have flood insurance. To be honest, our restaurant isn’t located anywhere near the shore, and in my 20+ years of doing business, I’d never seen a need for flood insurance.
Did that insurance cover any of the damages?
Insurance didn’t cover any of the damages.
Was there ever a point when you realized that Hurricane Sandy could seriously damage your business? And if so, did you take any actions to minimize that damage?
Well first, I wasn't sure Sandy would definitely hit New York City and I really didn’t expect Sandy to be as destructive as it was. Second, I was out of the country when Sandy came so I couldn’t even prepare last minute. I was told by friends and family what had happened, so I tried to fly back to New York City as fast as possible. Unfortunately, the planes to New York City from where I was were grounded for days.
How did you find out about Small Business Administration disaster loans?
Well, first I looked for loans from FEMA, but I had no luck. Then, after some light research, I found out about the SBA and their disaster loans, and applied right away. Everyone I spoke to was extremely understanding and the process was very streamlined. I was given a 20-year loan and I was able to pay it off within five.
How long did the approval process take?
I would say it didn’t take any longer then three weeks. I found out about the SBA and had money available three weeks later.
Were you being passed from person to person, or were you just speaking to a single point of contact?
I did meet with and speak to a number of people at various points in the process, but I wasn’t being passed from person to person. It really did feel like I was moving through a process and that I was getting somewhere the whole time. Everyone was straightforward and laid everything out on the table. I was very grateful for this.
How did you determine how much you’d need to borrow?
Well I knew the equipment and items I had to buy and that my savings weren’t enough to cover everything. I had to borrow an additional $100,000. I was back in business in one month.
Did you buy an entirely new store and move to a new location?
No, but I did have to replace everything else. I had to buy new ovens, a new refrigeration system, new furniture, etc.
What about the building itself?
We also had to tear up the walls and the interior to ensure there was no mold.
Was there anything unexpected during the whole SBA loan approval process? As you were getting approved, taking out the loans, were there any bumps in the road?
Nope, everything was straightforward and smooth. I even had an accountant visit my store a couple times and help me fill in the paperwork I needed.
What are the preventative measures that you’re now taking, moving forward, due to this whole experience?
I definitely got flood insurance. It’s pricey, and since my flood insurance is front-loaded, I pay most of my annual fees upfront. But it’s worth it to cover damages in case something like this happens again.
Do you have any general advice or lessons learned from this whole experience for our readers?
Yes, I would advise any small-business owner to have all types of insurance. I'm located over a mile from the shoreline and this still happened. You can never be too safe.
Apply for a SBA disaster loan here.