Nya Marshall of Detroit’s IVY Kitchen + Cocktails and other Black Michigan business owners are working to stay afloat when federal funding passes them by.
LANSING, MI — While all Americans are wading through the economic fallout from the coronavirus, business owners of color are experiencing even more issues with the protections that were promised from the Trump Administration.
The Paycheck Protection Program, more commonly referred to as the PPP, was developed as part of an act to help American businesses avoid debilitating debt. Plus, the loans have the potential to be 100% forgivable. This means that if a business owner can prove they used all funds properly to maintain the business, they do not have to repay any of the money.
The ‘Gander previously reported that Michiganders received more than $10 billion in forgivable loans for more than 43,000 Michigan-based businesses in the first round of financing from the federal government.
That totals less than 1% of what was authorized nationwide.
Most of the money went to large corporations, and what was left for small businesses was dispersed to business owners of color even less evenly.
Data released shows that economic assistance, even for business owners, is doled out disproportionately among business owners of color. A national online survey conducted by the Global Strategy Group of 500 Black- and Latinx-owned small businesses found that just 12% received the full assistance they requested, with two-thirds reporting that they did not receive anything.
An unrelated survey from the Small Business Majority, a small business advocacy organization, showed that 63% of Black and Latino small business owners received financing after applying, but 3 in 10 did not receive the amount they requested.
Michigan Business Dreams and Financial Nightmares
In theory, if a business owner completely filled out their application and submitted all required supporting documentation, they would be approved for the PPP.
This was the case for April Anderson, owner of Detroit’s Good Cakes and Bakes on Livernois Avenue. It sounds like yet another American Dream.
“We were fortunate,” Anderson told The ‘Gander. “But I’ve heard that Black businesses are having more difficulty getting [PPP] approval.”
Nightmares quickly replaced dreams for other Michigan entrepreneurs when the first round of the PPP ran out of money in 14 days. Many of the state’s Black business owners seemed to be left out in the cold while large, national corporations like Ruth’s Chris infamously benefited from the loan program.
“I’m resentful [with the application] process because I know when [large] companies get bailouts, they just get the money,” Dennis Williams, owner of Le Crepe in Royal Oak, told The ‘Gander.
Williams’ story is not unique. Other Black Michiganders found themselves unable to get through the application process or deemed ineligible for reasons like not having existing lines of credit with their financial institutions.
Caleb Foster owns several businesses in the region, including Foster’s Child Care and Learning Center in Southfield and a Sterling Heights Cold Stone Creamery along with his wife, Sharoune. They were denied in the first round of PPP funding, but qualified during the second.
“Originally they [the government] were saying you had to spend 75% of the loan on payroll. But I didn’t have 75% of my workers because of the virus. And what about the other 100% of my bills?”
He says he purposefully sought out smaller and online banks during the second round of PPP distribution because of trends he saw with larger banks.
Foster says that Huntington Bank, who he has a relationship with, told him that there were no more available funds for the PPP’s second round. QuickBooks, however, approved his loan application the same day he submitted. The loan was funded the following day.
Foster says he isn’t sure if minorities are being shut out, but the overall process to save the American economy is inadequate.
“I figured they either had a finite number of spots available and they couldn’t say that to us, or they were just refusing to help. The process is stupid.”
Table No. 2, a Detroit restaurant, was shut out of the PPP and launched a GoFundMe page to help pay staff and expenses. Ultimately, the efforts were not enough to keep its doors open. Chef Omar Mitchell announced the restaurant’s closure over the weekend, but says he plans to reopen in the future.
“Over the past day, I have seen the goodness in people,” Chef Omar wrote on the restaurant’s website and Facebook page on Sunday. “I look forward to sharing a great bigger and better location with you all very soon.”
Still, more Black-owned, Michigan-based small businesses find themselves without funding to continue operations beyond the pandemic. IVY Restaurant’s anticipated grand opening was the talk of the town around this time last year. And customers didn’t mind waiting until December when the restaurant and cocktail bar opened its doors to the public.
But the late start made the business ineligible for the PPP.
“We didn’t receive anything,” Nya Marshall, owner of IVY, told The ‘Gander. “We have some really great customers who are sticking with us through curbside service.”
Marshall pivoted and began feeding front line workers in addition to her regular curbside orders. She partnered with the delivery app Black & Mobile to get her orders directly to customers’ homes.
IVY and other Michigan restaurants will reopen soon as the state enters the latest phase of the MI Safe Start Plan.
Part of a Larger Problem
Michigan businesses were readying themselves for summer when the coronavirus hit. And many Black-owned businesses found themselves cut out of important government funding when they needed it most.
Congress enacted the CARES Act this year to help struggling American businesses that were forced to close or make drastic operational changes in the face of the coronavirus pandemic.
Time Magazine reported that conditions have favored larger businesses, with some practices that shut out many minority-owned businesses while only approving loans for existing customers and delaying the application of sole proprietorships. There is concern that future circumstances could make it difficult for Black business owners who did receive the loans to qualify for forgiveness.
As Michigan and the nation evaluate ways to address long-standing racial disparities, Michiganders are seeking more Black businesses to patronize. Check out SuportBlackOwned.com for a list of businesses in your area.