Constraints of federal small business loan prove challenging for Detroit bakery | Michigan Radio

Constraints of federal small business loan prove challenging for Detroit bakery

Apr 30, 2020

Avalon International Breads has rapidly expanded its business over the past five years. The business was settling into its new growth when the novel coronavirus outbreak upended everything. Stateside spoke with owner Jackie Victor, who recently published a New York Times op-ed, about how hard it will be for her bakery to retool, even after receiving a federal emergency loan.

Avalon was up to 135 employees in the beginning of March between its four café locations and a bakehouse on the east side of Detroit. After Governor Whitmer ordered that Michigan’s restaurants and bars close all dine-in services, Victor said Avalon laid off all their employees but one: their chief financial officer, who set to work on the application for the Paycheck Protection Program (PPP) loan from the federal Small Business Administration. Last week, her business got approved for the loan. However, Victor said she soon realized that getting the money was just the first hurdle. 

"It's important for everyone to recognize this program is by far the largest small business support program in U.S. history, and it was created in about a week,” Victor said. “I think it was made thinking this was gonna be a short problem. Nobody could have imagined how the economy has bottomed out.”

According to Victor, a major constraint of the PPP is that in order for the loan to be forgiven, it has to be used for payroll within sixty days. Victor said that this will be a challenge, as currently Avalon only has thirteen employees, and hiring more has proven difficult with Detroit’s high infection rate.

“People are very nervous, and rightly so. Even if our workplace is as safe as we can make it, there's a possibility that you could interact with people and bring [the virus] home,” Victor said. “It's hard to know how to spend the money because it won't be forgiven if within 60 days we don't have all of our employees back.”

There's also the issue of just how many customers the café will be able to serve once things can reopen. Victor said the pandemic could have significant longterm effects on the restaurant industry, including restricting maximum seating by as much as 50 to 75 % in the states that resume sit-in dining.

While she’s worried about what those changes could mean for her business and restaurants everywhere, Victor said she's confident that Avalon will come out of this with the same "hearth and soul" they have always had.

“This is a very sad time for the city of Detroit,” Victor said. “I feel like Avalon has a very important role to play in its healing. We will be there to play it no matter what that looks like."

This post was written by Stateside production assistant Lia Baldori.