Metro Detroit businesses hope they won’t lose loan program again
As for simple take-out food service, McShane’s Irish Pub laid off most of its 67 employees at three locations in Southeast Michigan after the start of the coronavirus pandemic.
To help his business survive, part-owner Bob Roberts applied for the Paycheck Protection Program, the high-profile federal low-interest loan program for small and medium-sized businesses that turn into grants if at least 75% of the money is spent. to maintain the wage bill before the pandemic.
Roberts submitted requests to each of the sites’ banks between April 6 and April 8. Yet by the time the program’s initial reserve of $ 349 billion ran out on April 16, it had received no loans and was still waiting.
Now, he hopes to have better luck in the weeks to come once the U.S. Small Business Administration replenishes the program with $ 310 billion in additional funds.
McShane’s empty-handed experience is sadly common in Michigan, according to business leaders and other owners, as some banks have been slow to accept the program’s online applications and the reports suggest that others had a “two tier” system and served their wealthier clients before small family businesses. In other cases, the demand for loans may have simply exceeded the funds available.
Roberts, who is also president of the Corktown Business Association in Detroit, said that earlier this week none of the 26 Corktown companies that had requested paycheck protection funds had received anything.
“I don’t think the loan process was very fair and inclusive,” Roberts said. “It was a race to see who got (the requests) first, and more importantly, whether or not your bank had its processes and procedures to be able to process your request.”
The second installment of the program’s money is due to arrive next week with the latest coronavirus relief legislation, signed Friday by President Donald Trump. Businesses don’t have to reopen to use program money – just restart their payroll if they want the loan to become a grant.
“I really, really hope we get it, but who knows?” Said Chris Gross, co-owner of Berkley Common restaurant in downtown Berkley, which employed 25 people before the crisis and is still waiting $ 80,000 at $ 90,000 in paycheck protection money for “If we get the loan, we can rehire people back to what they were doing and take the time to prepare for the reopening.” “
Michigan businesses and qualifying nonprofits have been approved for 43,438 forgivable paycheck protection loans for the first round, totaling about $ 10.4 billion, according to the Small Business Administration.
Nationally, the average loan size was $ 206,000 and the construction industry was approved for the most dollars (13% of the total). The business administration has yet to release loan details for individual states.
There are already concerns that the second batch of billions of paycheck protection will run out before all the businesses that need the money can get it.
“We think there are about 100,000 that were eligible, so this next round of funding is really important,” said Brian Calley, president of the Small Business Association of Michigan and former lieutenant governor of the state.
Smaller did better
Calley said small financial institutions appeared to be faster at accepting and processing corporate paycheck protection claims than some large banks.
“I think the bigger banks were trying to automate the app portal more and (do) everything online,” he said.
Firms were encouraged to apply for forgivable loans through their usual banks. However, they can also be applied through various non-traditional lenders including PayPal, Square, and SBF Freedom.
Comerica Bank, formerly based in Detroit but based in Dallas since 2007, has established itself particularly strong criticism from small business owners who say the bank was slow to start accepting requests.
Batch Brewing Co. in Detroit, which employed 18 people before shutting down due to the pandemic, attempted to apply for a $ 104,000 loan through its long-standing bank, Comerica, but the online application portal of the bank did not function until after the initial money from the program disappeared, according to owner Stephen Roginson.
Roginson said he would still apply for a paycheck protection loan, but through another financial institution because he severed all ties with Comerica.
“I have high hopes for the second round,” he said.
A spokesperson for Comerica declined to discuss the late opening of the bank’s application portal, but said they are now accepting applications.
“It is important to remember that due to the extremely high demand for this program, not all institutions accepting applications can guarantee how quickly the volume of applications can be processed… nor guarantee that funds will always be available. “said the spokesperson for the bank. .
Help with personal connections
Janet Jones, owner of Source Booksellers, 4240 Cass in Detroit, also applied for a paycheck protection loan, but has not yet received it. She is grateful for an emergency grant of $ 2,500 she received from TechTown Detroit’s Small Business Stabilization Fund, which helped her pay the store bills.
Jones said she knew her paycheck protection experience was not unique.
“We’ve had a lot of contact with virtual meetings with our fellow booksellers across the country,” Jones said. “The only ones who seem to be successful are someone who had a connection to a bank on a personal level.”
Although she has closed her store to customers in person and had to lay off four employees, she continues to sell books by mail through the new store website. And the website has generated sales with new customers across the country.
“There are positive things that have happened,” she said.
Chiropractor biz hopes $ 150,000
Be Well LifeStyle Centers, 750 S Old Woodward Ave. in Birmingham city center, had to close most of its buildings, with the exception of its cafe and chiropractic service. Chiropractic service is considered an essential business that can be operated under Governor Gretchen Whitmer’s “Stay Home” Order.
Owner Silvio Cozzetto said his patients are a mix of his regulars as well as new clients whose chiropractors are closed. He now performs all of his treatments wearing gloves and a mask, he said.
Cozzetto said he now only had three out of the 20 employees he had, and various technical issues forced him to submit his paycheck protection loan application three times to his bank, Chase Bank. .
He hopes his request for $ 150,000 will be accepted in the second round. He said he knew of other small businesses that were left out of the first round but can’t wait any longer.
“I have patients who are in their 60s and started their businesses – and they’re done,” Cozzetto said. “And they didn’t need that much money. They needed $ 5, $ 10, $ 15,000, and they didn’t get it. And the airlines got billions.”
Hairdresser’s scissors, face mask and gloves
The Social Club Grooming Co., a Detroit barbershop with two locations, is also waiting for paycheck protection money.
Homeowner Sebastian Jackson said he had no problem applying for the loan and was keeping his fingers crossed that it was finally granted once the funding was replenished.
Its 12 employees are currently on unemployment benefits, which isn’t too bad considering new federal weekly benefits of $ 600 that top off Michigan’s regular weekly benefits, which cap at $ 362. Yet this means a drop in income for many employees.
“Most of our full-time barbers make over $ 962 per week on tips and things, which is not common in our state,” Jackson said.
Once its stores finally reopen, the customer experience will be a little different from before the coronavirus. For example, be prepared to see barbers wearing gloves, face masks, face shields, and maybe even special sanitized clothing.
“We are looking at a new reality,” he said.