Five steps to financial recovery after natural disasters

Natural disasters such as floods, fires and droughts often create a raft of unforeseen challenges for producers that require them to access financial support to get back on their feet.

Agri-Business Development Institute Director Gordon Stone, who runs the MLA-supported Lender Ready Program, has some strategies for producers on how to navigate the lending environment to make sure they get support when they need it most.

1. Have a third party assess your situation

Natural disasters are emotionally draining for producers, so Gordon recommends having a third party support you with an objective assessment of your business position before making any far-reaching decisions around money.

“Finding someone empathetic to your business but able to look at your situation objectively is so valuable, be it an advisor, trusted family member or a friend,” he said.

“Taking that emotion out of their assessment is going to help you understand your situation with more clarity, and know what it is you need to do to recover.”

2. Build strong relationships with your bank

A strong relationship with your bank goes a long way to getting the financial support you need after natural disasters, according to Gordon. He said it’s important for a bank to understand your circumstances and the direction of your business.

“Banking is very process-driven, with lenders required to work within the framework of their institution.

“A robust relationship where they understand and trust you and your business is critical at these times.”

Gordon said another crucial part of this relationship is having your paperwork up-to-date so your business position is clear and known.

“If your paperwork or relationship is a bit out-of-date when a natural disaster strikes, take the time to briefly reconnect with your bank and your accountant in case some help is needed,” Gordon said.

3. Access disaster funds – that’s what they’re there for

Gordon said government schemes are a user-friendly way to get financial assistance, and are less constrained than the commercial requirements of banks.

“Even though these funds can be easier to access, you’ll still to need up-to-date paperwork to show the impact of the natural disaster on your business,” Gordon said.

4. Prioritise goals and pace your recovery

Gordon said understanding your strengths and weaknesses, as well as how you respond under pressure, can be valuable tools to have in the aftermath of natural disasters.

“Most people will justifiably feel stressed and out-of-control in these times,” he said.

“It’s important to somehow take a step back, identify everything going on in your business and then prioritise what’s needed from most important to least important,” he said.

“This will give you the chance to define the what, where and how of spending your time allowing you to park relatively less important things away until you have the time, mindset and finances to deal with them.

“This will help you focus and remove some of the financial stress.”

5. Don’t forget your community

According to Gordon, it’s important not to underestimate the value being a part of a community during and after a natural disaster.

“The people around you will most likely be in a similar situation, so helping each other recover as a community not only provides extra hands to get you back on your feet, but it also gives you a chance to help others for a sense of self and accomplishment,” he said.