DETROIT – Long before Detroit recovered, Avalon International Breads opened its first small storefront in 1997. Much to our delight (and my father’s surprise), our community artisan bakery quickly became the functional “Detroit Home” and figurative to a first chapter in the history of the return to the city.
As of March 16, we employed 135 people and deliver to over 100 restaurants, cafes and grocery stores. We were just starting to increase distribution statewide. And after five years of frantic and exciting growth, we had built the people, demand and operations to take our business to the next level.
Eight days later, we had just one employee: our 25-year-old CFO, who has been wise beyond his years. The other 134 employees were made redundant. Our restaurants were dark. With generous unemployment benefits promised by the federal government and stimulus checks on the way, we thought our colleagues would be financially stable.
Last week we were one of the lucky companies to receive a Paycheque Protection Program as part of the federal government’s $ 349 billion small business assistance program.
The question is: what now?
We are at the epicenter of the coronavirus outbreak in Detroit. It seems that almost every one of our employees has been personally affected. A director lost three members of his family. Two members of our management team had been down for a month due to the virus. Compounding the stress of the situation, many employees have yet to see unemployment benefits or stimulus checks.
But having received a coveted loan, we prepared to reopen. Our source of income is limited to the delivery of groceries, which represents approximately 25% of our business. However, our payroll, our rent and our utilities are covered. We are an essential business. It should be easy to reopen, right?
Many employees are reluctant to leave their homes. Others, dependent on a limited and dangerous public transport system, find themselves without a safe and reliable way to get to work. Still others are forced to stay home because they are sick, caring for a parent or child – or they just don’t believe that coming to work will be safe, despite the fact that our company follows the guidelines of the Centers for Disease and Prevention and has access to the tests. .
It is difficult to successfully use the paycheck protection program loan. The obstacles are high. Besides rent and utilities, the loan must be spent on payroll within 60 days. If employers reach the same number of employees at the end of the period, the amount spent on compensation is forfeited. Any portion not forgiven turns into a loan to be repaid in full in 18 months. Even if we manage to hire 135 employees and pay them for the next 60 days, it will be impossible for us to keep these employees when revenues are down 50-80%. In an economy of over 26 million people unemployed, consumer demand will be sharply reduced.
It is our duty to use the money wisely and build the long term sustainability of the company so that our employees have long term jobs. In order to make this more possible, the loan retention period should be extended to at least 120 days. And the number of employees who are to be on staff should be lowered to 70 percent of the previous figures. Forcing laid-off workers to come back only to have them laid off next month is not only cruel – it will also further clog the already overwhelmed unemployment system.
It should also be possible to use the funds for other purposes. Almost all businesses have a backlog of unpaid invoices because revenues dried up overnight. It would benefit everyone if companies could pay their suppliers, who could potentially rehire some of their employees as well.
The duration of the unsettled portion of the loan should be increased to five or ten years. This money can be used for cash flow, payroll, and future spending – which will continue to spill over into the economy as a whole – as we rebuild our businesses and return to at least some sense of normalcy.
Small businesses like ours, let alone those with fewer resources, should receive payment protection program funds as quickly and efficiently as possible. To prevent corruption in large corporations and banks, oversight needs to be strengthened. And the rules of the game must be changed to allow hard-earned taxpayer money to restart the economy and support people’s lives, as intended.
The future of our business is unclear, and we are just beginning to learn about the long-term social and economic impacts the coronavirus will have on Detroit. If the terms of the Payment Protection Program change, it will be easier for us to navigate this crisis and get back to work to help rebuild the city we love.