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

Owner of Donato Enterprises faces tough decision after government loan

MEMPHIS, Mich. – A Michigan business owner is facing a difficult decision in his quest to reopen amid the coronavirus (COVID-19) pandemic: accept a risky government load deal or turn it down and have no money to pay his employees.

UPDATE -- April 28, 2020: Michigan coronavirus cases up to 39,262

Michigan businesses have clamored for a part of the federal paycheck protection program and couldn’t get any of the cash. But one company in St. Clair County received the cash and found it wasn’t the cure-all the owner had expected.

There has been a lot of government intervention to keep businesses afloat during the pandemic. Keeping small businesses and their employees going is a priority, but it’s not a simple process.

The rules for loans are tough, and they’ve forced Chris Donato, the owner of Donato Enterprises in Memphis, Michigan, to worry about the state’s part in the equation.

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

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

Donato said he was happy to get nearly $300,000 on Monday, and he’s been working to ready his operation to restart.

“We moved things in a way to make sure that people were kept at a good distance,” Donato said.

By that, he means he can pay his employees for now, but the loan forgiveness rules require him to keep paying his employees after the loan money is used. With no end to the Michigan stay-at-home order in sight, he’s concerned about that stipulation.

“I’m angry,” Donato said.

He’s worried he’ll have to pay the money out of his own pocket if his business doesn’t survive.

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

Donato is left with two choices: Opt out of the money and leave his employees without paychecks or pay them and stick his neck out, hoping for the best. It’s not the kind of choice he was expecting when he filled out the loan forms. He said he’s hoping for the best.

Donato told Local 4 he wants his customers and suppliers to know that as things currently stand, his business is on solid footing. He’s deeply concerned, though, that a stay-at-home order keeping his business closed into June or July would change the picture dramatically.

About the Authors: