On Monday, June 22, 2009, the Rotary Club of Cedar Rapids speaker was Gary Ficken from the Small Business Recovery Group. Here's a review from "The Ripples" Newsletter of our club:
GARY FICKEN - CEDAR RAPIDS SMALL BUSINESS RECOVERY GROUP
Shannon Meyer, President of the Cedar Rapids Area Chamber of Commerce,
prefaced Gary Ficken's presentation on Monday by saying that the allocation of
the $517 million in Community Development Block Grants to Iowa recently
announced by Shaun Donovan, Secretary of Housing and Urban Development, was unfair to small businesses hurt by the flood. Only $25 million (5%) was
allocated to the business sector, state-wide. It was in the form of a $20
million loan interest expense program and $5 million in business rental
assistance. It was less than the $26 million allocated to the cost of
administration for the distribution of the funds. It compares to $380
million (74%) to new housing and home buyouts. She called the allocation
"unacceptable." Gary and Doug Schumacher are the two co-founders of
the Cedar Rapids Small Business Recovery Group. They have instituted a
business outreach program and maintain an Internet site to promote
organizational objectives to business victims of the flood. They presented
an emotional video about the effects of the flood on the Cedar Rapids small
business community. Gary Ficken is the owner of Bimm-Ridder
Sportswear, a 21 year-old Cedar Rapids business that suffered a $1.4 million
loss in the flood. Ficken said Bimm-Ridder's pre-flood debt was
approximately $130 thousand and as a result of the flood now stands at $900
thousand. He said the flood has changed his life. The small business
group has some real problems. Because of a lack of federal funding,
businesses affected by the flood have had to borrow to rebuild. Total
estimated small business physical losses (no "soft" costs) in Cedar Rapids
(Vernon Research) amounted to $239 million. Small business forgivable loan
assistance distributed as of June 1, 2009 amounts to $29.6 million.About 40% of
the debt load for small businesses has been created with SBA loans and 60%
created with commercial bank and other loans. An estimate based on 650
affected small businesses shows an average small business loss of approximately
$367 thousand ($249 thousand for building damage and $118 thousand for furniture
and fixtures, inventory, machinery and equipment). The average grant and
forgivable loan award per business amounted to approximately $46 thousand,
leaving a funding "gap" of approximately $322 thousand. This 88% gap in
funding per business is the crux of the problem for most affected small
businesses. The gap represents additional debt load on top of debt before the
flood. The additional debt load created by the flood only brings the
businesses back to pre-flood conditions, but does not improve the performance or
profitability of the businesses. It does not create more jobs or add new
equipment or inventory. It also does not take into account the depletion
to savings and retirement accounts used to fund recovery. Ficken predicts
that these higher debt levels will lead to a growing rate of business failures
in the future. Based on historical disaster occurrence statistics, more
than 300 additional businesses will shut their doors in the next two years
because they will not be able to sustain this level of debt. This will be
in addition to over 100 that have already shut their doors for good.
The Iowa Department of Economic Development (IDED) completed receipt of feedback at 4:30 pm on June 26, 2009 regarding the allocation of $517 million of CBDG funds. The City Council letter was one piece of feedback for IDED on the existing plan, along with Business Owners in the Cedar Rapids area.
Articles covering the Small Business Recovery Group; the group had a busy week after presentations to Rotary on June 22, 2009 and the City Council on June 24, 2009
Small Businesses Asking For "Fair Share" of Federal Funds - KCRG's Justin Foss
But with so much attention going to homeowners, the Cedar Rapids Small Business Recovery Group says the state is setting businesses up to fail. ...
But with so much attention going to homeowners, the Cedar Rapids Small Business Recovery Group says the state is setting businesses up to fail. ...
Flooded businesses feel slighted in latest aid round - The Gazette Online's Dave DeWitte
“The business community has offered ideas to help — they're just not getting funded,” Gary Ficken, president of the Cedar Rapids Small Business Recovery ...
“The business community has offered ideas to help — they're just not getting funded,” Gary Ficken, president of the Cedar Rapids Small Business Recovery ...
Cedar Rapids businesses say federal aid not enough - Gazette Online
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