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American Focus > Blog > Environment > Climate disasters are killing small businesses
Environment

Climate disasters are killing small businesses

Last updated: August 4, 2025 3:45 am
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Climate disasters are killing small businesses
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Climate-driven disasters can have a devastating impact on small businesses in the United States. These businesses, which are often the backbone of communities, face unique challenges when dealing with the aftermath of hurricanes, wildfires, heat waves, and ice storms. According to Shehryar Nabi, a senior research associate at the Aspen Institute Financial Security Program, small businesses are more vulnerable to climate shocks than larger businesses due to limited resources for preparation and post-disaster financing.

In Asheville, North Carolina, the effects of Hurricane Helene were particularly severe. The storm not only caused physical destruction but also had a long-lasting economic impact on the city’s small businesses. Kyle McCurry, the director of public relations for Explore Asheville, noted that the region’s economy suffered a 20 to 40 percent drop in annual business revenue following the storm. Many businesses, such as Vivian’s restaurant, Pleb Urban Winery, and TRVE Brewery, were forced to close their doors permanently.

One of the main challenges faced by small businesses after a disaster is obtaining financial assistance for recovery. While there are programs like FEMA’s individual and public assistance programs and the SBA’s low-interest loans, the application process can be burdensome, and the funds may take months to arrive. Only 14 percent of businesses were able to access support from the federal government, according to a report by the Federal Reserve Bank of New York.

To make matters worse, small businesses often struggle with liquidity issues after a disaster, making it difficult to cover immediate expenses. State and local governments, private lenders, and community fundraising efforts can provide additional financial support, but these sources may not fully address the liquidity needs of businesses.

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In response to the challenges faced by small businesses in Asheville, organizations like Explore Asheville have established funds to provide financial assistance to affected businesses. Through initiatives like GoFundMe campaigns and community fundraising efforts, businesses have been able to raise significant amounts of money for recovery. However, the road to recovery remains long and challenging for many small businesses in the wake of climate-driven disasters.

Despite these challenges, McCurry estimates that around 85 percent of Asheville businesses have reopened in some form, which is a positive sign of resilience in the face of adversity. With continued support from government agencies, community organizations, and private lenders, small businesses can begin to rebuild and recover from the devastating impacts of climate-driven disasters. Disrupted cash flow can have devastating effects on businesses, making pre-disaster planning crucial for protection. Experts emphasize the importance of contingency planning, which includes understanding insurance coverage and having strategies in place for potential threats. Benjamin Collier, an associate professor in the Department of Risk and Insurance at the Wisconsin School of Business, highlights the need for businesses to engage with the risks they face and be cautious by implementing buffers.

Nabi, a proponent of planning, suggests structural changes such as greater use of parametric insurance to provide quicker access to funds in the event of a disaster. He also advocates for allocating more resources to pre-disaster preparation to mitigate the impacts of potential threats. However, he notes that funding for preparation is often limited compared to post-disaster assistance.

Pat Nye, the regional director for the Los Angeles Small Business Development Network, points out a lack of incentives for small businesses to make their buildings more resilient to disasters. Unlike residential properties, insurance companies do not offer discounts for improvements made by small businesses. This oversight leaves small businesses vulnerable to the devastating effects of disasters.

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Kristen Fanarakis, associate director of small business policy and innovation at the Milken Institute, criticizes governments for not including small businesses in their recovery plans. She emphasizes the importance of incorporating small businesses in rebuilding efforts, citing a landscaper in the Asheville area who faced financial hardships after volunteering to help clear debris post-disaster.

In a report she authored, Fanarakis calls for a cross-agency “Small Business Resilience czar” and standardized disaster assistance forms to streamline the recovery process for small businesses. She advocates for a proactive approach that considers the long-term economic impact of disasters on small businesses, rather than just focusing on immediate relief efforts.

Overall, the key takeaway is the need for businesses to prioritize pre-disaster planning and resilience measures to protect themselves from the potential financial devastation of disrupted cash flow. By implementing these strategies and advocating for structural changes, businesses can better prepare for and recover from disasters.

TAGGED:businessesClimatedisastersKillingSmall
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