Hatch Detroit has funded an aspiring Detroit business yearly since 2011. But 2020 is different.
This year, the competition sponsored by Comerica Bank will put its $100,000 in prize money not toward a single neighborhood enterprise as usual, but instead toward utility payment assistance.
Hatch participants — the 10 semifinalists each year, not just winners — can apply through Aug. 14 for a cut of the prize money to put toward paying water, electricity and other bills.
Small businesses are grasping for grant money to stay afloat while they either remain closed due to the coronavirus pandemic, or operate on slim margins with added safety costs.
"Early on, we knew it was probably not a good idea to give money to a new business moving forward, given the current pandemic and the effects it has on existing businesses," said Vittoria Katanski, executive director of Hatch Detroit. "We've been hearing over and over that ... none of the funding from the state and federal and county were at the time focusing on utility bills, and there was nothing in that direction."
Hatch is starting with the $100,000 from Comerica, offering grants ranging from $1,500 to $5,000. The nonprofit expects to start getting money out the week after applications are due.
It also wants to add more donors so it can pay more utility bills. Katanski said a larger Hatch business may need $15,000 to pay for three months of utilities.
Katanski said they have also opened the funding eligibility for personal protective equipment and point-of-sales system payments, as well as traditional utilities. Only Hatch participants that have opened their businesses are eligible — not those still working on opening. That's 47 out of 90 total alumni. It includes open businesses that have closed temporarily due to the pandemic and are still incurring debt.
None of the Hatch alumni have closed permanently due to COVID-19 yet, Katanski said. But it's not out of the realm of possibility.
"We wish and we hope we'll have a second, third, fourth round to help these people out," Katanski said. "Losing any of them will be a big hit."
The competition doubled its prize money in 2019 to $100,000 due to a rise in business-opening costs in Detroit. The Dallas-based sponsor bank, a subsidiary of Comerica Inc., is also giving $50,000 in organizational support for the nonprofit Hatch, up from $40,000 last year.
Hatch funds independent retailers, restaurants and other small businesses in Detroit, Highland Park and Hamtramck through several rounds of public voting and a final judging panel. It also offers other technical assistance, exposure and mentoring support to its "alumni," or group of semifinalists from years past.
"The goal is just to survive this year. This whole year is a wash," said Amina Daniels, founder of boutique fitness studio Live Cycle Delight, which has two locations in Detroit's West Village.
Daniels won $50,000 through Hatch in 2015 and plans to apply for the utility grant.
"I apply for everything," she said Tuesday afternoon. "We've been closed for 141 days."
The yoga, cycle and workout studios require approximately $1,200 total in utilities per month, including internet, according to Daniels. That's while revenue is down about $22,000-$23,000 a month from last year. The business made around $6,000 in sales a month the last two months.
Daniels is offering classes outdoors while her gyms are closed. That requires new equipment, including a $2,000 structure to mount suspension training straps outdoors. Plus there's the cost to keep the lights on and to shoot videos indoors for digital content.
"The goal is to continue to get as much free money as possible, because we can't go into debt because of a pandemic," she said. "That's not fair."
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Instead of granting a new business $100,000, Hatch Detroit to help pay utility bills - Crain's Detroit Business
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