After the dangerous chemical leakage incident in Garden City, Orange County, many business owners, employees, families, and communities in Orange County have faced various issues such as forced evacuations, temporary closures, personnel interruptions, income losses, and more. For small businesses, temporary operational interruptions could potentially lead to severe operational and financial distress.
On Friday the 29th, the Orange County Inland Empire Small Business Development Center (SBDC) held a virtual meeting to introduce resources available to assist small businesses. Experts at the meeting emphasized the importance of businesses communicating with stakeholders and keeping detailed records for applying for relief, claims, or obtaining financial support through loans.
Last Thursday the 21st, a vapor leak incident occurred at GKN company’s chemical tank, leading Governor Newton to declare a state of emergency in California on the 23rd, with the mandatory evacuation order lifted on Tuesday the 26th.
During the meeting, Manal Richa from SBDC reminded business owners that safety should always be the top priority. She stressed the importance of maintaining communication with employees, customers, suppliers, and landlords while keeping thorough records of all information including income losses, canceled appointments, payroll interruptions, closures, cleanup costs due to the incident, and overtime expenses. Organizing documents systematically can facilitate the process of claiming compensation and assistance.
“During the post-disaster recovery period, employees are one of the most valuable assets. Inform them of changes in work arrangements, shutdown measures, safety protocols, and operational adjustments,” said Richa. She also mentioned considering California labor laws concerning shutdowns, wages, leaves, and scheduling, with the Employment Development Department (EDD) potentially offering services such as unemployment insurance, disability insurance, paid family leave, and workforce support.
Mike Daniel from SBDC mentioned that businesses typically have to wait a week to apply for unemployment benefits for employees following a shutdown, but due to the state of emergency declaration, applications can be submitted immediately. Moreover, employers have an additional two months to submit wage reports, and self-employed individuals can also apply for unemployment insurance by contacting EDD for guidance.
Richa advised business owners to carefully read the insurance policy terms, especially coverage included in comprehensive insurance such as business interruption, commercial property, liability insurance, etc. Contacting the insurer promptly if the business was forced to shut down or restrict operations due to unexpected events is crucial to potentially claim compensation included in the policy.
“It’s essential to keep detailed records during communications, request a claim number from the other party for tracking progress, opt for written communication where possible, and retain copies of all documents,” Richa explained. If business interruption coverage is part of the insurance plan, it may help offset losses including profit loss, fixed operational expenses, temporary leased space costs, employee wages, loan repayment, and other eligible expenses.
Specific terms in each policy differ, necessitating business owners to clarify what is not covered by insurance, e.g., undeclared income, interruptions in specific public utilities, or events listed as exclusions.
Daniel added that business interruption insurance often comes in three forms: as part of general liability insurance, as a standalone purchased insurance, or as additional provisions on the policy. He recommended contacting agents for inquiries, and SBDC could assist in interpreting the terms.
Would submitting an insurance claim through commercial insurance lead to premium increases or policy cancellation? Daniel responded, “There might be potential premium increases in the future, but for now, taking care of yourself is paramount. Additionally, one of the responsibilities of the state insurance commissioner is to ensure that insurance companies do not retaliate by canceling policies due to filing claims.”
For businesses under commercial lease agreements, contacting landlords to request a one-week or one-month rent deferral period is possible, though landlords may decide to accommodate or decline the request. Daniel suggested providing landlords with a written record detailing losses during the five-day mandatory evacuation and closure period and inquiring about any compensation or rent reduction measures available.
Currently, there are no financial aid programs at the city, county, state, or federal levels for this incident. Federal initiatives like low-interest loans or Economic Injury Disaster Loans have not been activated. The Orange County government is evaluating the degree of impact on businesses to facilitate applications.
At the state level, the California Infrastructure Bank (iBank) has multiple financial development corporations, with one in Orange County capable of approving loans up to $1 million for up to seven years for eligible applicants.
If federal loans are approved, such as Small Business Administration’s loan programs akin to pandemic disaster loans with terms extending up to 30 years at interest rates below 4%, loans exceeding $50,000 may require collateral.
Elmy Bermejo, Director of the California Office of Small Business Advocacy (CalOSBA), and Julie Clowes, the office’s representative in Southern California, who both have prior experience at the Small Business Administration (SBA) at the federal level, provided valuable insights on federal and state government affairs.
Bermejo expressed, “We hope your business can make the most of available resources as we move into the recovery phase, and our team will offer support.”
Clowes added, “Whether you have any queries regarding contacting state government departments or feel confused about specific processes, we are here to support you.”