Issue Overview
Disaster Bridge Loan Program
Most businesses that encounter losses due to hurricanes and other natural disasters are in desperate
need of cash to survive and to begin rebuilding their lives and the local economy. Major disasters
usually cause an interruption in business cash flow due to loss of property, production, suppliers,
customer base or accounting function. Receiving immediate operating capital to rebuild within
four weeks following a storm verses receiving cash four months following a storm, could be the
difference between staying in business and going out of business for most companies. FEMA and
insurance companies are slow to inspect, assess damages and reimburse businesses for their losses.
SBA, banks and other lending institutions are slow to disperse funds in the weeks following a
storm. Without cash, most business owners are forced to lay-off employees or close their business
indefinitely while waiting for loans, insurance payments or grants.
Local Response:
In order to better prepare for future natural disasters, business leaders and staff of the Mobile Area
Chamber of Commerce, as well as representatives from Alabama Gov. Bob Riley’s staff, met with
Mississippi officials in 2006 to learn about one of their key initiatives in helping businesses
recover from Hurricane Katrina – the Mississippi Small Business Disaster Bridge Loan program.
This program bridges the time until insurance claims are paid and other disaster relief funds or
financial assistance are acquired. Specifically, Mississippi’s program offered state-guaranteed,
three- or six-month, zero-interest loans of up to $25,000 to businesses with up to 100 employees.
Background:
Modeled after successful programs in Florida, the Mississippi Small Business Disaster Bridge
Loan Program targeted small businesses in 13 Mississippi counties most heavily impacted by
Hurricane Katrina. State officials worked with banks across the region to target business owners
who needed help the most. Local bankers contacted their customers. Approvals were handled at
the local level, eliminating much red tape and delay.
According to Mississippi Development Authority, more than $12.3 million was loaned to more
than 500 qualifying businesses in hurricane-ravaged areas of Mississippi. In Mobile’s neighboring
Jackson County, Mississippi, nearly $2.5 million was loaned to 102 Jackson County businesses,
touching some 880 local jobs. The program was made available in the immediate wake of Katrina
and is now closed.
Alabama Status:
Governor Bob Riley and his key staff members have expressed support for a similar program
in Alabama. The Mobile Area Chamber of Commerce included a disaster bridge loan program
in its 2007 Community Agenda for southwest Alabama. The Chamber will continue to work
closely with Governor Riley, the Mobile-Baldwin legislative delegation and other state
officials to secure this very important initiative for Alabama’s small businesses.
Mobile Area Chamber of Commerce P.O. Box 2187 Mobile, AL 36652-2187 251-431-8621 (phone) 251-431-8646 (fax)