Are You Ready in Case of Disaster?

June 1 marks the beginning of the Atlantic hurricane season

To ensure that small business owners can act quickly to recover from a natural or manmade disaster, the Insurance Institute for Business & Home Safety (IBHS) recommends creating a preparedness and recovery plan that considers the following five questions:

1. Do you have contact information for employees, suppliers, and vendors in a protected place? Ask your employees to provide their personal contact information annually. After a disaster, this will enable you to check on their well-being and share next steps for resuming normal business operations. In addition, update your supplier and vendor contact information, as well as other important contacts, such as your bank or insurance carriers, and keep this information in a safe location on the premises and at an easily accessible offsite location.

2. Do you have plans for maintaining or resuming critical business functions? Consider which functions are necessary to keep your business viable and in the black, such as those that fulfill legal or regulatory obligations or are essential for maintaining market share or reputation. Critical business functions can change from year to year, so be sure to account for any changes, such as the addition of new business systems, products, or employees. Work with your employees so that they fully understand the procedures for recovering critical business functions.

3. How is your data protected in a disaster? Determine which data and records are vital to perform critical functions, and be sure they are backed up on one or more types of media. Store a backup copy onsite for use after small disasters, such as a failed hard drive, and store a second copy in a safe offsite location that can be easily accessed after a large disaster. Additional information on protecting your data is available here.

4. How will you fulfill your financial obligations? Identify financial obligations and expenses that must be paid. You should not assume that because your area got hit by a disaster, your suppliers, vendors, and creditors are aware of the situation and are granting extensions automatically. Items such as mortgage, lease, or rental payments may still need to be made. Also, have an emergency cash reserve fund or credit available. You may need cash to purchase supplies or equipment, or relocate your business temporarily.

5. Do you have sufficient insurance coverage? Evaluate your insurance policies and meet regularly with your insurance agent/broker to be sure you understand your coverage, deductibles and limits, and how to file a claim. Most policies do not cover flood or earthquake damage, so you may need to buy separate insurance for those events. You also may need to consider a policy that will reimburse you for business disruptions, in addition to physical losses or extra expenses.

Staying Afloat After Disaster Strikes

In the wake of a disaster, the U.S. Small Business Administration (SBA) provides low-interest disaster loans to homeowners, renters, businesses of all sizes, and private, nonprofit organizations. Here are the basic steps involved in applying for an SBA disaster loan:

• After a presidential disaster declaration, register with FEMA. In most cases, you’ll be referred to SBA for possible loan assistance. Then apply here, which is the fastest way to receive a decision about your loan eligibility.
• SBA will then conduct a credit check and an onsite inspection to determine your losses. A loan officer will work with you to approve or decline a loan.
• Within five days of signing SBA’s loan closing documents, your first disbursement is made. A case manager will work with you to meet all your loan conditions and schedule the rest of your disbursements until you receive the full loan amount.