Flood will test viability of small Cedar Rapids businesses

Mr. Guarco stands guard after flood

Two community banks within four blocks of each other in downtown Cedar Rapids had dramatically different experiences during the devastating flood that reached its peak just about a week ago. Guaranty Bank & Trust, at the intersection of 3rd Avenue and 3rd Street, had nearly three feet of water on the first floor and had not been able to access the safe deposit vault. Thursday afternoon, upstairs tenants were allowed in but given protective masks and booties at a makeshift card table reception desk just inside the Third Street entrance. They had to show IDs to get in. Ruined furniture, wallboard and other debris continued to pile up outside under the watchful eyes of silent “Mr. Guarco.”

Two blocks north and two blocks east (not to mention a good many feet higher in elevation), Cedar Rapids Bank & Trust sat high and dry. Other than a loss of power and an evacuation order that temporarily closed the doors and moved personnel to a Council Street branch, the much younger bank dodged the destruction.

After conversations with executives of both banks today, I’m left sadly imagining a much different city here in the coming weeks, months and years. The small business community, in particular, may be in for a major shakeout, although the extent of the shakeout is no more predictable today than the record-setting crest was 10 days ago.

The banks, of course, must operate in a safe and sound manner to avoid regulatory action. At the same time, the feds will likely encourage them to “work with” borrowers as other banks and lenders were encouraged to do in the wake of Katrina and other catastrophes. Small businesses that were highly leveraged may have a hard time getting new loans, let alone paying off existing debt.

Said one banker: “We want to do everything that we can, but we also have to think about what’s best for the business, as well. If we think they’re a viable business, we’re going to do everything that we can to help.”

Recovering from a natural disaster isn’t always a test of will, as the optimistic sound bites of some officials would seem to have it. Of course, the community will survive. We’ll be back, better than ever, as some like to say.

Just keep in mind that “we” doesn’t actually mean everybody. It doesn’t mean “all of us.” It can’t. That’s what happens in a disaster; not everyone survives. For many small businesses, and maybe some bigger ones, it will come down to that test of viability.

Will gets you so far. Cash flow keeps you going.

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