The Coronavirus Effect: Black Businesses Are Bleeding

By Whitney Gresham

While dozens, if not hundreds, of small Detroit black-owned businesses, have been adversely impacted by the coronavirus pandemic, the federal government’s two trillion-dollar relief bill contained $377 billion dedicated to helping out small businesses.

Most established businesses that are properly licensed and caught up with their taxes should be able to access funds via special programs set up through the Small Business Administration, although the details are yet to be worked out.

However, in large urban cities like Detroit, Chicago, New York, St. Louis, Atlanta. LA and elsewhere, there is an entire underground economy built on commerce from low-income retail outlets, liquor stores, check cashing and “dollar” stores, fast-food chains, unlicensed auto repair garages, second-hand shops, and junkyards. And many of these small enterprises are unlicensed, unregulated, and pay few state or federal businesses taxes at all.

While not aesthetically pleasing, these hair salons, used tire stores, resale shops, rib joints, chicken shacks, and auto repair garages play a vital role providing low-cost, stripped-down services to local residents. And they are critical components of a delicate, economic ecological system say, urban planners. They are, in many instances, the backbone of many Detroit neighborhoods; the “underground economy.”

Dr. Henry Louis Taylor, director of the Center for Urban Studies at the University of Buffalo and a professor of urban and regional planning, said although small, non-compliant neighborhood businesses may comprise only about 10 percent of the total businesses in a city like Detroit, he estimates they are so ubiquitous that they could serve up to 70 percent of the residents at one time or another.

That means if they are forced to close due to economic distress they will be pulled out of the informal underground economy, with few options for accessing government loans or support. That, in turn, increases the pain and misery in the most distressed neighborhoods because not only does it cut off income for already marginalized entrepreneurs, but according to Taylor, it “disrupts a functioning political economy“ most people outside it don’t understand.

A recent report from Fox 2 News noted that with the help of the Detroit City Council, the Detroit Economic Growth Corporation has put together a $3.1 million fund for COVID-19 relief. It said small businesses that made less than a million dollars last year and have fewer than 50 employees can apply for these grants that range between $2,500 and $10,0000.

DEGC President and CEO Kevin Johnson said the money can be used for payroll, rent, mortgage payments, utilities, and other needs. The grants will be awarded based on how long the business has been in the city, the number of employees, and the profitability of the business, according to the report.

Johnson said the process isn’t meant to be cumbersome, so they’ll provide technical assistance to walk applicants through the process. The first checks are expected to be issued in the next couple of weeks.

However, for those who are part of Detroit’s underground economy such relief is of little comfort because they do not qualify.

Lt. Governor Garlin Gilchrist said the Whitmer Administration is aware of the hardships facing small mom and pop Detroit businesses and is working hard to provide relief.

He said it has established a small business hotline that any business can call and it has a response team to answer questions and walk them through the proper process for obtaining assistance. The phone number is 888.522.0103

“One of the things that I’ve learned for the administration of our small business support response is making sure that the state applied for and received an emergency disaster declaration from the Small Business Administration of the federal government, which unlocked access to small business loans, of low or no interest, and to be able to get this crisis aid to the state of Michigan,” he said.

Gilchrist also said the state also has the Michigan Strategic Fund which has allocated millions of dollars that can be available to direct support for small businesses that have been directly impacted through this crisis.

“I want to make sure that the small businesses you’re talking about, my barbershop for example, that they have access to these resources,” he said. “And that they know about the resources so we want to make sure that message is getting out to the community.”

People can also go to Michiganbusiness.org for information and support and resources Gilchrist said.

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