Detroit-area small businesses 'making zero dollars' in coronavirus crisis
Detroit — Latricia Wilder was just starting to see her boutique gym business in downtown Detroit take off when the coronavirus hit and she was forced by government order to close.
She quickly came up with a Plan B: teach Vibe Ride's classes online at her studio. And then Gov. Gretchen Whitmer on Monday signed a stay-at-home executive order requiring Michigan businesses to suspend in-person operations from 12:01 a.m. Tuesday through April 13 to help stem the spread of the virus.
"Today was the biggest hit because I don’t even have a plan C, D or E now," Wilder said. "It’s very scary. Beyond the fact that you don’t want to be sick. You are already nervous as an entrepreneur anyway. I just keep thinking, "am I starting all over?" Is it going to be like grand opening again?"
She's not alone. Wilder is one of many small business owners across the state now bringing in zero dollars because the virus has shut them down temporarily. Small business closures have spiked unemployment claims, with more than 108,000 claims filed between last Monday and Friday.
"Obviously this has been devastating for small businesses," Small Business Association of Michigan President Brian Calley, the former lieutenant governor, said during a Detroit Regional Chamber conference call. "They really do want people to take this seriously. This is a way to get everybody’s attention. We are going to have enough compliance with this that it's going to bend this curve down."
The critical infrastructure workforce exempted from the order includes: health care and public health; law enforcement, public safety and first responders; food and agriculture; the news media and energy.
Workers needed for "minimum basic operations" are individuals whose presence "is strictly necessary to allow the business or operation to maintain the value of inventory and equipment, care for animals, ensure security, process transactions or facilitate the ability of other workers to work remotely," according to the order.
Businesses must determine which workers "are necessary" to conduct these minimum operations and designate them in writing by 11:59 p.m. March 31. They have to make written designations "by electronic message, public website, or other appropriate means" about which workers are critical.
The order came with a lot of questions from the business community, and the National Federation of Independent Business sought more clarity within hours of the order's announcement.
In Ohio's stay-at-home order, the state included a listing of specific businesses that were considered “essential,” but Michigan's order does not. The Ohio Department of Health "included a more detailed description of small businesses that included contractors, laundering and dry-cleaning, hardware supply stores, and more and that would be helpful here," said Charlie Owens, state director for NFIB in Michigan, in a statement.
“Small business owners appreciate and understand the seriousness of the current situation with the COVID-19 outbreak,” Owens said. “However, we need more specificity on the types of businesses that can remain open during the period of the ‘Stay at Home’ order.”
Small businesses, like Vitrine Gallery & Gifts in Berkley, had already realized they could help stop the spread by closing. Vitrine closed last week and decided to stay closed until April 1 before Monday's executive order.
"I feel a part of the problem and by closing we are a part of the solution," Vitrine owner Susan Rogal said.
Owners of the Midtown boutiques City Bird and Nest closed their shops last Monday to protect their 12 employees and customers. They added a patio pickup option for customers to still order new items from the store and continued to see support last week for the stores, but sales are down 75% from last year, co-owner Andy Linn said.
"We tried on the fly to adapt as best as we could," Linn said. "This has changed by the day. This is absolutely unprecedented for us."
Linn could only recall having closed the City Bird storefront one time for two days in 2014 for construction. Although the moves by the governor are "extremely disruptive" to City Bird, Nest and other small businesses, Linn says they make sense. He's heard some medical experts say if they could wave a magic wand and keep everyone inside for two weeks that would help stop the spread.
"Getting as close to that magic wand would be the best option, I think," he said.
Pam Nikitas, owner of Joan Anderson Travel Agency Inc., has been feeling the impact of the virus on her downtown Detroit travel agency business since mid-February. She's been on the phone constantly waiting on hold for hours at times to get her customers a refund, voucher for a later trip or to file an insurance claim.
"I have everybody protected," she said, and she'll continue to keep working on it. But instead of working in her Buhl Building office, she'll be at home because of the governor's order.
"I don’t blame her. I think Governor Whitmer is excellent," she said. "She’s very smart. She’s taking precautions and protecting us Michiganders. I’m taking home a lot of files."
The spreading virus reminds Nikitas of what happened after the Sept. 11 attacks when travel was halted for a period of time.
"We are all losing money," she said of travel agents, who don't earn a commission until after the traveler takes the trip. "I still have a rent to pay."
To help small businesses and their employees, Whitmer signed an executive order on Monday expanding unemployment benefits to sick workers who are quarantined or immuno-compromised, workers caring for loved ones and first responders.
It also extends benefits for unemployed workers by increasing the amount of coverage from 20 weeks to 26, creating a longer application time from 14 to 28 days and suspending the in-person registration and work search requirements.
Additionally, the order through April 14 says employers will not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations.
Last week, the governor announced that the U.S. Small Business Administration approved her request for a statewide Economic Injury Disaster Loan declaration, opening the opportunity to small businesses to access low-interest loans from the SBA.
The state is seeking solutions for self-employed workers and independent contractors who traditionally do not have access to unemployment insurance. The governor has requested that President Trump issue a Major Disaster Declaration so that Individual Assistance and Disaster Unemployment Assistance through FEMA may be made available to those workers.
Detroit's Bedrock LLC, Quicken Loans chairman Dan Gilbert’s real estate development unit, said Sunday its tenants can receive rent forgiveness for April and May, and small businesses will be eligible for an extension to June. The program additionally includes costs for maintenance and parking.
"What Bedrock did is amazing," said Wilder, who's gym is located in a Bedrock building. "That was once less thing. I'm not worried about being put out as soon as I can open my doors."
Wilder had her loan deferred but interest is still going to accumulate so she's hoping government officials talk to banks about halting interest payments for businesses during this time.
"I am telling these people we are making zero dollars," she said. "I think putting some regulation on these banks ... would help.
Linn wants to see more guidance from small businesses about the best course of action for employees.
"I would love to see some funding to have the businesses keep their employees so there's less strain on unemployment insurance," he said. "With the information I have now, I believe we will survive — but it will be a big impact on the business."