Don Haley’s grandfather opened an Italian restaurant in Flint in 1931 during the Great Depression. As a third-generation operator, Haley has endured his share of economic heartache too.
He’ll tell you straight up that he’s not one to complain. Yet Haley remembers too well the roadblocks that Italia Gardens faced trying to get the bank to offer any relief or make a loan after the financial meltdown in 2008-09.
“Back then, I couldn’t even get them to return a phone call from me,” said Haley, 56, who explained that the restaurant had been doing business with that particular bank for 20 years.
Now, Haley is looking at a new kind of financial upheaval, working with a different bank and hoping to benefit from a new recognition that the country cannot afford to ignore the small business community as the coronavirus crisis unfolds in the coming months.
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U.S. Treasury Secretary Steven Mnuchin has urged small businesses not to fire workers, noting that the small business loan process is being streamlined to quickly provide loans to keep local restaurants, stores and others going during the crisis.
A key piece in the relief package out of Washington, D.C., is $350 billion to guarantee loans for small businesses. Low cost loans are being made to cover payroll and other expenses, like insurance premiums, mortgages, rent or utilities. In some cases, borrowers will be able to apply for loan forgiveness.
“It’s really bridge liquidity for people as they go through these difficult times,” Mnuchin said Sunday morning on CBS’s “Face the Nation.”
A key part of the relief, he said, involves the small business component of the package that could help half the companies in the United States get access to loans for covering up to eight weeks of payroll expenses.
“This money is going into the economy very quickly,” Mnuchin said Sunday on the program.
What kind of help will banks offer?
Banks are being proactive this time around to avoid massive defaults and bad loans as temporary shutdowns across the economy take place to stem the spread of COVID-19. One bank after another is talking about programs to help tide a small business over and get economic relief during the coronavirus pandemic.
TCF Financial Corp. and Wayne County, for example, announced a $10-million partnership to provide relief through low-interest loans to help local small businesses affected by economic disruptions associated with fighting the coronavirus pandemic.
The program is targeted to small businesses in low-income census tracts in Wayne County. Loans of up to $50,000 with interest rates between 0% to 2% will be made to eligible Wayne County businesses.
To apply for a relief loan, a Wayne County business must employ fewer than 100 people and have annual revenue under $1 million. Small business owners need to contact one of the 15 Wayne County TCF Bank & Chemical Bank banking centers.
On the first day alone, TCF already had 54 inquiries and 26 applications regarding the Wayne County program.
Michigan’s small businesses impacted by the COVID-19 virus can now apply for grants and loans through the Michigan Small Business Relief Program, according to the Michigan Economic Development Corporation. The program will provide up to $20 million in grants and loans to Michigan’s small businesses affected by the coronavirus crisis. See www.michiganbusiness.org/covid19 for information.
Fifth Third Bank on Thursday said it is taking proactive steps to ease the financial strain faced by small business customers during the pandemic.
“We understand that many of our small businesses are struggling right now to meet immediate needs,” Greg Carmichael, chairman, president and CEO of Fifth Third Bancorp, said in a statement.
Can businesses delay paying on existing loans?
Fifth Third’s customers are encouraged to contact the bank if they want to defer payments for up to 90 days and see no late fees. The bank is offering a range of loan modification options.
Comerica Bank said it is discussing various loan payment deferral and fee waiver options with its business customers who have been impacted by COVID-19.
Huntington Bank is taking comprehensive steps to offer financial relief during the pandemic.
For small businesses experiencing financial hardship related to family sickness or workplace closures because of COVID-19, Huntington will offer a payment deferral for up to 90 days with no impact on a credit bureau report.
Huntington said it’s also working directly with governors’ offices to facilitate a disaster declaration from the Small Business Administration. The goal is to help businesses be eligible for Economic Injury Disaster Program loans.
Small business owners are encouraged to go to www.SBA.gov/coronavirus for more information about assistance. The SBA guarantees the loans, which are made through banks, credit unions and other lenders.
Many small businesses will want to look into the SBA 7(a) small business loan and a new program called the Paycheck Protection Program.
How are small businesses coping?
Haley said Huntington Bank called him a few days after St. Patrick’s Day as fear of the economic fallout in Michigan spread. The banker, he said, asked things like: “Were we going to stay open? Were we going to close?”
Italia Gardens has four locations: Flint Township, Davison Township, Oxford and Grand Blanc.
The restaurants are staying open during the pandemic, offering a carry-out menu. A family meal of pasta, salad and bread that serves four or five people goes for $25. As a way to jazz things up, the restaurant decided to add on some ribs to that order for an extra $7.
“We’re fortunate our food travels pretty well,” Haley said.
Carry-out may not cover all the bills but Haley said it’s enough business to justify staying open, somewhere close to breaking even. He’s doing less than 50% of his normal business.
And he’s doing all he can to keep people employed at Italia Gardens restaurants.
The restaurants have 90 employees — and nearly half of those employees saw their hours cut by 75%.
About 35 employees — including Haley’s two sons — aren’t working any hours any more. Many of those employees worked part-time.
The 14 managers have seen their hours cut by less than 15%.
Some employees voluntarily asked for a temporary leave of absence. Many employees have filed for state unemployment.
“Our goal is to hire back 100% of employees when circumstances normalize,” Haley said.
Haley opened the fourth restaurant in Grand Blanc in November — he jokes that opening another restaurant was “impeccable timing” given the financial crisis now, just roughly four months later.
Now, he says, “I’ll have to borrow more money.”
On Friday, Haley was on the phone with the Small Business Administration. He’s expecting to take out around $200,000 in small business loans to deal with the payroll, mortgage and utilities for the three restaurants he owns as a result of the economic fallout. (One Italia Gardens restaurant in the small chain is a franchise and will likely be taking out its own loans.)
It’s a lot of money but Haley jokes it’s not as much as the $1.5 million loan he took out to open the new restaurant in Grand Blanc in November. He tries to be of good humor and says he isn’t sure how all the bills will get paid. But he quickly says the bills will be paid.
“Everybody gets paid. I was trained well by my dad and grandpa,” Haley said.
Haley stresses that all the efforts in Washington, D.C., to help small business are ways to help small operators survive.
“The McDonald’s and Olive Gardens will come out of this fine. It’s the independents that will face the greatest challenges,” Haley said.
An emergency-type loan, if you will, can give smaller operators a chance to stay afloat.
“It’s not a bailout. They’re loans. Low-interest loans. You have to be tough anyway to be a restaurant operator,” Haley said.
“We’ll be fine. After this is over, we’ll be fine.”