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Home›Investment›Michigan business owner forced to choose between risky loan deal and no money to pay employees

Michigan business owner forced to choose between risky loan deal and no money to pay employees

By Eric Gutierrez
March 19, 2021
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MEMPHIS, Mich. – A Michigan business owner faces a tough decision in his quest to reopen amid the coronavirus (COVID-19) pandemic: accept a risky charging deal from the government or decline it and have no money to pay its employees.

UPDATE – April 28, 2020: Up to 39,262 Michigan coronavirus cases

Michigan businesses claimed part of the federal paycheck protection program and couldn’t get the money. But a St. Clair County business received the money and discovered it wasn’t the panacea the owner had expected.

There have been a lot of government interventions to keep businesses afloat during the pandemic. Maintaining small businesses and their employees is a priority, but it’s not a straightforward process.

The rules for lending are strict, and they’ve made Chris Donato, owner of Donato Enterprises in Memphis, Michigan, worry about the state’s part in the equation.

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The program is designed to last eight weeks and help businesses cover their payroll. It then allows 25% of the money to go to mortgage, rent payments, and utilities.

Donato Enterprises is a tier two and three automotive supplier that also works for large companies such as Black & Decker, performing part separations and quality control.

Donato said he was happy to have received almost $ 300,000 on Monday and that he was working to prepare his operation to restart.

“We moved things around to make sure people were kept at a safe distance,” Donato said.

By that, he means he can pay his employees for the time being, but the loan cancellation rules require him to continue paying his employees after the loan money is used up. With no end to Michigan stay-at-home order in sight, he is concerned about this stipulation.

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“I’m angry,” Donato said.

He is worried that he will have to pay the money out of his own pocket if his business does not survive.

“Looks like, or looks like, 24 years of my life, and it got flushed down the toilet just because they won’t trust us to do what’s right,” Donato said. “We know what is right and what needs to be done.

Donato is left with two choices: withdraw the money and leave his employees without paychecks or pay them and be ready, hoping for the best. This is not the kind of choice he expected when filling out the loan forms. He said he hoped for the best.

Donato told Local 4 that he wants his customers and suppliers to know that, as it stands, his business is on a solid footing. He is, however, deeply concerned that a stay-at-home order keeping his business closed in June or July would drastically change the situation.

Copyright 2020 by WDIV ClickOnDetroit – All rights reserved.

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