Small Businesses Reeling
By Mark Steil
May 14, 1997

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Thousands of businesses in Minnesota, North Dakota and South Dakota hurt by flooding have applied for government disaster loans. For many, the weeks after the flood have been spent analyzing whether they can stay in business. Mark Steil of Mainstreet Radio reports:

The flooding Chippewa River left a big hole in the ground near a convenience store/gas station in Montevideo. Standing on the lip of the pit, six feet deep, bordered by twisted, broken pipes, station operator Jeff Knutson says it once contained gasoline storage tanks.

AS THE WATER COME UP, IT WAS LIKE HOLDING A POP BOTTLE IN A TUB OF WATER. AND THERE WASN'T ENOUGH DIRT OR ANYTHING TO HOLD THEM DOWN, AND THEY POPPED RIGHT OUT OF THE GROUND.

When the storage tanks floated out of the soil the future of Kntuson's business came adrift.

THE BIGGEST PART OF THE BUSINESS, ESPECIALLY IN A CONVENIENCE STORE, IS YOUR GASOLINE.

Riverside Gas & Video is still open, but Knutson says without gasoline to draw customers, sales are down 60%.

WE RAN THIS FOR THREE YEARS AND IT'S BEEN OUR LIVELIHOOD, IT'S BEEN OUR INCOME. IT'S BEEN THE ENTIRE AMOUNT OF EVERYTHING THAT WE'VE HAD TO DO IN THE LAST THREE YEARS AND THEN ALL OF A SUDDEN TO NOT HAVE IT THE WAY IT WAS BEFORE; THE ONLY WAY YOU CAN GET THROUGH IT IS TO LAUGH SOMETIMES. (LAUGHS)

Businesses hurt by flooding can apply for federal disaster loans. These loans are very attractive because of their low 4% interest rate. Many businesses find they can take on significantly more debt than they had before the flood, yet their monthly loan payments are the same. But waiting for the federal money to be approved can be difficult. Many businesses need cash now to tide them over until the federal money arrives. Dan Windschitl runs a spray foam insulation business out of his New Ulm home. The flooding Minnesota River closed his business for several weeks.

I'M GETTING ON THE THIN END. I'M GOING TO HAVE TO START EITHER SELLING THINGS, OR LOOKING FOR A SMALL BUSINESS LOAN OR GRANT OR SOME TYPE OF SITUATION LIKE THAT TO RELIEVE SOME OF THE FINANCIAL BURDEN.

Windschitl spent thousands of dollars and hundreds of hours fighting flood waters. The money and time were resources he normally would have used to build business.

NOT BEING ABLE TO GET OUT AND SOLICIT WORK, AND NOT HAVING THE FUNDS NOW BECAUSE I SPENT MY RESOURCES ON FIGHTING THE FLOOD, I HAVEN'T BEEN ABLE TO ADVERTISE. AND IT'S SLOW, IT'S SLOW GOING RIGHT NOW.

One group which is trying to help businesses bridge the time gap to federal loans is the Minnesota Chamber of Commerce. Chamber president David Olson says the group is raising money they'll distribute directly to businesses to assist their flood recovery.

HELPING WITH CLEANUP, IN SOME CASES, YOU KNOW, RESTORING STOCK AND MERCHANDISE THAT THEY NEED TO SELL, REBUILDING BUILDINGS, FIXING UP BUILDINGS. JUST THE BASIC NEEDS THAT NEED TO BE IN PLACE FOR A PERSON TO BE IN BUSINESS.

Many business owners say something's missing in the federal disaster relief package. Jeff Knutson of Montevideo puts it this way:

I FEEL THE BUSINESS PEOPLE ARE COMING OUT ON THE SHORT END OF THE STICK, THERE'S NO DOUBT ABOUT IT. I KNOW EVERY MONTH THAT I'M OPEN WITHOUT GAS I'M GOING TO LOSE MINIMUM $4000 A MONTH AND THERE IS NOTHING FOR THAT. THERE IS NOTHING FOR YOUR LOST REVENUE.

An official with the federal Small Business Administration says that's a complaint he's heard before. The SBA's Herb Mitchell says current policy does not provide cash grants to businesses.

ONE OF THE THINGS WE HAVE TO RECOGNIZE IS THERE IS SOME RISK THAT GOES WITH GOING INTO BUSINESS. ON THE OTHER HAND WE RECOGNIZE IT IS DIFFICULT TO PREPARE FOR A DISASTER LIKE THIS. WHAT WE TRY TO DO IS TO BE AS RESPONSIVE AS POSSIBLE, TO GET THERE AS QUICKLY AS POSSIBLE, AND PROCESS THE APPLICATIONS AS QUICKLY AS POSSIBLE TO SORT OF MINIMIZE, HOPEFULLY, THAT DOWN PERIOD.

Mitchell says thousands of businesses have applied for disaster loans. He says the latest tally puts the number of applications at 5000 in North Dakota, 2000 in Minnesota, and 1200 in South Dakota.

Go to Flood of 1997.