Stephanie Byrd feels like she’s hanging on by a shoestring. The second-generation small business owner has been rocked by COVID-19. And her parents, Alida and Michael, are coronavirus survivors.
“It’s been an emotional roller coaster for me and my family,” she said. “It’s been a daily struggle. How do we make ends meet?”
Byrd is the co-owner of Flood’s Bar & Grille; The Block, a restaurant and bar; and the Garden Theater, a 1,200-person capacity mixed-use venue, which have been hurt by the coronavirus crisis.
She received a Paycheck Protection Program (PPP) loan earlier this year to assist the Detroit businesses, but it hasn’t been enough. Flood’s and The Block reopened in recent weeks, but the Garden Theater remains closed. She fears that the businesses that her father toiled in for years may not make it.
One of Byrd’s businesses, Flood’s Bar & Grille, is located in the 14th Congressional District. The Block and Garden Theater are located in the 13th District.
Both of Michigan’s two majority-minority congressional districts have been flagged in research from the nonprofit group Accountable.US, which shows how areas with significant Black and poor populations have been “shortchanged” by the federal PPP loan effort.
Both anchored in Detroit, the districts were highlighted in two different reports on racial and economic disparities in PPP loans from the Washington, D.C.-based watchdog. In one Accountable.US study, the 14th District ranked among the top highest percentage of Black residents left behind by PPP. In another, the 13th ranked among the poorest districts neglected by PPP.
U.S. Rep. Rashida Tlaib (D-Detroit) represents the 13th Congressional District, which covers a portion of Detroit, as well as Ecorse, Highland Park, Inkster, Melvindale, Romulus and Westland. U.S. Rep. Brenda Lawrence (D-Southfield) represents Michigan’s 14th Congressional District, which includes part of Detroit, as well as the Grosse Pointes, Farmington Hills, Oak Park, Southfield and Pontiac.
“Small businesses are the engine of the United States, and in order to safely resume full operations they are in dire need of access to personal protective equipment,” Lawrence said. “Our Black businesses have been disproportionately impacted by the lack of access to these critical loans. It is imperative that we do what we can to make sure the small Black businesses are also able to recover from this pandemic.”
The 13th District is 56.3% Black; 33.4% white; 6.7% Latino; 1.1% Asian; and .3% Native American. The 14th District is 58.1% Black; 31.3% white; 4.4% Latino; 3.8% Asian; and .2% Native American.
Tlaib said that small businesses have told her office that “the current Paycheck Protection Program does not work for them. For many small businesses, including for example small independent restaurants, their rent or mortgage interest tend to be significantly more than 25% of their total monthly expenses.”
Last week, Lt. Gov. Garlin Gilchrist was at a press conference with Gov. Gretchen Whitmer announcing Huntington Bancshares Inc.’s $5 billion, five-year lending, investment and philanthropic commitment. Gilchrist, an African-American Detroit resident, noted racial disparities in PPP loans.
“In Michigan under the first tranche of the paycheck protection program, the PPP program, 785 Michigan restaurants got a grant of at least $150,000,” he said. “Guess how many of those were Black-owned restaurants? Only one.”
One family, three businesses hurting
Flood’s reopened in late May after closing its doors in mid-March immediately following emergency orders issued by Gov. Gretchen Whitmer shuttering restaurants, cafes, coffee houses and bars for in-person dining, as well as other businesses like distilleries, clubs, movie theaters, indoor and outdoor performance venues, gymnasiums, fitness centers, spas and casinos.
Staying open for carry-out service was an option, but the profit margin in that scenario did not make economic sense to Byrd. She told the Advance in May that her businesses only make a profit when they operate at full capacity.
Flood’s complies with the state’s current 50% occupancy order that aims to keep COVID-19 from spreading. But the business is fighting for its life and Byrd hasn’t been able to bring back its full roster of employees.
A popular after-work meet-up spot for downtown workers and dwellers since 1984, Flood’s was usually packed with as many as 200 patrons by 7 p.m. each evening. However, fewer than 10 people were there on a recent Friday night.
As the coronavirus crisis approaches the six-month mark, many Black business owners like Byrd fear that they will not make it through the year.
Byrd said that President Donald Trump deserves blame for the COVID-19 spread for his reluctance to implement a nationwide testing program that precipitated business closures and led to a spiraling effect with spiking unemployment.
“Donald Trump’s failure to get a handle on this pandemic cost our staff their livelihood,” she said. “It could cost our family our businesses. We don’t know. Businesses are struggling to survive. His absolute inability to provide leadership has tanked the Detroit economy.”
POC businesses left out
In one recent study, Accountable.US reported that 90% of businesses owned by people of color “have been, or will likely be, shut out of the PPP.’” Overall, only 12% of Black and Latino business owners have received relief requested from Small Business Association (SBA) programs, including PPP, after applying.
The group also found that the 10 congressional districts with the highest percentage of Black residents got up to $12.9 billion less in PPP loan funds than the 10 districts with the lowest percentage of Black residents, a difference of over 35%.
The 10 districts with the highest percentage of Black residents are: Tennessee’s 9th, Mississippi 2nd, Alabama’s 7th, Louisiana’s 2nd, Georgia’s 4th, Georgia’s 13th, Georgia’s 5th, Illinois’ 2nd, Michigan’s 14th and Pennsylvania’s 3rd.
The districts with the lowest percentage of African Americans are: Colorado’s 2nd, Utah’s 3rd, Colorado’s 3rd, Wisconsin’s 7th, Idaho’s 1st, Oregon’s 2nd, Oregon’s 4th, Idaho’s 2nd and and Wyoming’s and Montana’s at-large seats.
The 10 congressional districts with the highest percentage of Black residents received 40% fewer total PPP loans than the 10 districts with the lowest percentage of Back residents, a difference of over 64,000 loans.
And the 10 congressional districts with the highest percentage of Black residents received hundreds less in PPP loan dollars per capita than the 10 districts with the lowest percentage — 36% less for loans under $150,000 and 22% less for loans of $150,000 or more.
Crystal Mitchell, an African-American Farmington Hills resident who founded her Detroit graphic design and printing business in 1996, said that the Black and Brown businesses have disadvantages when it comes to applying for PPP loans.
She said they don’t readily have staff or consultants on hand to advise businesses on issues including tax regulation and payroll advice. Mitchell, who resides in the 14th District and her business is located in the 13th District, also argued that minority-owned businesses must better position themselves to secure federal and private loans.
Mitchell was shut out of the first round of PPP loan funding. She completed the “lengthy” application, but not before the deadline. However, she did secure funding during the second round of funding in May. The PPP loan helped her to stay afloat after a temporary business closure in March and April.
“It really came through and helped me out,” Mitchell said.
13th District among nation’s poorest
A second report lists Michigan’s 13th District, which is largely composed of Detroit’s west side, as well as Hamtramck, Highland Park and Inskter, among the nation’s poorest.
The 10 poorest districts are: New York’s 15th; Kentucky’s 5th; Michigan’s 13th; Mississippi’s 2nd; Alabama’s 7th; South Carolina’s 6th; Florida’s 5th; North Carolina’s 1st; Arizona’s 7th; and Louisiana’s 5th.
The poorest districts were also disproportionately Black, averaging a 41.8% Black population compared to the wealthiest districts’ average of 6.3%.
The 10 poorest congressional districts received over 56,600 fewer PPP loans than the 10 wealthiest districts, totaling up to $13.3 billion less — and an average of $35,566 less per loan.
The 10 wealthiest congressional districts by median household income are California’s 18th, Virginia’s 10th, California’s 17th, Virginia’s 11th, New York’s 3rd, New Jersey’s 11th, Virginia’s 8th, California’s 15th, California’s 14th, and New York’s 4th.
When comparing the wealthiest district, California’s 18th, with the poorest, New York’s 4th, the wealthiest got 8,763 more loans.
PPP fixes signed into law
Byrd and Mitchell were fortunate compared to many of their peers, according to a national Black business leader. Kenneth Harris, president and CEO of the National Business League, said PPP failed Black-owned businesses.
The organization was founded by Booker T. Washington in 1900 and is the nation’s oldest trade association representing Black businesses. The group has 120,000 members and nearly 8,000 are in Detroit.
“Most Black businesses and small businesses under 10 employees weren’t able to access those funds, and traditionally that has been the case,” Harris said. “PPP benefited the wealthy and and the well-connected.”
There have been efforts to level the PPP playing field.
In April, Lawrence and Tlaib, along with U.S. Rep. Dan Kildee (D-Flint), U.S. Sen. Debbie Stabenow (D-Lansing), U.S. Sen. Gary Peters (D-Bloomfield Twp.), U.S. Rep. Debbie Dingell (D-Dearborn), U.S. Rep. Elissa Slotkin (D-Holly), U.S. Rep. Andy Levin, (D-Bloomfield Twp.) and U.S. Rep. Haley Stevens (D-Rochester Hills) penned a joint letter to the SBA, which oversees PPP. They pointed out that their constituents were being hit hard by COVID-19 and deserved more support.
“Yet, despite this extraordinary demonstrated need, Michigan currently ranks 35 out of 50 states when it comes to PPP loans processed,” the letter read. “According to SBA’s data provided to Congress about the PPP program to date, many other states with the most COVID-19 cases also rank in the bottom third of states receiving PPP loans. Notably, many states with a low number of COVID19 cases have received the greatest number of PPP loans.”
On May 28, the U.S. House approved a measure designed to provide key “fixes” in the “flaws” to PPP that extended the program from June 30 to Dec. 31 and altered loan terms from two to five years.
During the debate, Lawrence said, “Over the course of this pandemic, I have heard from our small businesses and held conference calls with local chambers of commerce and state and local officials to determine how Congress can better help small businesses stay afloat during this very difficult time.”
Tlaib said that small businesses “are the backbone of our local economy. Many of my neighbors own small businesses that have been hit hard by this pandemic. They are in desperate need of assistance and I am going to continue to push for that help.
She said that there are “urgently needed fixes to the PPP program so that the most vulnerable small businesses, especially minority, women and veteran-owned businesses, have the flexibility to obtain the assistance they urgently need.”
Lawrence and Tlaib supported the measure that allowed for forgiveness for expenses beyond the eight-week covered period to 24 weeks and extending the rehiring deadline. It also increased the current limitation on non-payroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40% and offered full access to payroll tax deferment for businesses that take PPP loans.
The U.S. Senate approved the legislation on June 3 and Trump signed it on June 5.
Accountable.US President Kyle Herrig said Congress must now strike a deal on a new COVID-19 relief package that’s been held up for months, as Republicans want a much smaller package than Democrats.
“As the health crisis and recession grow worse, Congress has no excuse for not immediately passing another relief package,” he said. “But lawmakers must also learn from their mistakes and ensure that promised resources actually make their way to underserved communities and small businesses across the country, not just to the wealthy and well-connected.”