Experian: Katrina Hurt Small Business the Most

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Small businesses and retailers took some of the biggest economic blows in the aftermath of Hurricane Katrina, according to a study released yesterday by Experian.

The study examined the effects of the hurricane on businesses in the Gulf states based on 635,000 businesses from Costa Mesa, CA-based Experian's business information database.

The industry sector hardest hit and owing the most was professional and business services firms, which owed $8.8 billion, or 22 percent of the total amount owed. Other industry groups affected, as measured by tracking changes in outstanding payables, were: retail, which owed $8 billion, or 20.2 percent; wholesale trade, which owed $5.9 billion, or 14.7 percent; and construction, which owed $5.7 billion, or 14.2 percent.

The study also showed that the hurricane affected more small businesses -- those with fewer than 50 employees -- than any other business segment. Experian's trade data showed that 72 percent of the outstanding balances were owed by this segment.

"Small businesses rely heavily on local customers," said Dan Meder, senior director of commercial credit solutions for Experian's business information solutions. "The success of small firms in getting back on their feet, and thus able to meet their obligations, will be highly correlated to the ability of the local economy to recover."

Another finding is that more than half of the businesses in the region have been established for fewer than five years and therefore may lack the financial stability to withstand the aftermath of this disaster.

Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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