How a loan from the Small Business Administration helped Zephyr River Expeditions during an epic California flood in 1997
The COVID-19 pandemic is a disaster. But it’s not the first. Outfitters and guides depend on nature. They’re familiar with extreme events that rock their world and businesses. One such event was the epic flooding in California in 1997 when rivers broke their banks and snowmelt inundated many areas of the Golden State.
Bob Ferguson was running Zephyr River Expeditions on the banks of the Kings River in the Sierra Nevadas. When the flood came through, it scoured land from the banks. His base camp was swept away. The torrent left 20-foot piles of driftwood along the river. It was a disaster.
“We were down in the dumps,” said Ferguson in a phone interview recently. “We were thinking, what the heck are we going to do?”
The cost to bring in tons of sand, heavy equipment and pay for labor-hours was substantial. Ferguson heard that the federal government was offering Small Business Administration loans at 4% with a 30-year term to help businesses through the California disaster.
“We might have been able to use cash reserves to pay for the work, but this money was available, and I thought, ‘If next year is tough, then we can keep those reserves just in case.’”
Ferguson opted for an SBA loan and was pleased with the way everything turned out.
The flood happened in January, he and two other outfitters in the area contracted with an earth-moving company, and he was ready for customers as the season began in April.
“It worked out great for us,” he said. “A business that is in this position now should definitely look into a loan.”
Ferguson did have to put up other land he owned as collateral for the loan. He paid it off after a few years because there were no prepayment penalties with his loan.
As of now, Ferguson is not expecting to apply for a loan to help his business through the COVID-19 pandemic.
“I think we’re in a position that we can shutter up for 2020 if we want to, and then look forward to a better 2021,” he said.
Of course, many businesses are not in a position to do that during this crisis.
Ferguson said a major difference in assistance now compared to 1997 is that the federal government is now offering $10,000 grants (emergency advance) that do not have to be paid back. Even if a business does not qualify for an SBA disaster loan, it’s possible they could still get the $10,000 to help with revenue shortfalls and expenses, according to details of the CARES Act. See information on the SBA’s EIDL Emergency Advance loan here.
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American Outdoors Association - COVID-19 Guidance
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Idaho Outfitters & Guides Association
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Johns Hopkins University
Outdoor Industry Association - Webinar Recording (April 2)
Outdoor Industry Association - The Power of the Outdoors
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Small Business Administration - Disaster Loan Assistance
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Small Business Development Center (SBDC) Network