Three months after Hurricane Sandy, efforts to rebuild small businesses affected by the disaster are only beginning. Beyond insurance money, business owners have turned to lending programs as their primary source of financial relief. According to the Small Business Administration, Hurricane Sandy is already the third-largest disaster in U.S. history in terms of relief lending. Over $1.1 billion in disaster loans have been approved for affected business and home owners.
The SBA was criticized for approving only 3.1 percent of the business loans applied for following Hurricane Katrina in 2005. So far, it has improved significantly upon that percentage following Sandy, with an 8.1 percent approval rate for business loans in New York, 7.9 percent in New Jersey, and 8.5 percent in Connecticut. SBA spokeswoman Cynthia R. Cowell reports that the administration has received over 66,000 loan applications for property loss and economic injury.
Despite the improved approval rates, most business owners have not received the lending they asked for, or have not yet received any response to their applications. The SBA’s target is to process requests within 21 business days, but its 4,200 staffers are being stretched to their limits. Depending on the state, loan application deadlines will arrive in late February and early March. It is possible that the deadlines will be extended, as they have been before.
Some business owners had expected to receive disaster relief from the government in the form of grant money. But the SBA is not authorized to give out grants, only low-interest loans. However, certain nonprofit agencies and fundraising entities have made grants available.
Microlenders, such as the Intersect Fund and Accion, have supplemented government lending in an effort to get small businesses on the East Coast up and running again. Accion East and Online recently received an extra $1 million in funds and approved 26 microloans for $339,753.
Juan Marin is the owner of Garibaldi, a Mexican restaurant and bakery in New Jersey. He secured a microloan from the Intersect Fund, a New Brunswick-based charity that focuses on serving low-income entrepreneurs. “No one else would consider giving me this type of support,” said Marin. His $7,000 loan was enough to replace some of the equipment he lost in the flooding.
Klein, Karen E. “Three Months After Sandy, a Report Card on Small Business Relief.” Bloomberg Businessweek, 2/1/13.