High, But Dry: Post-pandemic cash flow worries small businesses as demand picks up
by Amy Lane
At Marcie Earl’s Elk Rapids business, orders for custom-designed items like promotional pens and sports team T-shirts have been making a return as Michigan moves past COVID-19.
That’s good news.
But with the business uptick comes a challenge: Paying suppliers after the pandemic gutted cash flow.
“I don’t bill the customer until the product has been received by them and I know they are satisfied,” said Earl, owner of The Place Promotional Products and Apparel, which supplies merchandise for marketing and events. “When business starts to pick up, you owe more to suppliers, that’s a good thing. But you need to receive payment from customers.”
Helping her bridge the cash flow was a $5,000 grant from the Regional Resiliency Program (RRP), a local fund aiding small businesses impacted by the pandemic. The program, operated by Venture North Funding & Development, is providing grants of up to $5,000 throughout Venture North’s 10-county area, including Antrim, Emmet and Charlevoix counties.
The grants have helped businesses survive and shake off the pandemic’s effects. Earl, for example, last year saw customer orders for promotional items dry up as events were cancelled and budgets shrank. With orders now picking up, the RRP grant has helped her pay suppliers for goods as she awaits delivery and eventual customer payment.
“That’s where it’s helping out, right immediately,” Earl said.
Earl’s grant is among the latest to be awarded through the RRP, which was launched last year with a $200,000 grant from the Consumers Energy Foundation and has grown to more than $1 million in donations from energy companies, community foundations, financial institutions, economic development organizations and others.
The program gave grants to nearly 200 businesses of nine or fewer employees last year, and numbers have climbed this year as additional grant rounds have rolled out.
In many counties, local partners have provided assistance and matching dollars to Venture North, helping to expand the RRP’s size and reach.
In Antrim County, the Bellaire Chamber Foundation raised $24,000 that was crucial to making the county’s spring grant round a reality, said Laura Galbraith, president of Venture North.
The money raised by the foundation targeted small businesses in the foundation’s geographic service area, encompassing Bellaire, Alden, Central Lake and Mancelona. An additional $20,000 contributed by Venture North and $3,000 from the Grand Traverse Regional Community Foundation was allocated for use throughout Antrim, creating a $47,000 pot out of which grants in May were awarded to 13 businesses, including Earl’s.
For the young foundation, only about 18 months old, there was a desire to help the small businesses that can be community anchors, said Louise Wenzel, the foundation’s board chair.
“We just want to ensure these people stay afloat,” she said. “It just feels so good to help the businesses who in turn help our communities.”
The foundation raised money from individuals and businesses and also helped organize an Antrim County team to review grant applications and make funding recommendations to Venture North. The nine-member team included representatives from the foundation board and from Central Lake, Ellsworth and Elk Rapids. They reviewed 22 applications seeking $104,500 – more than double the available funding.
In Emmet County, an initial grant round last December brought $64,250 in awards to 16 businesses; additional grants totaling $50,250 were awarded in June. Helping to capitalize both rounds has been the Petoskey-Harbor Springs Area Community Foundation, where Executive Director DJ Jones said the foundation had been thinking early on about ways it could help small businesses through the pandemic as a charitable nonprofit. (It and other such foundations can’t contribute directly to private entities like businesses.)
Venture North, however, has been an avenue for support. The organization is both a nonprofit and is experienced working with small businesses, as a federally certified Community Development Financial Institution that provides small business capital and resources for economic and community development.
“It made total sense for us to partner with them to reach that audience; we wouldn’t have been able to do this on our own,” Jones said. “Some people might look at a community foundation and think, ‘Why are they involved in small business?'”
In the end, Jones said, “(i)t comes down to what’s charitable.”
“We’ve always had the philosophy that supporting economic development is charitable,” said Jones. “It’s all about community. A vibrant quality of life.”
Galbraith said Venture North is grateful for the community foundation’s resources and leadership, including recommending people to serve on the Emmet County grant application review team.
The first Emmet County round included $50,000 in COVID-related reserve funds from the foundation, $10,000 from the Frey Foundation, and $4,250 from donor-advised funds housed at the foundation and individuals. Grants were awarded in December.
Restaurant owner Julie Adams, of Julienne Tomatoes in Petoskey, was among those thankful for the help.
Like others similarly affected by Gov. Gretchen Whitmer’s executive orders limiting or shuttering businesses, Adams’ café closed in March last year. She said the restaurant did not open until three months later at reduced capacity, and while the café was able to have “an okay summer” with carryout and limited dining, it lost almost its entire season of catering, which makes up 10-24% of business.
And while revenue was down and menus and hours were reduced, expenses were not: Costs of food and supplies climbed. Adams also increased pay for her dozen or so employees whom she says have “endured much.”
“All I keep encouraging is we just keep putting one foot in front of the other,” she said. “But it’s been kind of like a free fall for a year and a half.”
She said her $5,000 RRP grant went toward “day-to-day functions,” helping to pay expenses. For a business owner accustomed to giving to others in the Petoskey area, being a recipient of financial assistance was something new.
“Here we are, always the ones to answer every call from surrounding areas … and all of a sudden, we can’t put ourselves in a position to help. And now I’m the one receiving,” she said.
She had two customers write her personal checks, insisting that she accept the money.
“It’s not me; I’m not this person,” she said. “I’m always the one giving.”
Adams said the grant meant more than just the money. Amid stress and negativity, to have the local offer of help, “it just gives you some little piece of positivity and initiative to keep going,” she said.
For Katie Boeckl, owner of Between the Covers bookstore in Harbor Springs, business closure brought a shift to online sales and shipping, continuing to feed an appetite for books that didn’t waver throughout the pandemic. The store chose not to fully reopen when it could have last spring, operating only by appointment and curbside delivery.
“There were still so many unknowns, (it) had to be about the health and safety of our entire town, customers and staff,” Boeckl said.
But as she moved into the end of last year, after a summer down about 80% and cancellation of a three-day fall festival of books that brings flocks of visitors into the area, Boeckl knew she was approaching her slowest season, January through April.
“That’s always a little bit of a nail-biter every year, but this last year in particular was going to hold even more concerns,” she said.
She said the store applied to the RRP and elsewhere “for anything we can to help get us through that period” and to cover basic operational costs.
The $5,000 RRP grant went toward rent, supplies, wages and other expenses, helping with finances but also, Boeckl said, supporting her choice to remain largely closed until this last May.
“It helped us to continue to survive while taking that hit to the bottom line,” she said, “because we decided that health and safety was more important.”
RRP grant rounds have continued in the region. In Charlevoix County, an application period for $20,000 in grants funded by Venture North closed in mid-June, with awards pending as of press time.
And in Emmet County, the second round capitalized by $15,000 from the Petoskey-Harbor Springs Area foundation, $35,000 from Venture North and $250 from an individual donor awarded grants to 12 of the county’s businesses, including again to Adams’ Julienne Tomatoes.
Adams said the money went toward a new laptop that had become critical part of functioning effectively, improvements to outside dining space, and she also planned to give employees another raise, underlining their importance to the operation.
“To me it is just obvious, I cannot do this without them, and we are under a great deal of stress and strain every day,” Adams said. “I know a lot of the impression is that this is over, but unfortunately, we’re going to be feeling the effects of this for a long time.”
Galbraith said many small businesses continue to be challenged, even as there are positive signs of recovery. Earl, at The Place Promotional Products and Apparel, said her RRP grant has helped the business move forward.
“This was like this little lifeboat that I was able to hop in to get me through as the business is slowly turning around,” she said. “I’m hopeful it’s going to be smooth sailing from here.”
Amy Lane is a freelance journalist and former reporter for Crain’s Detroit Business, where she covered business, state government, energy and utilities for nearly 25 years.