Tami VandenBerg successfully applied for the first round of federal Paycheck Protection Program loans for her small businesses in 2020.
In the months rounding out last year, though, she and many other small business owners were “left flailing,” said VandenBerg, the owner of The Meanwhile bar and Pyramid Scheme venue, both in Grand Rapids, as uncertainty clouded the prospects of additional funding support.
The U.S. Small Business Administration opened applications for a new round of forgivable PPP loans through March 31. VandenBerg and other West Michigan restaurant and bar owners describe the funding as a lifeline that will hopefully prevent more small businesses from closing, though the program is not without its flaws.
“We were thrilled that another stimulus bill passed, although it was too late for many,” VandenBerg said. “I have friends who have lost their businesses, but we were able to fortunately hold on through being mandated to close. I think we probably could have figured out a way to hold on without the (latest round of PPP) assistance, but it would have put us in a lot of debt.”
The Michigan Restaurant and Lodging Association predicts about 5,600 establishments will close in Michigan in the next six months.
“The first round (of PPP) was amazing. I was beyond thrilled, but it was not enough and we ran through it,” said 1983 Restaurants owner Lucas Grill. “We weren’t even through the summer and the money from the PPP loan was gone. When we hit November and didn’t have a loan, it was a different situation. We had all this overhead, labor costs and no assistance.”
Grill said 1983 Restaurants — which operates Seventy-Six, Poquito and Obstacle No. 1 in downtown Holland, as well as Public in Zeeland — would hire people back quickly if it gets approved for this current round of PPP. Before the pandemic, about 100 people were employed across 1983 Restaurants’ four businesses. When they are able to reopen Feb. 1, Grill expects staffing will be at about 65 employees.
“Restaurant owners like myself, we’re desperate — our employees and ourselves need the money,” Grill said. “Our sales in the second quarter of 2020 were down by 79 percent.”
Grill opened Poquito and Obstacle No. 1 cocktail bar in Holland four months before the pandemic hit.
“Every time we start to build some momentum, we have to shut down,” Grill said. “It’s a gut punch.”
Not being able to pivot to takeout during dine-in restrictions adds another layer of difficulty for bars that do not have food service.
With months of no additional federal funding after the first round of PPP, The Apartment Lounge owner Bobby Johnson has dipped into his personal retirement savings. He also started a GoFundMe for the state’s oldest, continuously operating LGBTQ bar, and has been holding occasional pop-up happy hours in his bar’s outdoor space.
“A lot of local businesses are starting GoFundMe campaigns and people don’t understand that without it we wouldn’t be able to survive,” he said.
Outdoor dining and service is less feasible in the winter months, but The Apartment still sporadically hosts outdoor happy hours to keep generating some revenue, Johnson said.
Businesses like The Apartment rely on a high volume of customers to make a profit, which makes dine-in restrictions — such as 25 percent capacity limits, which begins Feb. 1 — even harder to operate in, Johnson explained. The average bill for a customer that comes to The Apartment is about $15, while the average bill at a restaurant could be $30 to $40. The Apartment also lost its 11 p.m.-2 a.m. crowd, which was its busiest time pre-pandemic.
Lack of clarity on funding tools
VandenBerg only applied for the latest round of PPP — which she ended up securing — for The Meanwhile. She was worried that applying for a PPP loan for the Pyramid Scheme would jeopardize the venue’s ability to receive relief from the $900 billion coronavirus relief package passed at the end of 2020.
The legislation set aside $15 billion for grants to entities including small arts and entertainment venues. Grants from the relief bill for entertainment venues will likely be much more than the PPP loans, but VandenBerg was not able to get a definitive answer on whether applying for one program would disqualify her from applying to another funding source.
“It feels like we’re in this high stakes poker game,” VandenBerg said.
The first round of PPP was forgiven for The Meanwhile, but VandenBerg is still waiting to see if it will be forgiven for the Pyramid Scheme because it was not open long enough to use much of the funding for payroll. Between the two businesses, $125,000 was secured in the first PPP round.
“It was worth it regardless because it’s a 1 percent loan and we have way more overhead at the Pyramid Scheme,” she said. “The main issue for the Pyramid Scheme was in order to use all of our staff or even half of them, we had to be having shows.”
Relationships with bankers
Johnson said when he tried to apply for the first round of PPP loans, he was “frozen out,” and had to switch banks before he was eventually able to qualify for $23,100 in funding.
“We were with a large bank and they helped their larger clients before they helped their small clients,” Johnson said. “We switched to Lake Michigan Credit Union.”
The Apartment has kept its core staff and for the first time opened an outdoor patio area in the summer.
For Grill, of 1983 Restaurants, applying for the first round of PPP went smoothly and did what it was designed to do — keep people on the payroll. Grill’s relationship with his local bank, West Michigan Community Bank, was helpful in the process, he said.
Millennium Restaurant Group, which operates six restaurants in Kalamazoo, also benefited while applying for PPP by having a good relationship with its bankers to secure funding in the first round, said Operating Partner Shelly Pastor. As a company that’s been in the restaurant business for more than 20 years, Millennium was equipped with the knowledge and skills to navigate the PPP application process, she said.
“We see this as helping to tide us over,” Pastor said, adding that it will also benefit service industry vendors. “Without it I can see us and many others not surviving.”