Media Advisory: The Impact of Natural Disasters on Small Businesses
One in 10 small businesses with at least one employee suffered losses from a natural disaster in the prior year, according to a new fact sheet based on data from the Federal Reserve’s 2021 Small Business Credit Survey. The report provides additional insight into how US small businesses fared amid major natural events in 2021, including Hurricane Ida, the historic cold wave in Texas and other southern states, and the destructive wildfire season in the West.
- Most disaster-affected firms reported total losses of less than $25,000. Higher-revenue firms and firms with 50 or more employees were more likely than their counterparts to report losses exceeding $100,000.
- Forty-four percent of disaster-affected employer firms turned to external funding sources to cover their business losses. The most common sources of external funding were insurance, non-government loans, and federal disaster relief funds.
- Among firms that turned to external sources, 80% covered at least some of their losses through external funding, while 20% recovered none. Firms owned by people of color were more likely than white-owned firms to say that they recovered none of the revenue losses through some type of disaster funding.
Read more: The Impact of Natural Disasters on Small Businesses
About the Small Business Credit Survey (SBCS)
The SBCS collects information about business performance, financing needs and choices, and borrowing experiences of firms with fewer than 500 employees. These firms represent 99.7% of all employers.
Responses to the SBCS provide insight into the dynamics behind aggregate lending trends and about noteworthy segments of small businesses. The results are weighted to reflect the full population of small businesses in the United States. The SBCS is not a random sample; therefore, results should be analyzed with awareness of potential methodological biases.
The SBCS includes experiences from firms across all 50 states and the District of Columbia through collaboration of all 12 Federal Reserve Banks. The 2021 survey yielded responses from a nationwide convenience sample of 6,834 firms with no employees other than the owner(s) and 10,914 firms with between 1 and 499 employees.
For more information on the Small Business Credit Survey, please visit fedsmallbusiness.org.
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
Doug Campbell, firstname.lastname@example.org, 513.455.4479