Florida’s Small Businesses Struggle to Recover from Hurricane Milton
Orlando, Florida — More than two months have passed since Hurricane Milton struck the state, leaving a trail of destruction in its wake. With damages estimated at a staggering $50 billion, the recovery efforts are underway, but small businesses face significant hurdles. Nearly a dozen lives were lost in the hurricane, and the cleanup process could take up to a year as communities attempt to rebuild.
The Impact on Small Businesses
Small businesses are essential to Florida’s economy, employing 63% of the state’s small business workforce and generating 61% of its small business revenue. The hurricane affected over half of these businesses, many of which have 500 or fewer employees. Alarmingly, two-thirds of businesses directly in the hurricane’s path employ fewer than 20 people. As Florida faces this disaster, many of these small establishments that had barely recovered from the COVID-19 pandemic are now at risk of failing once more.
The Role of Banking and Government
To assist in the recovery, the Federal Deposit Insurance Commission (FDIC) has urged banks to offer constructive support to financially struggling businesses post-hurricane. Those banks that comply may receive favorable treatment under the Community Reinvestment Act for community development loans. However, simply encouraging banks to lend their assistance may not be enough. While many banks are eager to help, they too are grappling with the financial fallout of the storm.
Addressing Regulatory Challenges
One significant obstacle to recovery is the complex regulatory environment in Florida, which has been ranked as the 11th-most regulated state nationwide. With over 170,321 regulatory restrictions, many small businesses find compliance costs burdensome, particularly as they try to recover from the hurricane. Studies indicate that heavily regulated states see fewer startups and slower economic growth. For small businesses, the compliance costs per employee are notably higher, estimated at 29% more than larger businesses.
Recently, Florida passed a law referred to as the Regulations from the Executive in Need of Scrutiny. This law mandates that any new regulation expected to raise costs by over $1 million over five years needs legislative approval, thus providing some relief from outdated regulations that hinder business growth.
Federal Regulation Concerns
Despite state efforts, federal regulations continue to pose challenges for Florida’s small businesses. Some economists argue that recent actions by the Department of Justice and the Federal Trade Commission may harm businesses that rely on the Visa debit card network—an essential tool for many small operators. The Biden administration’s scrutiny over Visa, which controls a significant part of the market, could lead to more regulations that complicate operations for small business owners.
Looking Ahead
Congress is currently deliberating on hurricane relief for Florida, amidst debates about the amount of aid and timing. However, it is imperative that lawmakers recognize that adding more regulations to an already struggling sector may stifle recovery efforts.
Floridians are resilient and determined. The road to recovery from Hurricane Milton may be long, but support for small businesses is crucial. To ensure a robust recovery, our government must prioritize easing the burdens these businesses face, allowing them the freedom to rebuild and flourish once again.
