Home » NEWS » Economy, rough weather create 'perfect storm'

Economy, rough weather create 'perfect storm'

The year 2008 was a stormy one – literally and figuratively. The economic recession and a string of weather-related disasters impacting practically the whole state combined to create the “perfect storm.”

Janita Stewart, district director, U.S. Small Business Administration, Mississippi District, said, “As is the case throughout most of the country, SBA lending in Mississippi is challenged due to the current state of the economy, which has placed a credit crunch on small businesses. Overall lending is down in our primary loan programs – 7(a) guarantee and 504.

“We made 128 loans to small businesses in Mississippi this time last fiscal year (Oct. 1, 2007-Dec. 12, 2008), but so far this year, we’ve approved only 98 loans for $20.9 million. The federal fiscal year runs Oct. 1-Sept. 30.”

While SBA’s primary loan programs are down, the agency had a busy year processing disaster-related loan applications. The state fortunately did not see a major hurricane strike, though Hurricanes Gustav and Ike did cause economic losses, but adverse weather ranging from drought to severe thunderstorms and tornadoes affected business and industry across the state.

In fact, the state set a new record for tornadoes in 2008, according to the Mississippi Emergency Management Agency (MEMA). MEMA reports the state was hit by 108 tornadoes in 2008, breaking the old record of 99 set in 2005. There were 23 tornadoes in September alone, a staggering number considering the annual average for the state is 26 tornadoes.

MEMA director Mike Womack said this illustrates why businesses need to be prepared. Tornadoes are a constant threat, and often strike suddenly .

“(Tornadoes) are very dangerous because they can happen anywhere with little to no warning,” Womack said.

Tornadoes and severe weather prompted the first disaster declaration early in 2008. Issued Jan. 11, the declaration covered 12 counties in the Delta and Central Mississippi.

In February, Gov. Haley Barbour declared a state of emergency after destructive storms and tornadoes hit North Mississippi that damaged and destroyed scores of businesses.

In April, severe storms and tornadoes raked Central Mississippi, causing extensive damage in Jackson. Barbour petitioned for assistance from FEMA, which initially refused to offer aid. The state appealed, and the declaration was ultimately declared in May.

Also in April, the Mississippi River flooded to near record levels. The river crested April 19 in Vicksburg at 50.8 feet, just missing the 1973 crest of 51.6 feet. At the height of the flooding, more than 275,000 acres were under water in Mississippi, affecting not only agriculture but also river traffic and the casino industry.

SBA disaster assistance was extended in April and again in May for severe storms, in June for flooding, in July for freezing temperatures that occurred back in April and in August for severe storms and flash flooding.

Hurricane Gustav hit in August, followed by Hurricane Ike in September. The SBA would approve more than $2.8 million in disaster assistance loans for Gustav alone.

Though a record year for tornadoes, not a single fatality was recorded. The Mississippi Emergency Management Agency (MEMA) said preparedness is the key.

“We tell businesses to do a lot like what people do at home, just on a larger scale,” Jeff Rent, public information officer at MEMA, told the MBJ.

While lives were spared, the cost of damaged and destroyed businesses mounted in 2008. Compared to 2007, last year was a stunner.

In 2007, the SBA approved $562,500 in economic injury loans. In 2008, the agency approved $7.876 million in economic injury loans.

While disaster assistance will remain a priority in 2009, the SBA is also looking to help cushion small businesses as they face a tough economy and tight credit. Stewart listed several things the agency is doing to aid the state’s small businesses when it comes to the economy:

• working with lenders and small businesses to understand the current economic situation

• encouraging participating lenders and certified development companies to work with small business borrowers by providing them with the flexibility to keep their businesses going

• getting the word out that money is available through SBA to credit-worthy small businesses to get the financing they need

• resource partners providing counseling and technical assistance, helping small business to maintain a positive financial situation throughout the ups and downs of the economy

• and, helping small businesses engaged in federal government contracting to take advantage of this approximately $400-billion marketplace

Contact MBJ staff writer Wally Northway at wally.northway@msbusiness.com.


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Wally Northway

Leave a Reply

Your email address will not be published. Required fields are marked *