As the coronavirus upends normal life, Detroiters have rallied to support small businesses — whether ordering from restaurants limited to takeout, buying swag, donating to unemployed staff or loading up on gift cards to redeem for future use. But those heartfelt acts may not be enough to help local entrepreneurs weather the crisis until it’s safe to shop or dine again side-by-side.
Detour Detroit surveyed 25 small business owners in food and beverage, retail, beauty, service-based and other industries in Metro Detroit.
The overwhelming majority responded they will lose over 60% of revenue in the next 30 days, with nearly half reporting they will lose 90 to 100% of revenue. All but one said they’re concerned whether they’ll be able to reopen after the pandemic without financial assistance.
Ping Ho, owner of Marrow, The Royce and Mink, estimates it will take nine months to a year for her three Detroit restaurants to recover, even with the first two offering takeout.
“We’ll need a long-term relief financial package and ‘bail out’ by the government,” Ho told Detour. “They are used to bailing out big businesses, but they need to consider small and local businesses as a driver and backbone of the U.S., particularly in industries like [food and beverage] and hospitality.”
On Friday, President Donald Trump said the federal government is “providing historic support to small business“ impacted by the virus, though he did not share specific details. As of Monday afternoon, Democratic Senators voted down a $2 trillion economic stimulus plan that would allocate about $500 billion in funds for loans for companies and states impacted by the virus, as well as $350 billion to help small businesses with payroll costs. This was the second time the vote failed.
The Detour Detroit survey asked business owners what legal or political initiatives would be most helpful at this time. Two of the most popular answers were “freezing commercial rent or utility payments” and “more grants made available to small businesses.”
Locally, TechTown Detroit has raised $250,000 for a Detroit Small Business Stabilization Fund that provides up to $5,000 in working capital grants for eligible small business owners. Requirements include having 10 employees or less and a physical location in Detroit. Businesses must also have experienced a loss of income due to COVID-19, and the business owner’s household income must be less than 80% of the area’s median income. Meaning, a two-person household must have an income under $48,880.
“We all know what very real threat lies ahead for our local neighborhood businesses as in-person customer traffic vanishes,” TechTown CEO Ned Staebler said in a press release. “Grants of up to $5,000 will provide a critical life-line for a business community just starting to see real gains following the great recession.” (Editor’s note: Tech Town is the fiscal sponsor of Detour Media LLC).
Yet many business owners are skeptical of relief efforts and say the available grants and loans may not be enough to help them weather this storm.
“It seems like the funds aren’t sufficient to help everyone, and that the amounts granted can’t make a difference,” Ho said.
As of Monday, the Michigan Department of Health and Human Services reported more than 1,300 COVID-19 cases in the state and 15 deaths. Of those, 431 cases are in Detroit; more than 85 percent of the cases are in the metro area. Last week, Gov. Gretchen Whitmer mandated bars and restaurants as well as other public gathering places like gyms, movie theaters and spas to temporarily close, putting thousands out of work.
This week, she expanded the shutdown, ordering all Michigan residents to “stay at home” through April 13 except for essential activities and jobs. The executive order, which takes effect at midnight Tuesday, is aimed at slowing the spread of the virus by forcing non-essential businesses to close and limiting contact between people. The mandate includes exemptions for grocery stores, gas stations, banks, child care and other work deemed essential.
Many business owners Detour talked to are still in shock and don’t know how to plan for the future when there’s no clear timeline for when it will be safe for groups bigger than 10 to gather. Some had already decided to close their doors before the mandate in the interest of their customers’ health.
While the U.S. Small Business Administration disaster assistance program is offering low-interest loans for businesses in Michigan impacted by COVID-19, owners like Erin Gavle of Eldorado General Store say “grants, not loans” are the answer. In the next 30 days, Gavle expects to lose 100% of revenue and lay off all seven employees at her Corktown vintage shop.
Brigid Beaubien, owner of the decor shop Urbanum in New Center, isn’t confident the federal funding opportunities will help businesses like hers either.
“I think they will help the most desperate and the very wealthy, and those of us in the middle will be out of luck,” she said.
Beaubien expects she’ll have to lay off 2 staff members in the next 30 days. For now, she’s agreed to pay them out of her own pocket until the end of the month.
“I’m going to need restart money,” she said. “I’ve spent, or will be spending, all my money on closing and caring for my employees.”
The top stressor, according to the Detour survey, is rent payments, which aren’t covered under Whitmer’s order halting evictions of residential tenants. Some cities like Los Angeles and New York City have placed moratoriums on commercial evictions.
Detroit has not made any announcement regarding commercial rent payments or evictions. Yet some building owners have voluntarily offered relief. Beaubien’s landlord offered her free rent until the crisis passes.
“She told me she’s 100% behind us and will do whatever she can,” Beaubien said. “Because of that, I can afford to pay [my employees] for a little longer.”
Bedrock, the real estate arm in Dan Gilbert’s family of companies, announced Monday that they’re waiving rent and other fees for small business tenants. The rental amnesty program will last through June and could be a lifeline for dozens of downtown Detroit business owners: Bedrock has 125 retail and restaurant tenants, though some are larger companies that wouldn’t qualify.
Some businesses are turning to crowdfunding to cover rent, payroll and other expenses. Rohani Foulkes, owner of the Corktown restaurant Folk, launched a $5,000 GoFundMe campaign to compensate hourly staff she’s had to lay off.
Foulkes has also turned Folk into a takeout grocery store, where customers can purchase items such as fresh produce, local meat, dairy, eggs, and paper products like toilet paper online and then pick them up curbside. She’s also offering delivery, which has allowed her to keep on an additional staff member.
Like so many small businesses owners, Foulkes has had to create a new business plan overnight.
“I’ve spent the past 72 hours deconstructing and reconstructing what Folk looked like a week ago,” Foulkes said on Friday, before their weekend reopening.
Liz Blondy, owner of Canine to Five, which has two dog daycare facilities in Detroit and Ferndale, said she will continue to stay open after the latest state business restrictions, though she’s cut her staff of 90 to a “bare bones team” of about 10.
“More than anything right now, I want a crystal ball, but I don’t have that,” Blondy said, adding if the situation worsens, she’d consider combining her two locations. “But at this point, it’s my ultimate goal to continue to stay open.”
While her daily charges have declined from about 200 to 40 dogs, she’s committed to serving essential workers, especially first responders, health care and nursing home workers, to whom she’s offering a 20% discount.
“We have a Newfoundland whose mom is a firewoman, and if that lady has to work 24 hours straight, what is she supposed to do with her dog?” Blondy asked.
Stephanie Casola, owner of the public relations firm Prologue Detroit, has a message for fellow small business owners: You’re not alone during this unprecedented time.
“I’ve worked hard my whole life to maintain a good credit score, pay my bills, build my business and pay contract employees,” she said. “The best-case scenario destroys all of that. The worst-case scenario has me scared enough to start writing my will. I am among those at high risk so this is a scary time to say the least.”
“All we can do is work together to mitigate the damage.”
Stephanie Steinberg is a freelance journalist and founder and CEO of The Detroit Writing Room in downtown Detroit, which is temporarily closed due to the coronavirus, but is offering workshops online.