For entrepreneurs hit hard by the devastating aftermath of Hurricane Katrina, there are more dark clouds ahead. For the flexible and creative among them, however, there's the glimmer of a potential silver lining--and the hope of blue skies beyond.

The bad news is, damage is total in many areas, running into the tens or even hundreds of billions of dollars--there are demographics to back up assertions that the scale of Hurricane Katrina's destruction dwarfs any other disaster on record in America. Recovery agencies, and even the SBA, have been swamped with requests for disaster loans.

The good news is, limits on disaster lending for small businesses may very well be set aside because of the scale of the disaster. And for some businesses willing and able to stick it out and to think on their feet--and to be generous with the elbow grease--there may be serendipitous opportunities.

Michael Lampton is a public information officer for the SBA's Disaster Assistance division in Fort Worth, Texas, which processes federal, low-interest disaster loans for businesses with fewer than 500 employees. According to Lampton, the first step for small-business owners seeking SBA disaster recovery loans is to contact the Federal Emergency Management Agency (FEMA) through its website or at (800) 621-3362, the same number given to all the Katrina evacuees. Intake staff at FEMA handle the SBA disaster center's triage, making referrals by FEMA case number from one central source.

By close of business Thursday, the SBA disaster loan processing center had received 52,329 referrals from the Louisiana area alone, a figure representing roughly half the number of all small businesses in the New Orleans area. "They're calling wanting to know how they can access our services," says Lampton. "We've been inundated."

SBA spokesperson Mike Stamler says that according to the 2002 U.S. Business Census, the annual payroll for small businesses in the most stricken metropolitan statistical areas of Biloxi, Mississippi, Mobile, Alabama, and New Orleans exceeded $11.7 billion. And that's just payroll alone, a figure that doesn't begin to take in tangibles like facilities, inventory, machinery and equipment.

Exact numbers of those affected will take some time to determine, but demographics dictate that small businesses in the metropolitan statistical areas mentioned above were decimated by Hurricane Katrina. On average, in the affected areas, about 75 percent of the small businesses were non-employer firms, such as sole proprietorships. Of the remaining small businesses, about 80 percent of them had fewer than 20 employees.

In Biloxi, Mississippi, according to the 2002 census, small businesses employed a total of 54,029 people. In Mobile, Alabama, 107,586 people worked at small businesses. And in New Orleans, there were 80,311 non-employer firms and 25,107 firms with 500 or fewer employees. Of those businesses, 21,565 had fewer than 20 employees. A total of 273,651 New Orleans-area residents worked for small businesses, generating a total annual small-business payroll of $7.75 billion in the Big Easy alone.

Among the stories of businesses reduced to wires and rubble and whole industries snuffed out, tales of entrepreneurial miracles have emerged in news reports, including researchers whose vital samples were somehow saved and resilient employers who had one employee willing to open their unflooded home to displaced fellow staffers so the company could stay in business.

What's Next?

Unfortunately, in many areas, total evacuation meant total shutdown for businesses both large and small. And while engineers ponder the safety and practicality of rebuilding much of New Orleans, entrepreneurs are huddled in distant shelters, wrestling with the big questions.

To relocate or not to relocate? Would my business flourish somewhere else? Should I rebuild my business? Can I improve on it and do it smarter? Even if my employees return to the area, will my clients come back? Could this happen to me again? And most pressing, perhaps: Will the government lend me money to help me with those answers?

Getting a clear reply to that last question could take longer than usual, says the SBA's Lampton.

After assessing the damage and receiving related paperwork, decisions are generally available within seven to 16 days. In the case of lost documentation, it's possible to fall back on things like tax returns from the IRS. However, other information sources usually called upon in the loan process may simply be unavailable for affected businesses. In the case of such a severe disaster as the flooding in the wake of Hurricane Katrina, Lampton says. "We're going to run into things that don't usually impede the process."

As of Friday, the SBA's loan processing center in Forth Worth, Texas, was gearing up for the massive task of preparing to lend. They'll be hiring between 400 and 700 employees to triple or even quadruple the existing staff of 240 and speed up the process. But, as Lampton says, "It's so early--they haven't been able to get in to any damage assessment yet."

In most disaster-lending situations, the agency can loan small businesses up to $1.5 million. However, that sum can be waived in particularly widespread disaster situations. After the September 11, 2001, terrorist attack in New York, for example, the agency received the legislative go-ahead to increase the lending limit to $10 million. By the end of last week, a similar move was expected in the wake of Katrina, with loan ceilings expected by some to go even higher.

Lampton's worked for the SBA's disaster loan division for 13 years and has seen many disasters come and go--earthquakes, the four hurricanes in Florida last year and the attacks on the World Trade Center. But it never gets any easier, he says. "It doesn't matter what type of crisis it is," says Lampton. "If they've lost it all, they've lost it. You feel for people, and you never become immune to it.

Thinking Ahead

While entrepreneurs mull their fates after the ravages of Katrina and the SBA seeks to measure the economic losses, there are fans rooting for can-do American entrepreneurship at places like the Caruth Institute for Entrepreneurship at Southern Methodist University's Cox School of Business in Dallas.

Jerry F. White is the director of the Caruth Center. He sees the opportunities that started springing up with the first boat rental last week as damage assessment and clean-up efforts got underway. In the face of a tragedy of such immense proportion, he's careful to preface discussion of entrepreneurial opportunity with sympathy for the victims of Katrina's wrath. Nationwide, that same sympathy will be a saving grace for desperate entrepreneurs in the affected area, he says.

Just determining to stick it out may turn the status quo on its ear--and earn a fledgling enterprise a fresh look from potential clients, White says. "In the short run, everyone is going to have phenomenal sympathy for you. People will buy from you just from admiration," says White. "You can tell them your equipment is more modern, your people are better and [ask them for their business.]--it's compelling. If you take the opportunity to do good work and to get a good reputation in the massive rebuilding phase, you're going to have some satisfied new customers who didn't even know you existed two years ago.

"It's not about exploiting people; it's about jumping in and helping solve their problems," adds White. "America is a very resilient place, and in times of destruction, entrepreneurs rise up and solve people's problems cheaper, faster and better than ever before. You'll have human tragedies where dreams are destroyed, but then you'll have other situations where people have dreamed of helping people and building a business, and those dreams will be fulfilled. There's an adage in Entrepreneurland that change produces opportunity. Entrepreneurs are opportunity-driven."

When Hurricane Katrina turned the Gulf Coast upside down and inside out, it changed the economic landscape, too, White says. "Some who were minor competitors or didn't exist before may rise up and become very, very substantial players. On the other hand, some competitors may decline or may not survive. The effort to rebuild is going to create a tremendous demand that has to be satisfied."

Think construction boom of a sweeping nature, White says. Once it's been determined which areas can be rebuilt and restored to livability, there'll be stores that have to be rebuilt, businesses that have to be rebuilt, homes that have to be rebuilt and filled with furnishings and appliances. Everything that was inside hundreds of thousands of homes will have to be replaced. Pipes will be plumbed, and someday, sod will have to be laid. The fleet of an estimated 250,000 cars lost to flooding will need to be replaced.

And it's not like a Third World situation, where there are hardly any funds to do the rebuilding and replacing, White notes. There'll be insurance payments, government funding through FEMA, small-business loans and individual savings--and the rebuilt businesses may well have modernizations that will suit their owners very well.

For the plucky entrepreneur, there may be chinks in the armor of the competition. Small business can sometimes make decisions faster, take a different tack on shorter notice, be more flexible. It could be a good time for the competent entrepreneur with authentic skills to make a push for new business, White says: "Those who come to the table with viable people and good proposals will get a hearing.

"The biggest opportunities are due to disruption of competition," claims White. "There'll be a plethora of smaller, newer companies that will rise up and take advantage of the opportunities if they are flexible, creative and dynamic."


Jackie Larson is a freelance writer in Ennis, Texas. She can be reached at jk_larson@hotmail.com.