How to Recover Your Business From a Disaster or Pandemic
According to the National Federation of Independent Business (NFIB), as of March 30, as many as 92 percent of small businesses across the United States stated that they had suffered negative results as a result of the COVID-19 coronavirus pandemic. Since March 30, the economic damage of the pandemic has gotten significantly worse. If your business has suffered due to the novel coronavirus pandemic, or as a result of any other disaster, there is a path to getting back on track. Continue reading for tips on how to recover your business after an unexpected disaster, and speak with a knowledgeable California business insurance lawyer for advice and representation concerning an insurance or business law matter.
Assess Your Financial Damage, Adjust Your Business Plan
It is essential to get an accurate picture of the current state of your business. Update your profit and loss cash flow statements and compare them to last year around the same time. If you’ve had to lay off or furlough employees, factor that into your plan to rebuild. If you’ve cut down on expenses relating to marketing and advertising, or if you have lost customers, those should be reflected as well.
With a proper assessment of your current financial situation, take a new look at your business plan. Consider how your plan can be adjusted to deal with any of the damage your business has suffered and what steps you can take to account for the changes. Consider, for example, expanding to the digital space if you were previously all brick-and-mortar. The U.S. Small Business Administration (SBA) has issued guidance for small businesses working on getting through and recovering from the coronavirus pandemic.
File a Claim with Your Insurance: Natural Disaster, Business Interruption
Ideally, any business should carry property damage insurance that covers property damage and/or physical loss in the event of a natural disaster. The baseline policies cover damage to raw materials, inventory, equipment, and buildings that result from fires, floods, earthquakes, and other disasters. There are additional policy options worth including, especially if your business is in a location known for hurricanes, earthquakes, floods, or other events. Extra Expense Coverage covers additional expenses such as generators for when the electricity is out after a storm, and Debris Removal Coverage covers expenses connected to rebuilding the property. Speak with a business insurance attorney to help you file your claim and maximize your available recovery under your policy.
Business interruption coverage, which supplements business property damage policies, can also be a vital tool for recovering after a disaster. Your business interruption insurance will supply your business with the income lost as a result of a natural disaster and the rebuilding process. Some businesses cannot open for several months while repairs are being conducted, and mere property loss benefits may not be enough.
By its terms, business interruption insurance should cover losses due to mandatory business shutdowns resulting from the coronavirus pandemic. As we have discussed before, however, some insurance companies are dragging their feet when it comes to paying businesses affected by the novel coronavirus pandemic for their business losses. A dedicated insurance denial attorney can help ensure your business gets the coverage to which you are entitled.
Funding Options: Small Business Loans, Paycheck Protection Program, Credit, etc.
If you determine that your business needs a cash infusion in order to stay afloat, there are a variety of options for struggling businesses. Under the Paycheck Protection Program, the SBA is currently offering loans and loan forgiveness for employers that are retaining employees during the pandemic. The SBA is also offering economic relief loans, express bridge loans, and debt relief options such as deferment and fee waivers for businesses that are suffering as a result of the pandemic.
In addition to federal loans, there are many small business funding options to get your business through these tough times. You might consider small business term loans from lenders, business credit lines, merchant cash advances, and any number of other options. Consult with your financial professionals and your business law attorney to discuss your options and the pros and cons of each.
If you have a business interruption claim or other insurance policy issue in southern California or statewide, call the California business insurance attorneys at Drake & Drake, P.C. for a consultation at 818-914-4055.