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In one editorial published by The New York Times On Tuesday, Jackie Victor – founder and owner of Detroit’s Avalon International Breads – addressed glaring issues with the Small Business Administration Payment Protection Program, a loan cancellation program designed to keep businesses afloat by keeping workers on the payroll.

Victor co-founded the flagship Cass Corridor bakery in 1997 with just $ 6,000 from family and friends who purchased coupons called “bread dough dollars,” which could be handed out and used for the bakery’s first loaves. Over the past few years, Avalon has expanded its presence by opening a full-service restaurant in downtown Detroit, a coffee shop in Ann Arbor, and growing the wholesale segment of its business by delivering to over 100 restaurants and grocery stores in metro Detroit and plans statewide distribution on the horizon.

However, Gov. Gretchen Whitmer’s March 16 shutdown of non-essential businesses, which limited restaurants to take-out only, was quickly followed by a statewide stay-at-home order for residents. from Michigan. Victor said Avalon employs 135 people at a single, the company’s chief financial officer, while its storefronts and cafes darken. Several of its employees had been personally affected by the virus, some by the death of relatives, others, including two executives, had even contracted the virus.

Last week, Avalon was voted one of the few companies eligible to receive the benefits promised by the Payment Protection Program, which exhausted all of its $ 349 billion funding just weeks after its introduction. Multi-million dollar companies that have secured PPP forgiveness loans – like Potbelly, Shake Shack, and Escalade – came under fire and quickly repaid the loans. Victor said the program does not provide certainty that small businesses, like Avalon, can survive.

On the one hand, says Victor, the loan is for one purpose: payroll. Not operational costs, overheads, or debts that businesses may have accrued since shutting down or downsizing. The loan amount must be spent within 60 days and must be used to rehire each employee.

In other words, if Avalon is able to rehire the 135 workers, the loan is canceled. If they are unable to do so, however, the money not returned by payroll must be repaid, in full, within 18 months. As Victor points out, it’s highly likely that Avalon and other small businesses won’t be able to keep these people on staff for the full 60 days due to reduced consumer demand and reduced numbers. US record – and pending – unemployment benefits. This, says Victor, could hamper the recovery of the economy as a whole, leaving companies to scramble not only to maintain their operations but, now, to repay a loan.

Victor says the solution comes down to tighter monitoring of banks and businesses and reconfiguring the terms of the loan program. She suggests that loans be extended to 120 days from 60 and that the number of staff required be reduced to 70% of pre-coronavirus staff. Victor also says companies should have five to ten years to repay the unsatisfied portions of the loan, which should not be exclusive of salary costs, but should be able to cover other operational and financial needs to improve stability. future of the company.

You can read the entire editorial here.

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