8% of Employer Firms Took a Natural-Disaster Loss in a Year. 34% of Them Called Their Finances Poor, Against 20% of Everyone Else

The Federal Reserve’s 2025 small-business survey asked employer firms whether a natural disaster had cost them in the past year. The ones that said yes looked different on almost every money question.

Who reported a loss

The survey asked employer firms one direct question: did the business sustain losses related to a natural disaster in the prior 12 months? Across all employer firms, 8% said yes (95% range 7.2–9.5%). The share barely moved with size. Firms with 1–4 employees were at 9%, firms with 50–499 at 9%, and no two size bands differed by more than their margins of error. Rural firms (10%) and urban firms (8%) did not differ either.

Where a business sat mattered far more. In the South Atlantic division, which runs from Delaware down the coast to Florida, 17% of employer firms reported a loss, a higher share than in every other division except the Pacific (11%). Five divisions, across the North and the Mountain West, were at 4% or below. Of the 20 states the survey publishes, Florida had the largest share at 29%, above 17 of the other 19; North Carolina (28%) and Tennessee, where the samples were smaller and the margins wide, could not be told apart from it. California was at 15%.

By industry, leisure and hospitality (restaurants, hotels, arts and recreation) had the largest share, 16%, above manufacturing (6%) and professional services and real estate (3%). Retail, at 12%, could not be told apart from leisure and hospitality.

How the firms with a loss were doing

The appendix also splits every other answer in the survey by whether the firm reported a disaster loss. That is 523 firms with a loss against 5,785 without. On financial condition at the time of the survey, 34% of firms with a loss said poor, against 20%. At the other end, 17% said good, 6% very good and 2% excellent, against 27%, 12% and 5%. Only the middle answer, fair, could not be told apart.

Revenue told the same story. 56% of firms with a loss said revenue fell over the prior 12 months, against 41%; 28% said it rose, against 41%. Asked which financial challenges they had faced, 70% of firms with a loss named paying operating expenses (others 52%), 64% named weak sales (others 46%) and 51% named making payments on debt (others 31%). Rising costs were named by most firms in both groups (84% and 72%) and did not tell them apart.

The size of the business made no measurable difference to who took a loss. Where it was made a large one.

What they did about it

Among firms that faced a financial challenge, those with a disaster loss were more likely to have taken almost every action the survey lists. 66% used the owner’s personal funds (others 52%). 60% cut costs, 57% drew on cash reserves, 49% took on debt, 46% downsized and 33% paid a bill late or not at all. The one action that did not differ was raising prices: 45% against 48%.

They also went looking for money more often. 72% of firms with a loss applied for some kind of financing in the prior 12 months, against 58%. 12% received a grant, against 5%, and 14% took a loan from family or friends, against 8%.

What to take from this if you run a small one

The first finding: being small did not make a firm more or less likely to take a disaster loss. The map did. If you operate somewhere like Florida, where more than a quarter of employer firms reported a loss, the planning question is not whether your business is too small to matter but what the first ninety days look like if it happens. The second finding is where the strain landed. Among firms with a loss, the owner’s own money was named as often as cutting costs or drawing on the business’s reserves, and more often than taking on debt or raising prices. Knowing in advance which of those you would reach for first, and how deep each one goes, is the part of the plan only you can write.

Three limits worth holding. The survey cannot say the disaster caused the weaker finances: firms with a loss were concentrated in particular regions and industries, and the appendix does not separate those effects. The SBCS is a convenience sample weighted by the Federal Reserve to match the employer-firm population by size, age, industry, region, urban or rural location and owner demographics, so every share carries a margin of error, and only differences where the 95% ranges do not overlap are stated here. And it covers employer firms only; owners with no employees are outside it.

Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com

This article is for educational purposes and is not a substitute for professional financial or legal advice.