EARTHQUAKE: THE LONG ROAD BACK : Gearing Up and Shutting Down : Small Firms Face a Grueling and Uncertain Recovery Effort

Il Byun stepped inside his Hollywood Boulevard clothing store Monday morning and could hardly believe his eyes.

The earthquake a few hours earlier had jarred ceiling tiles loose, collapsed an interior wall and crumbled a piece of the store’s facade into the street. Looters had carted off about $8,000 worth of goods.

It was the second major blow to Byun’s small business in as many years: His former clothing store in South-Central Los Angeles had burned to the ground during the riots of 1992.

“It is so frustrating and so sad,” Byun said softly.

Byun is one of uncounted thousands of small business owners--merchants, grocers and restaurateurs, some of whom had just bounced back from the L.A. riots--for whom the quake of ’94 is the beginning of a long, grueling process of recovery. If the 1992 riots are any guide, that process could end in failure for two out of five.

There are no good estimates of how many businesses were affected by the quake. But the response at newly opened federal disaster centers Thursday suggests quake damage was widespread.

Several hundred people seeking relief for their homes or businesses were waiting outside the Department of Water and Power building on Crenshaw Boulevard when it opened at 1 p.m. Some had been waiting since before dawn.

By opening time, many in the crowd seemed to be nearing open revolt. Several said that one man had grabbed a handful of aid applications and tried to sell them to people for $5, fleeing the scene before police could be alerted. Los Angeles City Councilman Mark Ridley-Thomas grabbed a police bullhorn to calm the crowd.

Dun & Bradstreet estimates that about 175,000 businesses, employing 1.5 million people, lie within a 20-mile radius of the epicenter of the quake. But only 19% of the small businesses in California that think they are vulnerable to earthquakes are likely to have earthquake insurance, according to the Insurance Research Council.

Businesses that sustained damage and do not have insurance will have to rely on public or private aid, loans, savings or friends for the money to restock lost inventory, to pay expenses while they clean up or to rebuild entirely. After the riots, for example, such help has been too little too late.

At the Oaks Liquor store in the Jefferson Park section of South-Central Los Angeles, the quake knocked virtually everything off the shelves, co-owner Brenda Robinson said. “There was a bunch of broken bottles everywhere.”

Oaks has no earthquake insurance to cover the lost inventory, which Robinson estimated to be worth between $30,000 and $40,000. That’s because Oaks’ owners couldn’t afford the $2,500-a-year premium on the $10,000-deductible policy.

As a result, Oaks will have to rely on a Small Business Administration disaster loan to recover. “But a lot of the losses we’ll have to eat,” she said. “We understand that doing business in Los Angeles, that’s one of the risks you live with.”

Past experience suggests that quake-damaged business owners can expect to run a gantlet of red tape, government regulations, confusing forms and bureaucratic foot dragging on the way to recovery.

The Korean-American Grocers Assn. of California reported that of 200 stores destroyed in the riots, only six are back in business.

The poor success rate is due to a lack of insurance, regulatory hurdles and delays in receiving federal assistance, said Ryan Song, executive director of the grocers group.

A broader survey by Dun & Bradstreet, meanwhile, found that more than 40% of 522 South-Central and Koreatown businesses damaged in the riots are no longer in operation. Of those that did rebuild, 37% said insurance paid for less than half the costs of rebuilding.

For their part, government officials promised that things will be different this time around.

Bernard Kulik, the SBA’s assistant administrator for disaster assistance, said the agency has cut its loan application process in half since the Midwest floods of last summer.

Gov. Pete Wilson said Thursday that the state will underwrite loans of up to $200,000 to help small-business owners get back on their feet quickly.

City, county, state and federal officials have met to begin coordinating relief efforts to business, said Kim Shaw, program manager of the county’s Community Development Commission.

And RLA, formerly Rebuild L.A., said it will begin coordinating information on sources of rebuilding money, and the agency encouraged affected small-business owners to call for help.

In the wake of the riots, the SBA says it approved 74% of the applications it received for disaster relief, most from small businesses, amounting to 5,582 loans worth $330.7 million. Of that money, more than 84% was disbursed.

But a survey by the Korean American Inter-Agency Council, a consortium of community groups, found that much of the money was given out in amounts too small to get a business back on its feet. The council blamed shortsighted SBA procedures.

SBA spokesman Richard Jenkins said the goal this time around is to get applicants their money within three weeks.

Alicia DeAlba, 71, was one of the people who made it inside the Crenshaw disaster relief center.

She owns a 24-unit apartment building in Glendale that sustained an estimated $150,000 damage during Monday’s temblor.

Six apartments were badly damaged. Many of her tenants have moved out and say they don’t want to go back in. DeAlba said the rents she receives are her only source of income besides Social Security, and now she faces a $6,175 monthly mortgage payment.

Referring to her tenants, she said: “Now the people are scared to death and they want their deposits back. But how am I going to make my mortgage payments? I’m very, very scared myself.”