Hurricane Sandy destroyed many small businesses in New Jersey, both on the coast and further inland. Now, over six months later the ramifications on the economy and on the small business owners are reaching a critical mass.
The rebuilding process for these small businesses has been very difficult. In the immediate aftermath of the storm they did not have many options for economic assistance. The only aid available at that point was a fixed interest loan available through the Small Business Administration (SBA) (http://money.cnn.com).
The fixed interest loan application process was long, tedious, and time consuming (22 pages long). In the end, some small business owners scrapped the plan to focus on rebuilding without a loan that they would eventually have to pay back with interest (www.nj.com).
A New Way Forward
The New Jersey Economic Development Authority recently announced the “Stronger NJ” Business Grant Program which will provide a small business or non-profit organization with grant funding to repair and restore their respective businesses. The program, according to NJ.com, breaks down as follows:
- · Small businesses or Non – profit organizations with 5 or more locations can get a maximum of $250,000 in grant funding through this program
- · Small businesses or Non-profit organizations with fewer sites or locations will receive up to $50,000 per location
The eligibility criterion for this program is as follows:
- · The business must have sustained at least $5,000 in damages
- · Occupants in a basement office space are eligible
- · Any applicant must also have applied for the S.B.A. low interest loan prior to application in this program (www.nj.com)
This is certainly a helping hand for the small businesses and non-profit organizations throughout the state, but by no means is it a universal solution. The grant money if it is a maximum of $50,000 per location is going to help, but it is going to take a great deal more funding to repair and rebuild these small businesses. This is especially true in the areas along the main points of storm impact on the coast, and then in other areas in the northern part of New Jersey.
In fact, according to CNN Money, there are 19,000 businesses which sustained damages of $250,000 or more in New Jersey alone.
I know from my own experience, driving through the barrier island and the Raritan Bay shore areas of Monmouth County that the small businesses are struggling to get back on their feet or are not anywhere near able to open their doors again.
The state of small business in the NY/NJ Metro area
My wife and I were displaced by Hurricane Sandy from Sea Bright, which is about twenty minutes driving time away from where President Obama and Governor Christie made their appearance recently in Asbury Park, NJ to declare the Shore was open for business.
The small town of Sea Bright has most of the businesses still shrouded in the boards that were put up by the respective owners and staff on October 28 on the day the evacuation order was issued for the barrier island town. The town is suffering from a huge shortfall in tax revenue due to the huge number of displaced residents who have been unable to return to their living places and the lack of ratable tax revenue from the desolate business district of the town.
In a May 1, 2013 article in The Wall Street Journal, some shocking facts were shared on the enormous impact of the storm in the NY/ NJ Metro area:
- · 3, 340 small businesses received $337 million in emergency loans
- · 200,000 businesses reported damage and filed insurance claims (www.wsj.com)
- · Many businesses report that they are struggling and have lost sales dollars
The process to rebuild is taking so long, that as a resident of a New Jersey coastal town, I have seen businesses close down because they cannot wait for the relief money any longer. I have read accounts of insurance companies denying claims on the damage.
A report from CNBC.com stated that a full 50% of small businesses have lost sales or revenue due to the effects of Hurricane Sandy. That is going to have an enormous negative impact on the economies of both New York State and New Jersey.
Big delays – Hope for the Summer
In a report from The Washington Post on May 21 it broke down the $50 billion aid package and explained that it is the SBA which reviews the applications and determines the federal aid award to each small business.
The same report also stated that the SBA averages 43 days to review applications from Hurricane Sandy compared to an average of 14 days for Hurricanes Ike & Irene (http://www.washingtonpost.com/ ). What is causing the long delays on reviewing and issuing money for Sandy? That question, nobody seems to have answered yet.
That same report in The Washington Post also mentioned that not counting the withdrawn applications the SBA approval rate for the granting of aid was 40%. The small businesses in New Jersey need it to be a lot higher rate to have a chance to survive. In the six months since Sandy struck, only 15% of the aid money has been issued versus 40% of the aid money being issued in the first 5 months following Hurricane Irene.
In the end, the small business owners I have had interactions with have a common theme: they have hope for the summer months to be very successful so that they can move forward with their work and their lives. That is not uncommon, growing up here on the New Jersey Shore; we always put our minds and hopes towards the endless days of summer.
Those days of having fun at the beach or the boardwalk were always a good remedy from the isolation of the winter months. The summer days ahead this year just took on a whole new meaning: a hope that those days from our past are not just memories that those hope filled days of promise still lie ahead for all of us.