This brief explores how capital for disaster recovery has been structured and deployed to support small businesses. Using insights from 41 recovery programs across fourteen disasters between 2017 and 2025, and interviews with local practitioners, it offers actionable lessons and strategies for community development financial institutions, community foundations, philanthropies, public agencies, and other actors to better support small businesses after a disaster event, particularly for business owners who have been historically underserved.

Why This Matters

Small businesses employ nearly half of all private sector workers and account for 99.9 percent of businesses in the United States. Yet, most small businesses are not equipped to recover after a climate disaster, while disaster events become more frequent and severe. Research suggests that small businesses face a higher risk of experiencing a disaster, receive less recovery support, and often recover at a slower rate than larger firms. Certain structural conditions can further increase vulnerability, including businesses operating in specific industries, owned by people of color, and operating in low-income communities and communities of color. When a small business is unable to recover quickly from a disaster, it affects their workforce, local community, and larger regional economic landscape, oftentimes exacerbating preexisting inequities. Equitable disaster recovery holds that all businesses that survive disasters should have a viable path to recovery and resilience, recognizing that achieving this requires directing greater resources and attention to business owners facing the greatest barriers.

Key Takeaways

Well-designed programs and capital products can help small businesses address recovery needs immediately after a disaster occurs. Private-sector funders play a critical role in filling gaps in pre-existing public resources by providing flexible capital products and support for recovery and longer-term resilience.

We recommend community development financial institutions and partner organizations consider the following recommendations, as they create new programs and initiatives to support small business disaster recovery.

• Engage potential funders before a disaster strikes and frame small business recovery as foundational to community rebuilding.
• Assemble a diverse capital stack that includes philanthropy, bank capital, and government funds to address different business needs.
• Match the capital product to the business’s pre-disaster financial condition and post-disaster situation.
• Design eligibility and application requirements that are low-barrier and include indirect impacts.
• Build fraud mitigation into program design from the start to balance rigor without being too burdensome on small businesses.
• Work collaboratively across the disaster recovery ecosystem, dividing roles, sharing information, and pre-negotiating capital reallocation.
• When possible, pair free and targeted technical assistance with capital products.
• Collect demographic and impact data during the application phases and in follow-up activities to inform future funding decisions and recommendations.

How We Did It

The recommendations are based on our analysis of 41 disaster recovery programs implemented across fourteen disasters events between 2017 and 2025. To understand the range of capital products and identify gaps in the recovery ecosystem, we scanned public sources such as federal agency websites, state action plans, CDFI networks, community foundation reports, and news coverage. In addition, we interviewed 13 organizations directly involved in 8 different disasters, including Hurricane Harvey (2017), the Camp Fire (2018), the Marshall Fire (2021), the Maui Fires (2023), the Great Vermont Flood of 2023, Hurricane Helene (2024), the March 2024 Tornado Outbreak, and the St. Louis Tornado (2025).