For State Representative, 21st District
Serving the people of Canton, Belleville, and Van Buren Twp.
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First published in the Courier, April 16th, 202o
Author: Keya Vakil
Hess Experiences Government Failure First Hand
Laurel Hess and her husband are now on the verge of losing their business and potentially their home and life savings, all while government-promised aid has yet to arrive.
For two decades, Laurel Hess and her husband Eric lived the so-called “American Dream.” They launched their own successful business, bought a two story colonial-style house in a nice, quiet, middle-class neighborhood in Canton, Michigan, and raised a family in that home. The couple has never been wealthy. They don’t own a cottage Up North like many other Michiganders and the Town and Country minivan they drive has close to 300,000 miles on it. But they still considered themselves blessed to have their home, their family, and their business.
They felt this way as recently as March. Now, less than a month later, everything they’ve worked for is at risk. Hess and her husband are among the tens of millions of Americans on the brink of financial collapse because of the coronavirus pandemic.
When the coronavirus outbreak began to spiral last month, the couple was forced to close their business, Jungle Java. The indoor children’s play center, also located in Canton, about 35 minutes west of Detroit, includes a cafe that serves coffee, sandwiches, snacks, and other specialty drinks. Jungle Java is not considered an “essential business” and had to shut its doors after Michigan Gov. Gretchen Whitmer issued a stay-at-home order on March 23.
The writing was on the wall before that order, though, Hess said. In the 10 days preceding Whitmer’s order, Jungle Java lost more than a dozen events to cancellations. With those cancellations, Hess and husband lost $20,000 in business. “Her shutdown isn’t what killed us,” Hess told COURIER. “It was the fear before the shutdown. Nobody was going to come to businesses like ours anyway.” The Hesses are now on the verge of losing their business and potentially their house and life savings, all while government-promised aid has yet to arrive.
“It’ll be a month this week since we were shut down and not one single promise of ‘We’re going to help you out’ has materialized, even though we’ve been on top of every application from the minute they opened up,” Hess said.
They opened their business, which Hess described as “Chuck E. Cheese meets Starbucks,” in Canton in 2003 and it has been the family’s single source of income ever since. Jungle Java also has two other locations in Michigan, in Farmington Hills and Clinton Township, both of which are independently owned and operated by other people.
Hess and her husband are the exact sort of small business owners the federal government had in mind when it passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act,” on March 27. The $2 trillion relief plan, the largest bill emergency aid package ever passed into law, included $349 billion in forgivable loans to help some of the 30 million small businesses in the U.S. This effort, dubbed the Paycheck Protection Program, was designed to provide businesses with fewer than 500 employees fully guaranteed, forgivable loans of up to $10 million for operating expenses. Sounds great, doesn’t it? Hess thought so at first, too. “There was all this excitement about help,” she said. “We were like ‘We’re going to be OK." But as she quickly learned, the Paycheck Protection Program is not the cure-all many had hoped for. The program, offered through the Small Business Administration and its partner banks, sputtered out of the gates as the SBA worked through technical issues, questions about what costs the loan will cover, overwhelming demand, and confusing bank guidelines about who can apply. By Thursday morning, less than two weeks after the program opened on April 3, the program had all but run out of money and stopped accepting applications. “The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding,” the agency said in a statement on its website.
The SBA and its lending partners have approved more than $339 billion in loans across more than 1.6 million approved applications so far, but the Hesses’ application is not one of them. Lawmakers are seeking to direct an additional $250 billion into the PPP, but have been unable to reach an agreement thus far. Those squabbles perfectly encapsulate the disaster that has been the PPP.
Hess and her husband applied for PPP online through their bank, Bank of America, as soon as they could on April 3 and received an email instructing them to await further instructions on how to upload “supporting documents.” But that email never came. Instead, a Bank of America employee called the couple a week later and informed them that they had still yet to submit documents. “We told him that we had not yet gotten the email on how to submit them,” Hess said. From there, the employee directed the couple to another web page to upload their supporting documents. “We sat here for hours on Friday trying to figure out how to apply, because it’s asking you questions that you don’t even know what documents they’re asking for,” Hess said. “It’s so incredibly difficult—even as a college-educated business owner—to wade through 27 pages of paperwork … It’s not real easy, but we were able to get through it.”
Hess said completing this second set of paperwork felt like “virtually starting over again,” and worries it delayed their ability to receive a loan. Even if Congress approves additional funding, Hess’s experience has left her nervous that she’s going to run into even more roadblocks and may never see a dime from PPP.
Even if the couple does receive a loan, it would only provide a minimal amount of help. Under the PPP, the loans for small businesses are only forgivable so long as the companies use 75% of the loan to keep their employees on payroll—or rehire workers they laid off—for eight weeks.
That math doesn’t add up for Hess’s business. The maximum amount businesses can receive is capped at 2.5 times the company’s monthly payroll, which at Jungle Java is about $35,000. But Hess and her husband also spend $10,000 a month on rent for their massive indoor playscape and are prohibited from spending more than 25% of the loan on rent, utilities, or other business expenses if they want to receive loan forgiveness.
Hess said she would much rather spend that money on rent, adding that she expects her landlord to demand payment even for the months they’re closed. “He’s got three or four strip malls and if nobody pays him his rent, what’s he supposed to do? He’s got to pay the bank, so I feel for him as well.”
After being forced to shut down their business in mid-March, Hess and her husband were unable to pay their April rent and don’t plan on paying for May either, even though not doing so puts them at serious risk. The couple renewed a 10-year lease in August 2019 and had to agree to a two-year personal guarantee, which means their landlord can come after their personal assets if they fail to pay rent under the terms of the contract.
“There’s no way I can pay him rent and if he wants, he can take my house, he can take my car, he can take most of my life savings that’s not in retirement,” Hess said.
This stark reality is one facing many Americans. In recent weeks, story after story has emerged highlighting the devastation being visited upon small business owners and workers alike. Roughly 22 million Americans have filed for unemployment since the coronavirus pandemic began shutting down the economy.
This strain on the unemployment system is exactly why the forgivable nature of the loans is linked to payroll—to incentivize companies to keep workers on staff and lessen the burden on state unemployment systems. But Hess said this clause renders the PPP more or less useless for her.
Jungle Java employs mostly low-wage workers, all of whom she had to let them go in March when her business shut down. But due to the CARES Act’s expansion of unemployment benefits by an additional $600 a week, those workers now qualify for benefits that pay them more than their old jobs.
“I’ve got a couple of managers that make $14-15 an hour here and they’re able to collect unemployment,” Hess said. “They’re going to be better off staying safely in their homes making almost $1,000 a week than coming back to work for me.”
Hess doesn’t oppose the unemployment expansion; she and her husband also have applied for that aid, though they’ve yet to receive their benefits. Instead, she said lawmakers also need to pass legislation enacting rent relief.
“Rent is my hugest bill. I just feel morally like I shouldn’t have to pay it when I can’t even be in there operating my business,” she said.
There has yet to be any serious proposal on rent relief in Michigan or at the federal level, but unless rent forgiveness is enacted and covers several months, Hess isn’t sure whether Jungle Java will survive. The business is closed through at least April 30, and she doesn’t anticipate being able to reopen until mid-May or the beginning of June at the earliest.
Even when they do reopen, she knows that they would likely operate at a loss for many months to come. “Even if I get forgiveness for April and May and I’m allowed to open on June 1, people aren’t going to flock into all these businesses for a very long time,” she said. “People are still going to be social distancing enough where they’re not going to be frequenting a business like mine … I don’t think we’ll know until next winter if we’re able to get through this or not.”
Hess’ long-term concerns aren’t alarmist by any means. Michigan has been one of the hardest hit-states in the nation with more than 29,000 confirmed cases of COVID-19 and 2,093 deaths due to the virus. The state has the fourth highest number of cases and the third highest number of deaths in the country. The state is also currently under one of the nation’s strictest stay-at-home orders lasting through at least April 30.
Hess said she and her husband sensed the PPP might be a mess, so they also tried other avenues to obtain help. They applied for the Small Business Administration’s Economic Injury Disaster Loan Emergency Advance, which would provide up to $10,000 in advance and does not have to be repaid, unless the business also receives a PPP loan, in which case the advance would be deducted from the loan forgiveness amount of any PPP loan received.
“It’s supposed to be a way to get $10,000 real quick,” Hess said. The SBA told small business owners they’d receive their advance within days of filing their applications, but Hess has yet to hear anything more than two weeks after applying for the program.
They also applied for the Michigan Economic Development Corporation’s Small Business Relief Program, which was set to offer up to $10 million in grants and another $10 million in low-interest loans to businesses directly impacted by COVID-19. The Hesses applied for a grant of up to $10,000 on April 1, the first day applications were accepted.
“I made my husband stay up until 12:01 a.m. I said ‘Just get it in, because you know it’s going to be first come first serve,’ so we were one of the very first people to get that in on April 1 and supposedly you were going to hear from them within a week,” Hess said. “We haven’t heard anything.”
She added: “You fill out these applications and they go into the ethers and you don’t even get a confirmation saying your application has been received.”
Applications for the program closed on April 6 and Hess said a representative at her local chamber of commerce told her the applications were reviewed last Friday and they “should hear something this week.”
These experiences have left Hess dejected and unsure what comes next for her family or Jungle Java.
“All my friends are like, ‘Oh they’ve got all these great programs, you’re going to be fine,’” Hess said. That has not been the case. “It’s been a month and we’re not even close to seeing a dime.”
Hess has done everything she was supposed to and feels as if the government isn’t living up to its end of the bargain.
“I just feel like it’s a lot of talk. Every time there’s a press conference, whether it’s our president or our governor or even our county officials, they’re talking about how ‘We’re doing this and we’re doing that,’ but it’s really all a lot of talk until the money hits.”
First published in Hometown Life, April 21, 2020
Author: Ed Wright
Hess Understands What Small Businesses Need Now To Survive
Canton play cafe prime example of how coronavirus can devastate small businesses.
Since it first opened in 2003, Jungle Java has been one of the happiest, endorphin-producing spaces in Canton Township. Stocked with a giant jungle-themed maze of tunnels and slides toward the back of the 6,700-square-foot business, play space for its youngest guests and spacious seating areas for parents and grandparents sipping java while the kids played, the place was a magnet for young families in the fast-growing community. "It's kind of like Starbucks meets Chuck E. Cheese," explained Laurel Hess, who owns the small business with husband Eric.
"It was so unique during the first few years that people would drive up from Toledo or all the way over from Grosse Pointe to visit Jungle Java," Eric Hess said.
As recently as March 10 — Presidential primary election day in Michigan — business was booming at Jungle Java. No school that Tuesday translated into a steady stream of customers, explained the Hesses, who have been outright owners since 2010.
Then came March 11, the day ominous clouds started forming over most small businesses in the United States.
"That was the day the NBA suspended play, Tom Hanks announced he and his wife had been infected," Eric Hess said. "We had a feeling then that this was going to get bad." The Hesses had secured reservations for 15 birthday parties for the ensuing weekend, a booster shot of roughly $15,000 or more for the business. "But one by one, they started calling and canceling the parties," Laurel Hess lamented. All but one of the parties was canceled. The parents of a 3-year-old girl said they had talked to most of the people who had been invited — 20 kids and their families —and as of Saturday morning, most of them were still planning to attend. Ultimately, the only attendees were the 3-year-old birthday girl and members of her family. "I told the mother that there was no way we were going to let her pay the entire bill of $500," Laurel Hess said. "We only charged her for the food that we purchased for the party and told her to come back once everything has passed over and we can have another party for her daughter."
Two days later, Jungle Java was ordered to temporarily shutter its doors by Gov. Gretchen Whitmer's stay home executive order to help contain the spread of coronavirus. "Realistically, it didn't matter if we were open or closed; it was fear (of the virus), not the executive order, that kept people away," Eric Hess said.
The sole income for the Hess family, which includes two college-aged sons, David and Steve, had dried up — and there is no oasis in sight.
Eric Hess said he felt "a pang of fear" in February, when it was reported that the coronavirus was spreading across the globe.
"I remember going through the Swine Flu (April 2009 through August 2010), which caused a little bit of a slowdown for businesses. I thought, as a country, we're not ready for anything like this." "I'm a serial pessimist," Laurel Hess said, grinning. "I was like, 'This is it. We're done.' Then they started talking about these programs to help small businesses and it gave me some hope."
As of April 17, the Hesses had not received any funding from the three programs they applied for. The federal government's Paycheck Protection Program (PPP), which authorized up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis, has dried up. The Hesses also applied for a Small Business Association EDIL with no success. "We found out a few days after we applied that the first wave of people who applied, which was us, had to reapply because of a glitch. But we never received notice," Laurel Hess revealed. "By the time we went to reapply, the money was gone."
Their third opportunity at the moment is a Wayne County grant that Eric Hess applied for at 12:01 a.m on April 1, the first day the grant application was available. Although the Hesses scored a 92 out of 100 on the grant's grading scale, they haven't heard a word from the county.
"The maximum we could get from that is $10,000, so we may get a couple thousand, if anything," Eric Hess said. "I have a glimmer of hope."
The Hesses are not angry at any individuals. "When you get right down to it, it's the stupid virus's fault," Eric Hess said. "I'm more upset with the government bureaucracy," Laurel Hess added. "From the president, the governor to local officials are all holding these press conferences stating that they're helping small businesses like ours ... but these programs aren't working."
Although sucker-punched by an invisible enemy, the Hesses are grateful their situation is not worse. "I mean, we have our health, some savings and our landlord hasn't kicked us out yet," he said. "People are dying, families are losing loved ones. And we know we're not alone. There are so many other small-business owners we keep in touch with that are in our shoes." Both of their sons are home from college, too, which is a blessing, they say. Nineteen-year-old Steve is a freshman at New York University, which is located in the heart of New York City. "Steve's former dorm room was cleared out so they could transform it into a room for doctors and nurses to stay during the crisis," Laurel Hess said. "This hit New York a lot sooner than it hit us, so we're just thankful he's healthy."
The Hesses are already thinking of a transition plan for when (and if) they're able to reopen in the near future.
"We're thinking of hosting private parties of 20 or so, until everybody feels comfortable that normalcy has returned," Eric Hess said. "We feel that once people are comfortable to, let's say, attend a game at Michigan Stadium, that's when we'll know normalcy has returned."
There is no textbook titled "How Small Businesses Can Rebound From a Pandemic."
However, with the Hesses' business acumen, maybe they'll be the ones who write one.