Black-owned business battle to survive during COVID-19 crisis

When it comes to the COVID-19 crisis environment, Regina Gaines speaks for a lot of Black-owned businesses in the metro Detroit area.

“We’re dead!” Gaines, the African-American owner of House of Pure Vin located in downtown Detroit, told the Advance on Thursday.

A statewide coronavirus hotline is open 7 days a week from 8 a.m. to 5 p.m. at 1-888-535-6136. Information can be found on the DHHS website or the U.S. Centers for Disease Control (CDC) and Prevention website.

“Everything about our business was about experience,” she said. “We do a lot of wine tastings. You would come in, and if you like what you like, you bought the wine.”

For the last seven days, however, that hasn’t happened at House of Pure Vin. It’s been one week since Gov. Gretchen Whitmer ordered that all Michigan restaurants and bars close and only offer take out. As of Wednesday evening, the state has confirmed 334 COVID-19 cases. There have been three deaths.

Meanwhile, the Michigan Strategic Fund (MSF) on Thursday approved two funds totaling $20 million, divided evenly between grants and low-interest loans. The idea is to help at least 1,100 small businesses directly hurt by ordered closures during the coronavirus crisis. Businesses with fewer than 50 employees are eligible to secure up to a $10,000 grant.

“We understand small businesses across our state are facing unprecedented challenges as we take every step possible to mitigate the spread of coronavirus,” said Whitmer said through a news release. “Through decisive actions like those taken today by the MSF Board to authorize relief for small businesses throughout Michigan, we are leveraging every resource available to support our businesses, communities and entrepreneurs around the state impacted by this outbreak.”

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The funding is divided between $10 million in small business grants and $10 million in small business loans to support businesses facing drastic reductions in cash flow and the continued support of their workforce.

In order to qualify for grant support, businesses must meet the following criteria outlined in Whitmer’s Executive Order 2020-9: 

• 50 employees or fewer
• Needs working capital to support payroll expenses, rent, mortgage payments, utility expenses or other similar expenses that occur in the ordinary course of business
• Able to demonstrate an income loss as a result of the EO, or the COVID-19 outbreak

At the same time, Black-owned businesses face challenges that other entrepreneurs don’t. Many don’t have generational wealth for startup capital and historically haven’t had the same access to government or private-sector loans. 

The owners who spoke with the Advance certainly understand the seriousness of the public health crisis, but they also point out that they employ men and women who are on the margins of the American economy. A few of them donated their perishable food items to local homeless shelters.

William McCray, owner of Willpower Fitness Group in Clawson, had to lay off four personal trainers this week as his gym closed to the public. He, however, is providing training through an on-line app. McCray has also posted free workout videos on the businesses’ website for homebound-consumers, but he hopes to reopen soon.

“I know this is a challenge for a lot of people right now,” McCray said.

Jai-Lee Dearing, whose family operates Bert’s Marketplace in Detroit’s Eastern Market, has called COVID-19-related directives from the government “catastrophic.” Dearing said that his restaurant and bar will take carry-out orders but he only needs three employees now. He generally operates with a staff of about 40.

Barbershops and hair salons are not included in the state ban, but some of them are hurting, too. 

“It’s definitely been slow,” Broderick Gerald, a barber at B.J.’s Uptown Barber Shop in Detroit, said. “It [COVID-19] has really affected us.”

Several Black-owned businesses in the Detroit area have opted to close entirely in response to state COVID-19 directive, including Coop Caribbean Fusion, The Block and Floods Bar and Grille, per spokesman David Rudolph.

Kuzzo’s Chicken and Waffles, located along the Avenue of Fashion in northwest Detroit, switched over to takeout and delivery services. Gaines’ House of Pure Vin, located downtown, is effectively closed but maintains their wine club shipments, curbside pickup and wine delivery. 

In terms of government support, Gaines prefers grants as opposed to loans. After starting her business in 2015, she didn’t earn a profit until last year. 

“Minority businesses, their whole foundation is built on debt,” Gaines said. “To take on another debt, moving forward, is more than I’m willing to do.”

Kenneth Harris, national president and CEO of the National Business League Inc., a Washington, D.C. group, said that the government on all levels has been slow to react to the needs of Black-owned business. Harris’ organization represents 49,000 Black-owned businesses nationwide, including 4,200 in Detroit proper.

“This [COVID-19] is a wake-up call,” Harris, an African-American Detroit native, told the Advance on Thursday. “It calls into question: Are our tax dollars really working for everyday people and the small businesses? They are kind of left to fend for themselves.”  

Harris also said that Black-owned businesses need grants instead of loans to assist them at this time. He believes his members should strongly consider online business models that don’t exclusively rely on traditional walk-in business. 

While the federal Small Business Administration (SBA) approved more than $19.6 million in loans to Black-owned businesses in 2019 — a 17% rise of 34% from 2017 — the figure still represents a disproportionate amount going to businesses headed by African Americans.

Locally, the city of Detroit has created a temporary program to provide so-called Carryout Zones, a free license to restaurants to assist them during the COVID-19 crisis. The idea is to make it convenient for customers to pick-up orders from restaurants. Staff are expected to take orders to customers’ vehicles to reduce exposure to COVID-19.

Meanwhile, Dearing doesn’t know what to do.

“I’ve got inventory now that I have to throw away because I can’t sell it,” he said. “On Saturdays, I go from people at every table ordering food to now only a handful of carry-outs.”