Before, During and After a Disaster Small Business Disaster Continuity Planning Carl Hadden CME Assistant Director Florida SBDC at USF
Impact of a Disaster on Small Business FEMA estimates that almost 40 percent of small businesses that close after a disaster never reopen their doors because just a few inches of water can cause tens of thousands of dollars in damage. Insurance Institute for Business & Home Safety (IBHS) and U.S. Small Business Administration (SBA) estimate that while one in four businesses can expect to experience a disruptive disaster, approximately 60 percent of those businesses do not have a basic emergency response plan. Without a plan, IBHS and SBA estimate that 75 percent of the impacted businesses will fail within three years of the incident.
Impact of a Disaster on Florida s Economy Do The Math Florida is home to 2.3 million small businesses that employ and pay wages to 3.1 million employees, not including the businesses owners. 93% (2.2 million) of all small businesses in Florida were located in a federally disaster declared county following Hurricane Irma. 40 percent that close after a disaster never reopen What does Florida s economy look like if 40% (nearly 1 million) of small businesses and 1.2 million jobs went away overnight?
Before, during and after a disaster, we are there to help protect your small business. FloridaSBDC.org
State Designated as Florida s Principal Provider of Small Business Assistance [288.001, Fla. Stat.] Who We Are Network of Partners Over 100 investing partners SBA, DLA, State of Florida, State Universities and Colleges, and More.
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What We Do Business & Management Training Basic to advanced business management topics Research, Data & Information Relevant and customized business research and information for better decision-making Professional Business Consulting Access to experienced and credentialed professional business consultants at no-cost
Who Does It Experienced Professionals thousands of years of combined business ownership experience Certified and Credentialed maintain professional licenses and certificates in professional areas of expertise Community Based live and work in the community they serve Results Driven focus on creating outcomes keeping the end in mind Industry Certified Professional Business Consultants and Specialists
Florida SBDC Areas of Strategic Importance Capabilities (expertise) that align to the top current or growing needs or opportunities for SMEs: Capital Access Market Growth Government Contracting International Trade Business Continuation Disaster Continuity and Recovery Specialists Cyber Security Specialist
Continuity Plan: Why? Business Continuity Planning Is Good for Business Can be a competitive advantage over competition. Insurance is only a partial solution. Insurance cannot replace lost customers nor can it cover all losses. Any significant delays could result in the loss of a customer to a competitor. Large customers (big business and government) need to know that preparedness is important to their suppliers.
Continuity Planning: Employees Your Front Line is Your Bottom Line Can your business function without your most important asset? Maintain current employee contact information Have up-to-date Emergency contacts Alternate means of communication Identify special skills, certifications, etc. First aid, CPR, or military training Help employees with personal disaster plans
Continuity Planning: Vendors Suppliers Can Make or Break You Can your business function without your suppliers and vendors? Maintain current vendor information Primary and alternate contacts Have alternate supplier(s) Do your most important suppliers have a continuity plan Ask If they don t, how could that affect you? Don t forget your banker and accountant!
Continuity Planning: Customers Without Them, Does It Matter Can your business survive without customers? Identify the likelihood that customers will be present in your business if a disaster occurs. Keep communications open with customers (phones, email, website, social media) Monitor the Internet and social media to track trending stories. Keep a copy of your customer records off-site or in the cloud. Have an alternate worksite from which to communicate to customers during recovery.
Basics to a Smooth(er) Recovery 1. Document Your Damage/Impact 2. Call your Insurance Agent 3. Contact your local Florida SBDC 4. Communicate with Your Customers, Suppliers, and Employees 5. File a Tax Extension (if applicable) 6. Avoid Contractor Fraud/Scams
Disaster Recovery: Document Capture It and Spread It Photograph and/or video the disaster-damaged property and equipment BEFORE you begin cleanup. Cleanup without proper documentation could impact the accuracy of the estimate. Collect and save any records that show the value of physical damage suffered. building, equipment, furnishings Collect and compile financial records that demonstrate economic damage financial history of revenue seasonality. Interruption insurance and State and Federal Disaster Loans or other assistance related to economic impact will require it.
Disaster Recovery: Florida SBDC Don t Go It Alone - Get Professional Help Florida SBDC Disaster Response Team member can assist to determine eligibility and apply for state/federal disaster assistance. assist in the preparation of disaster applications and support documentation, vendor and supplier communication, and general customer care. Can significantly increase response and probability of getting the immediate aide your business needs to reopen and long-term assistance your business will need to make a full recovery.
Disaster Recovery: Communicate Keep Your Essential Stakeholders Informed Contact and Check the Status of: Your employees Your Suppliers Your Professional Support Team Accountant, Banker, Lawyer Let Your Customers Know Your Plans
Disaster Recovery: Communicate Keep everyone informed about the status of your business. Update your website when you expect to reopen. Review partner or competitor websites to learn about their status or pick up best practices Utilize social media to get the word out ahead of and after reopening Monitor social media and the Internet to track trending stories Share disaster-recovery information that may be of interest to your customers Remember social media is a two-way communications tool track any responses or Retweets Track what customers are saying and respond to each comment Where appropriate, consider special promotions to raise awareness; thank first responders; and entice customers back
Disaster Recovery: IRS Buy Time Federally declared disasters usually allow businesses to file a tax extension For example, IRS extended deadlines for businesses impacted by Irma that were originally due to file returns or make payments by September 15, 2017. The IRS also extended deadlines for quarterly payroll and excise tax returns that were due by October 31st. Check out www.irs.gov for more information and to download forms.
Types of Disaster Recovery Loans
Disaster Assistance Loans Florida Small Business Emergency Bridge Loan Purpose Short-term, interest-free working capital loans Intended to bridge the gap between the time a major disaster hits and when a business has secured longer-term recovery resources i.e. insurance, federal disaster loan, restored revenues Not a Grant. State of Florida public funding that must be repaid.
Disaster Assistance Loans Florida Small Business Emergency Bridge Loan Eligibility To be eligible, a business must: A for-profit, privately held small business that maintains a place of business in the state of Florida, Demonstrate economic or physical damage as a result of the disaster; Established prior to the disaster, and Have between two (2) to 100 employees. Employees are defined as individuals who receive paid wages or salary which employment taxes (e.g. FICA, FUTA) and income taxes are withdrawn and remitted to the IRS, as evidenced by business tax returns filed, i.e. IRS Form 940, Employer s Annual Federal Tax Return, IRS Form 941, Employer's Quarterly Federal Tax Return or IRS Form W-3, Transmittal of Wage and Tax Statements. For purposes of eligibility, independent contractors (also known as 1099 employees) do NOT qualify as employees for this loan program.
Disaster Assistance Loans Florida Small Business Emergency Bridge Loan Loan Details Amount: Between $1,000 and $25,000 Term: Up to 180 days Interest: Loans will be interest-free for the loan term. Payment Process: No payments during the term of the loan but must be paid in full by the end of the term. Payment/Non-Payment Penalties: Loans must be paid in full by the end of the loan term. Penalties for nonpayment will begin at the expiration of the established term of each loan, and will be as follows: 12% per annum on the unpaid balance for the first 180 days following expiration of the established term. 18% per annum on the unpaid balance thereafter.
Disaster Assistance Loans Florida Small Business Emergency Bridge Loan Loan Documents 1. Completed application form signed by individual(s) who, individually or collectively, own fifty-one percent (51%) or more of the equity of the business, as evidenced by the business tax statements 2. Business Tax Returns at a minimum, copy of the previous two years Federal income tax returns for the applicant business, including all schedules, or a written explanation if the tax return(s) are not available. One of the following: Sole Proprietorship Form 1040, US Individual Income Tax Return, Sch. C, Profit or Loss from Business Partnerships Form 1065, U.S. Return of Partnership Income, Schedule K-1, Partners Share of Income, Deductions and Credits Corporations Form 1120, U.S. Corporation Income Tax Return S Corporations Form 1120S, U.S. S-Corporation Income Tax Return 3. Individual Tax Returns At a minimum, copies of the previous two years Federal income tax returns, IRS Form 1040 and all schedules, for each individual business owner who completed and signed this application. 4. Business Employer Tax Documentation One of the following: Employer s Annual Federal Tax Return (IRS Form 940) Employer's Quarterly Federal Tax Return (IRS Form 941)
Disaster Assistance Loans U.S. Small Business Administration There are two types of SBA business disaster loans: 1. Physical Damage Disaster Loans 2. Economic Injury Disaster Loans
Disaster Assistance Loans Physical Damage Disaster Loans Provides up to $2 million in funds to businesses and private non-profit organizations of any size in the declared disaster area that have sustained uninsured losses. Funds can be used to repair or replace business property to pre-disaster conditions.
Disaster Assistance Loans Economic Injury Disaster Loans Economic Injury Disaster Loans: Provides up to $2 million in working capital loans for small businesses and private non-profit organizations in the declared disaster area that suffer economic injury as a direct result of a disaster. Assistance is provided regardless of whether property was damaged.
Disaster Assistance Loans U.S. Small Business Administration Loan amounts and terms are set by the SBA and are based on each applicant s financial condition. As an example, for Hurricane Irma interest rates were as low as 3.305 percent for businesses with terms up to 30 years. Build Back Better!: Applicants may also be eligible for a loan amount increase up to 20 percent of their physical damages, as verified by the SBA for mitigation purposes.
Disaster Assistance Loans Florida Small Business Emergency Bridge Loan Region Loans Closed (#) Loans Closed ($) Florida SBDC at UWF 1 $50,000 Florida SBDC at FAMU 3 $100,000 Florida SBDC at UNF 113 $3,536,679 Florida SBDC at UCF 81 $2,671,030 Florida SBDC at USF 140 $7,545,100 Florida SBDC at FGCU 148 $6,267,690 Florida SBDC at IRSC 23 $2,730,300 Florida SBDC at FAU 71 $2,544,500 Florida SBDC at FIU 100 $2,665,873 Florida SBDC at FKCC 138 $5,446,421
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