Short-term finance solutions needed for disaster-hit businesses

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Many British businesses in recent years have suffered from floods and natural disasters. Access to finance is needed to repair buildings and reopen businesses closed due to flood damage.

According to a September 2016 press release, Florida recently offered a financial lifeline to businesses devastated by Hurricane Hermine. The state set up a fund to provide interest free short-term bridging loans for small businesses suffering from hurricane damage.

Britain takes a different approach by offering grants rather loans to affected businesses. reported in September 2016 that over £9m has been allocated this year to farmers in the North of England, helping them make repairs to their flood-damaged farms. Scotland also recently gave out grants of £1,500 each to many Scottish homes and business damaged by floods, said the BBC in January 2016.

Most businesses will be covered by insurance for flood-hit property, but businesses may not be covered for the full cost of lost business or the marketing costs of relaunching their business after a prolonged closure period.

One solution for short-term cash flow is a commercial bridging loans. The main criteria for acceptance for a bridging loan is a profitable past trading history and a clear exit strategy. An exit strategy is one where the repayment date is known and the lender is assured that funds will be available to repay the loan.

No business likes to contemplate closing due to a natural disaster, but it helps to have a financial plan in place in case a business is forced to temporarily close due to a natural disaster.

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