Small businesses were hit hard by hurricanes
COSTA MESA, Calif. (11/2/05)--As credit unions look to serve more small businesses, they need to be aware of how vulnerable these companies can be to natural disasters such as Hurricanes Katrina, Rita and Wilma.
According to a recent study by Experian, Hurricane Katrina affected more small businesses--those with less than 50 employees--than any other business segment. Seventy-two percent of the outstanding balances of $7 billion were owed by small businesses.
The finance, insurance and real estate sector accounted for 3.7% of the outstanding balance, while the greatest amount--$8.8 billion or 22%--was owed by professional and business services firms (PRNewswire Nov. 1).
Across the country, more than 1,700 credit unions offer member business loans, according to statistics from CUNA's Center for Research and Advice. In 2004, credit unions granted more than $8.4 billion in member business loans with the average loan coming in at $160,000.
Small businesses are more vulnerable to business interruptions that affect their relationships with local customers, said Dan Meder, senior director of commercial credit solutions, Experian Business Information Solutions.
The longer a small firm has been in business, the better chance it has to recover. More than 50% of the businesses in the Katrina-affected area had been in business for less than five years and may not have the financial stability to get them back on their feet, according to Experian.
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