Businesses tell Grassley that failures will accelerate

CEDAR RAPIDS - Business failures from the June 2008 flood in Cedar Rapids will be higher than necessary because of the slow and poorly coordinated government response, a group of businesses told U.S. Sen. Chuck Grassley this morning.

By the time all the federal dollars get through the maze of bureaucracy to reach businesses, many will already have failed, business owners and leaders told Grassley at the Cedar Rapids Area Chamber of Commerce.

“We're running into that next crisis phase, which we knew would happen,” said Doug Schumacher, a founder of Cedar Rapids Small Business Recovery who serves on a case management committee performing on-site assessments with the flooded businesses.

Out of 12 businesses Schumacher visited, he said roughly 80 percent expect a “cash flow crisis” within the next three months.

Millions of additional federal dollars are in the pipeline to help the businesses, but “we are definitely in a time constraint,” Schumacher said.

Chamber President Shannon Meyer said the federal government lacks disaster recovery programs, requiring a large investment in time by state and local officials to develop new programs that might qualify for funding under such existing programs as Community Development Block Grants.

Weak cash flow and heavy debt loads are “the number one issue our businesses are facing,” Meyer said, pointing to a lack of communication and coordination among agencies at various levels of government.

Much of the wrath was directed at the complex web of loan requirements and slow administration of Small Business Administration disaster loans to businesses.

Andy Deutmeyer of Blend restaurant, which closed last week under the weight of flood recovery debt, said the SBA's lack of flexibility left closing as the only reasonable option for the business.

Grassley said he was surprised that over 1,100 businesses were affected by the flood. He he believes the federal government overreacted by abuses in the Hurricane Katrina disaster response by tightening up restrictions on disaster aid.