Will New Orleans' black businesses bounce back? A year after Hurricane Katrina, black entrepreneurs are still struggling.

The quick answer to the question of whether black businesses in New Orleans are bouncing back after Hurricane Katrina devastated the Gulf Coast just over a year ago is an unequivocal no.

The estimated 8,000 black-owned businesses that existed in New Orleans pre-Katrina continue to face obstacles that have kept most from returning to the city. Entrepreneurs charge that a lack of financial support, city infrastructure, and habitable residences has hindered their ability to re-establish themselves. The greatest challenge by far, however, is the need for displaced residents to return: New Orleans, which boasted a population of 455,000 before the hurricane, had only about 230,000 to 250,000 residents as of August.

According to the Post-Katrina Economic Redevelopment Plan published in January by the city's planning body, the Bring New Orleans Back Commission, small businesses accounted for 40% of the job market pre-Katrina. But about 60% of those businesses were driven away by the storm.

The NAACP, The Opportunity Agenda, and the Kirwan Institute recently released a report, Housing Opportunity Action Plan, which outlined the lack of progress of the rebuilding efforts. As of July 2006, according to the report, a mere 17% of public buses were operational, only 60% of homes had electricity, and only 50% of hospitals had reopened.

The Opportunity Agenda Executive Director Alan Jenkins spoke about how the slow pace of rebuilding negatively affects black businesses. "Eighty percent of the flood-affected areas were occupied by people of color, so the businesses in those areas are hardest hit. You can imagine the challenges facing an entrepreneur trying to start over, trying to cultivate customers in a region where the government hasn't invested in rebuilding in a way that people can occupy it."

New Orleans Mayor C. Ray Nagin says, "I see many challenges ahead but we're meeting them head on. Legislation has set aside $600 million in new market tax credits for New Orleans businesses, and once we assess their needs, we are prepared to link them with various resources such as the SBA and Job One Centers." Nagin continues, "We're imploring businesses from all over the nation to consider moving to New Orleans. We hope to attract new industries to diversify the businesses and strengthen the city's economy. The region is facing $60 billion of economic opportunity over the next seven years. We don't have the businesses to accommodate the boom!"

Nagin added that small businesses will likely need to reinvent themselves to survive post-Katrina.

Business owners who have remained in the battered region have responded with spunk and creativity. Loretta Harrison, the owner of two pralines shops, continues to find ways to keep her company afloat. Although one of her stores suffered about $35,000 in vandalism damages and will have to remain closed until next year, her outlook is optimistic.

During the post-Katrina recovery, Harrison started serving breakfast and lunch to residents and out-of-towners involved in the rebuilding effort. Although her revenues haven't returned to the nearly $47,000 a month she was making pre-Katrina, her shop is maintaining itself since adding breakfast and lunch to the menu.

Liberty Bank and Trust is one of the black-owned businesses that was hardest hit by the hurricane (see "Blown Away by Katrina," November 2005). But Liberty (No. 7 on the BE BANKS list with $293.2 million in assets) has been able to successfully pick up the pieces.

"My company is having the most profitable year in its history," says CEO Alden McDonald. "Katrina forced us to develop a new business plan that had to offset our losses. As a result, we have become more efficient."

For the first six months of 2006, profits were $2.2 million--a 1.27% return on assets; pre-Katrina, the return was .85% to .87%. McDonald credits this increase to the restructured business model. Also, only four of nine banks are open, meaning less overhead and fewer employees. Surprisingly most of Liberty's customers stayed with the bank through its Internet banking feature.

McDonald points out that not every black-owned business be able to reopen immediately. "It's going to take a while for the small black businesses to come back," he says. "But you do have those businesses that are doing extremely well that have adjusted their product to meet the need of the new economy, such as real estate and construction."