How the smallest small businesses cope with uncertainty
With so much uncertainty caused by the coronavirus, small business owners have to make hard decisions about how to pay the bills.
“Heck yeah, we have to figure out how to bring some revenue in here," said Alaina Campbell, owner of Cookies & Cream by Sprout Bake – a premium ice cream shop in Lake Orion.
The ice cream shop just has a walk-up window. There’s no dine-in space, so it's allowed to be open for business. Campbell says only two workers are inside at a time – they’re washing their hands, wearing masks; taking extra steps to make sure there’s social distancing to keep everybody safe. Since Cookies & Cream opened back up a few weeks ago it’s been a hit.
“We got thanked by everyone who came, practically,” Campbell said. “I think people wanted to do some normal spring things that they would do, you know, bring their family out for ice cream.”
But other sectors of the economy are still in a holding pattern – not doing any business because of public health advice and executive orders by Democratic Governor Gretchen Whitmer, though she is beginning to lift some restrictions on what work can be done. Whitmer signed an executive order on Friday allowing construction to resume across the state on May 7.
That'd be good news for Tim Spaulding. He's the vice president of a commercial flooring installation and construction firm in Lansing, Seelye Group Ltd.
“To me, it's just lift the ban and my guys are back to work,” Spaulding said. “I'll be fine if we can just get back on the job sites."
He’s better off on the job sites than at a standstill, but the economic slowdown caused by the pandemic is throwing off scheduling. Spaulding said projects are way off schedule now, and managing logistical questions is going to be a nightmare at first.
Spaulding said he has 20 employees he’s been paying with cash on-hand since the shutdown stopped most work.
"We feel like we owe it to them and we want to take care of them and not just send them to the unemployment lines," Spaulding said.
Spaulding was wondering how long he’d be able to pay his workers, until he was notified of his approval for a federal Payroll Protection Program loan. It’s an emergency forgivable loan designed to help businesses during the pandemic and keep employees in the workforce. However, Spaulding hasn’t received the money yet and he said neither his lender nor government officials have been able to answer his questions about how to meet the requirements for loan forgiveness. Spaulding said he doesn’t know how much of his total payroll expenses the loan will cover.
"I hate expecting the government to bail me out,” Spaulding said. “As a business owner, I don't want their money. I don't want them to be my solution.”
Yet in this case, it was the government that stopped Spaulding from doing business in the name of public safety during the global pandemic. Meanwhile, Spaulding needs to recover the costs of continuing to pay his workers when there wasn’t much work to be done. A PPP loan may not be the solution he wanted, but he’ll take it.
According to the Small Business Administration (SBA), 103,811 Michigan businesses (including Spaulding’s) have been approved for PPP loans worth $15,947,803,159. As of May 3, Michigan ranks third out of six states in the Great Lakes region in both the total number of PPP loans approved, and the total amount of PPP loan money approved for in-state businesses (see table below). Approximately $135 billion in PPP funding is still available, according to an SBA spokesperson.
Another business owner, Gina Coll, runs her own art and metalworking shop with her fiancé in Howell – G. R Custom Art and Metalwork LLC. They don’t have employees to pay, but they also aren’t getting as many new orders from customers.
"I've got two or three confirmed jobs and I have like three quotes out there pending to be accepted,” Coll said. “I'm not sure if they're wanting to wait until this whole thing blows over or what."
Because she’s self-employed, she should be eligible for unemployment insurance to make up for the lost business. In fact, she's been trying to file for unemployment since the middle of March. Three weeks later, she still hadn't heard if she'd been approved.
She said their business doesn’t have a lot of overhead costs; it’s just difficult to plan for the future.
"I'm lucky. I don't have a ton of bills and I don't have kids to take care of. So I'm not as stressed as I'm sure a lot of people will be,” Coll said. “In general, it's just sort of nerve wracking."
More than 1.26 million Michiganders have applied for unemployment insurance since mid-March, though the number of new initial claims filed in Michigan has declined each week since mid-April. For the week ending April 25th, the U.S. Department of Labor reports 81,312 Michiganders filed unemployment insurance claims, a decrease of more than 55,000 from the week prior. The USDOL reports nearly 900,000 Michiganders were receiving unemployment insurance benefits as of April 18, a decline of nearly 40,000 from the previous week. While Coll hasn’t yet been approved, she’s far from the first person to feel frustrated and somewhat helpless about the process.
In the middle of a global pandemic, there are more questions than answers. Business owners who like to be able to plan ahead instead have to do the best they can navigating these strange circumstances week-to-week.