According to the Federal Reserve of New York, superstorm Sandy caused financial losses for about a third of the small businesses in the areas it hit. The New York Fed surveyed 950 companies around the greater metropolitan New York/New Jersey area.
Half of the businesses covered their storm-related losses with personal resources, the survey found. And about 40 percent increased their debt to deal with losses. Twenty-two percent of the companies reporting losses said they lost more than $100,000.
As a business lender, you can quickly visualize other impacts, such as a displaced client base (like Hurricane Katrina), washed out roads (like Missouri floods), devastated suppliers and a scarred business environment. Couple those conditions with past due invoices, unpaid receivables and crippled credit scores.
Bankers put some time into planning for their own disaster survival but I wonder if small business lenders shouldn’t give some thought to how we would respond to our clients if our shared market were waylaid with such an event?
Would you retreat to the same old defenses like “your credit score is below our minimum,” or my favorite, “why is that my problem?”
Or would you rise to the occasion and turn disaster into a business growth opportunity for both your bank and your client by finding clever ways to navigate around barriers and provide vital capital when and where it’s needed most?
Easier to think about that now on a sunny day, right?