NEW YORK—The Federal Reserve Bank of New York today released two reports on small businesses in Puerto Rico: Puerto Rico Small Business Sector Trends: Evidence from the 2018 Survey (Sector Trends Report), and Puerto Rico Small Businesses and the 2017 Hurricanes (Hurricanes Report). Both reports draw from the New York Fed’s annual survey of small businesses in Puerto Rico, which provides timely information about firms’ performance and financing experiences. This survey was fielded from March to May 2018, six to eight months after hurricanes Irma and Maria’s landfall on Puerto Rico.
“Last year’s hurricanes wrought extraordinary challenges for small businesses in Puerto Rico, and these reports provide a valuable look of the surviving firms,” said Kausar Hamdani, senior vice president at the New York Fed. “The reports highlight ways to address current losses—namely through bolstering micro loans—as well as possible preventative measures for future storms—including by addressing insurance coverage gaps.”
The Sector Trends Report looks broadly at trends in Puerto Rico’s small business sector, while the Hurricanes Report specifically focuses on firms that faced hurricane losses. Overall, credit demand declined, possibly because of the increased aversion to taking on debt, though credit availability improved significantly. There was a higher share of micro-revenue firms, and the financing requested was primarily for small-dollar loans. Of the vast majority of firms that faced hurricane-related losses, few were fully covered by insurance, and less than a quarter applied for financing to address those losses. Despite these hardships, most surviving firms indicated high confidence that they would be open for business this year.
“It’s clear that the entrepreneurial spirit remains strong as businesses look to not just rebuild but expand from the devastating storms of 2017,” said Federal Reserve Board Governor Lael Brainard. “This report is another reminder of the extraordinary needs and opportunities for investment that exist on the island,” she said. “We invite financial institutions to seriously consider Puerto Rico and other storm damaged areas, including those affected by Hurricane Florence, as part of their CRA activities.”
Earlier this year, federal bank regulatory agencies issued a joint statement giving favorable Community Reinvestment Act (CRA) consideration to development activities by financial institutions located anywhere in the nation that help revitalize or stabilize Puerto Rico and the U.S. Virgin Islands.