NEW YORK (AP) -- The arrival of summer means small business owners should think about protecting their companies against disasters such as hurricanes, tornadoes, floods and wildfires. Disaster preparations can be an expensive proposition, but the federal government is offering some financial help.
The Small Business Administration has started a pilot program that offers a total of $15 million in loans to small businesses undertaking what are known as pre-disaster mitigation measures. Pre-disaster mitigation can mean strengthening doors and windows against high winds, or installing storm shutters. It can mean replacing the roof on your company's buildings with fireproof materials.
The application period for the loans began June 16 and runs through July 16. Unfortunately, not all businesses can qualify. According to George Camp, supervisory program analyst with the SBA's Office of Disaster Assistance, the companies' proposed measures must conform to mitigation plans of their communities or states. If companies are not located in an area with such plans, they wouldn't be able to obtain the loans.
``This is not a disaster loan,'' Camp emphasized. ``This is a loan to help them (small businesses) do things to their businesses that hopefully will prevent damage or minimize it or mitigate it.''
But he also noted that companies that do qualify for the mitigation loans can still receive loans to help repair physical damage or alleviate economic injury after a tornado, hurricane, flood or other calamity.
Businesses can receive loans of up to $50,000, but because the funds in the pilot program are limited, they are available on a first-come, first-served basis. The loans have repayment periods of up to 30 years, and currently carry an interest rate of 2.953 percent.
As is the case with other SBA loans, companies must prove that they are able to repay the money they borrow. And loans over $10,000 require collateral.
Camp said the program was expected to be available again next year.
Whether they qualify for the loans or not, companies should think about what they need to do to protect their businesses against a variety of disasters.
There are several aspects to pre-disaster mitigation.
The SBA has a disaster preparedness section on its Web site at www.sba.gov/disaster/getready.html; it lists topics that business owners should consider, such as insurance, computer system backups and locating alternative suppliers in the event their vendors are shut down by a disaster.
The Federal Emergency Management Administration's Web site has a great deal of information about protecting a company's physical plant. Some of the information is directed at homeowners, but the same considerations often apply to commercial and professional buildings. The Web address is www.fema.gov/fima.
The Institute for Business & Home Safety also offers advice on getting a business prepared on its site at www.ibhs.org.
Companies' dependence on computer systems makes it imperative that they back up their data in some way, or risk losing customer lists, order histories, payroll records and more. Options range from putting the data on disks to creating a backup server at a remote location.
A business pays more as it increases the degree of computer protection, but the company's ability to get back to work faster in a crisis can make the extra investment worthwhile. (And by the way, business owners should never store backup disks at the office, where they can be destroyed along with everything else.)
Companies also need insurance. The Insurance Information Institute's site, www.iii.org, explains business property insurance, and its limitations. Companies probably will need special coverage for floods, earthquakes and terrorism.
Many companies also purchase business interruption insurance, which typically covers lost profits but could also help a business meet obligations such as mortgage payments and payroll.
