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Preparing a Business for a Hurricane

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With the latest in forecast technology, it’s no longer a surprise when a monstrous storm like Hurricane Sandy is on the way. There’s usually substantial time for meteorologists to carefully study projected storm paths, make predictions and warn people of potential devastation.

As dire warnings of Hurricane Sandy included life-threatening flooding and extensive power outages, millions of people living on the Eastern Seaboard were able to collect provisions, evacuate to higher ground and settle into shelters.

As the storm pummeled the East Coast, leaving millions of people without power and at least 45 dead in nine states, it also destroyed countless businesses. While the financial market reopened today along with limited mass transit, not all American companies will be able to recover as quickly.

According to the Gulf Coast Back to Business Act (2007), a bill introduced to address ongoing needs in the Gulf Coast states following Hurricanes Katrina and Rita, Congress determined 43 percent of businesses that close following a natural disaster are never able to reopen. And within two years, according to the Library of Congress, an additional 29 percent of damaged businesses end up closing down permanently.

The Importance of Preparing a Business for Disaster

The devastation caused by Hurricane Sandy is a reminder to business owners nationwide to weigh the risk of a disaster and put a comprehensive recovery plan in place prior to a storm.

While creating a contingency plan may seem somewhat time-consuming and costly, the return on investment is extraordinary and may make the difference between saving a business and going under.

This plan should include a complete inventory of equipment, supplies and proof of equipment ownership. “Before” photographs of valuable equipment and serial numbers are also important in the event they are needed for insurance claims.

Flooding always increases the opportunity for loss of equipment and data, which can devastate any business. Keeping servers in a basement, for example, is not recommended and should be taken into consideration when creating a plan.

The ability to back up data and possibly store data offsite is essential to many businesses. It’s also crucial to make an investment in alternate power, such as a generator or backup battery for a computer system, so as to prevent data loss and interruption in service. Testing the disaster recovery plan several times a year is also vital according to Microsoft, as close to 75 percent of companies that test backups experience failures.

Another important step to ensure business recovery is to make sure your insurance policy matches business needs. Neglecting to purchase flood insurance, for example, will result in uncovered losses to thousands of businesses following Hurricane Sandy. Failure to update insurance policies to reflect true rebuilding or repair costs will leave many business owners without adequate funds to recover. It’s also essential to install storm shutters and hurricane clips ahead of a natural disaster.

Moving forward

When your small business has been hit by a hurricane, recovery may seem daunting. It’s important to be aware of a number of sources to aid recovery.

The Small Business Administration (SBA) and the United States Department of Agriculture (USDA) both offer low-interest loans to help business owners repair or replace property destroyed in a hurricane. Loans are also available to those who experienced an economic loss. The Federal Emergency Management Agency (FEMA), Farm Services Agency (FSA and state governments make assistance available as well.

Economic Injury Disaster Loans, up to $2 million, can make a big difference for a business owner whose company suffered substantial economic injury as the result of disaster. The loan term is up to 30 years. The interest rate cannot exceed 4 percent if credit cannot be obtained elsewhere, or 8 percent if it can.

Physical Disaster Loans, also up to $2 million, can help a business owner repair or replace destroyed real estate, inventory and equipment. The loan rates and terms are similar to the Economic Injury Disaster Loans.

Business owners can also request tax relief from the federal government. This includes delaying tax filings and expediting refunds. FEMA will also provide free legal services for businesses to help with filing insurance claims and additional legal issues that result from the disaster.

About The Author

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].


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