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Small businesses in the United States have recently been affected by two unforeseen external factors - COVID-19 and civil unrest. The wave of protests that followed the brutal killing of George Floyd brought to light, once again, the systemic problem of police brutality that America continues to grapple with. Although the majority of the protests were peaceful, there were also rogue elements that left violence and destruction in their wake. This has had a profound impact on the small businesses that were looted and/or suffered losses due to resulting disruptions. The following article will explore the aftermath of the protests, what this means for the small businesses that were directly impacted, and the measures that can be put in place for future riots and incidents of looting.
Those participating in the recent protests sweeping over the country have largely been peaceful protestors, however, they have been overshadowed by a minority who have taken part in riots, looting, and the destruction of property. Those who intend to attend a protest peacefully, very rarely partake in vandalism, this is usually carried out by those who wish to take advantage of the situation and further their agenda, separate from that of peaceful protestors. Riot looting is often a sign that people have had enough of the status quo, in this case, police violence against minorities, and are venting their frustration in a violent and destructive manner. Aggression on the part of police officers can also turn a peaceful protest hostile and dangerous, particularly if looters and peaceful protestors are both being targeted by the police because of the illegal behavior perpetrated by the former.
The riots and looting that followed George Floyd’s brutal killing occurred at a time where many small businesses were still reeling from the effects of the COVID-19 pandemic and its subsequent lockdown. Many small businesses are bearing the brunt of the economic ramifications brought about by these consecutive events. Unlike huge retailers such as Walmart and Target, small, privately owned businesses are finding it significantly harder to bounce back.
Direct costs such as damage done to stores and stolen inventory are compounded by indirect costs such as earnings that were lost because stores had to close for indefinite periods to restock and repair damages. Those who own and work for small businesses often have closer ties to their businesses and are affected much deeper psychologically and financially compared to those who work for large retailers. Although the damage done to small businesses and their owners has been huge, similar events in the past have shown communities often rally together in times of difficulty and help the affected business to open its doors once more.
Generally, small businesses are covered by their insurance policies in the event of looting, however, the insurance coverage taken out varies depending on the size of the business. A standard liability and coverage package taken out by a small business can add up to $1,200 a year, compared to the more comprehensive policies taken out by large retailers, that often run into millions of dollars, Unfortunately, due to the economic strain put on small businesses by the COVID-19 pandemic, many businesses had been unable to pay for their insurance coverage and were left uncovered when the riots took place. The Insurance Information Institute estimates that only 40% of small businesses are adequately covered in the case of their business being interrupted. Minneapolis, the epicenter of the riots, has amassed an estimated $25 million in insured losses.
There are multiple routes that small businesses can follow if they require financial assistance. This can take the form of insurance, government assistance, or support from the public through donations. An emergency fund is made available by the government in the form of a disaster loan program created by the Small Business Administration (SBA). For them to be valid, disaster loans given out by the SBA need to fall into an area that has been declared a disaster area by the SBA. Historically, the federal government has assisted in affected areas through other channels. This included making available a $600 million relief package for landlords, residents and business owners by way of the Federal Home Loan Bank Board system, in the wake of the 1992 Los Angeles riots.
Assistance does not only need to come from a federal level, but it can also be provided for by local organizations that are looking to help affected businesses. Local governments and banks have also handed out emergency loans in the aftermath of riots such as the 1992 Los Angeles riots and the Cincinnati riots of 2001. The recent riots in Minneapolis have seen a local non-profit Lake Street Council, raise $8,86 million to help businesses that have been affected. To date, they have distributed $2,8 million in grants to afflicted businesses in the Lake Street corridor in Minneapolis. 70,000 private individuals have also made donations. Crowd-funding platforms, such as GoFundMe can also be a great way to raise funds and awareness.
Periods of civil unrest can be stressful for all involved. They are particularly taxing times if you have a business that could be damaged and your money safety could be jeopardized. These tips should be followed to mitigate, and possibly prevent, any damage that could befall your business.
Cash safety is a pertinent worry for those who may be affected by civil unrest and destruction. Although an increasing number of consumers are moving toward using credit cards, many businesses, particularly small ones, do not have credit card terminals in their stores, resulting in large amounts of cash being at the store at any given time. Many looters are also more attracted to the prospect of stealing cash, rather than items, as they may struggle to resell stolen goods. To alleviate the losses that your business might suffer it is important to remove any cash, merchandise, or equipment from the property if yourself and your employees begin to feel unsafe. After removing all valuables, it would be wise to put up easy to read signs on the front of your business stating that there is nothing of value within the store. Although not a guarantee, it can deter potential looters from breaking in.