help for small businesses-covid 19

Small businesses hurt by coronavirus can access $20M in support from Michigan Strategic Fund

  

Updated 12:51 PM; Today 12:47 PM 

By Malachi Barrett | mbarret1@mlive.com 

The Michigan Strategic Fund unanimously voted to approve a $20 million economic relief program meant to help struggling small businesses make payroll and cover their bills during the coronavirus COVID-19 outbreak.

There are an estimated 117,000 businesses and 593,000 directly impacted by Gov. Gretchen Whitmer’s March 16 order to temporarily close bars, restaurants, cafes, recreational facilities and other personal service businesses to slow the spread of COVID-19. MSF board members said businesses need help to face significant financial hardship from revenue losses that could continue for weeks.

The board granted the Michigan Economic Development Corporation to distribute $10 million in grants and $10 million in low-interest loans to businesses across the state. Josh Hunt, vice-president of business development at MEDC, said the goal is to deploy funds to 1,100 businesses by April 1.

Hunt acknowledged that businesses will need more help as the coronavirus pandemic continues. President Donald Trump indicated the emergency could continue through the summer at a press conference earlier this week.

“We are still in the stages of evaluating other programming and other tools that will be needed,” Hunt said. “This is our attempt to get a money shipment to the most immediate need. We expect to need to do more in the long term.”

MEDC will partner with regional economic development organizations across the state to identify small businesses facing significant financial challenges from the COVID-19 pandemic. Up to $10,000 in grants will be delivered to each qualifying business.

Board Member Ronald Beebe said the grant funding will be spent quickly, estimating $10,000 is close to one week of payroll for many businesses.

“While a good idea, the $20 million is lacking a zero or two,” Beebe said.

Hunt agreed.

“This $20 million won’t do enough to impact every small business in the state or everyone in need at this time,” he said.

Businesses must meet the following criteria to qualify for grant support:

· The company is in an industry affected by Whitmer’s executive orders or can demonstrate it is otherwise affected by the COVID-19 outbreak

· The company has 50 employees or less

· The company needs working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business

MEDC will also provide $10 million loan funding to small businesses. Loan amounts start at $50,000 and are capped at $200,000, with a 0.25% interest rate and a guarantee that businesses only need to pay off interest for the first five years.

Businesses must meet the following criteria to qualify for loan support:

· The company is in an industry affected by Whitmer’s executive orders or can demonstrate it is otherwise affected by the COVID-19 outbreak

· The company has fewer than 100 employees

· The company needs working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business;

· The company can demonstrate that it is unable to access credit through alternative sources

MSF Board Member Cindy Warner expressed some concern about requiring businesses to prove they can’t access loans through any other sources but ultimately voted to approve the financial aid program. Warner and other board members said supporting businesses immediately is a necessity.

“These people are going to need this money like yesterday," We need to think carefully about the administration of this and the rules and requirements. These people as of this week won’t be able to pay payroll. Unemployment hasn’t started yet and they have real payroll expenses for people next week can’t buy groceries."

The federal government is also offering up to $2 million in loans through U.S. Small Business Administration.

State Sen. Curtis Hertel, D-East Lansing, commended the sweeping actions Whitmer’s administration took in the last week to mitigate the spread of COVID-19. He also said the funds will provide much-needed relief to businesses worrying about how they will continue under the coronavirus pandemic.

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sba-Coronavirus (COVID-19)

SBA Disaster Assistance in Response to the Coronavirus

  

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

o Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the Coronavirus (COVID-19). This will apply to current and future disaster assistance declarations related to Coronavirus.


o SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
 

o Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.


o SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
 

o These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
 

o SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
 

o SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.
 

o For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail  disastercustomerservice@sba.gov.

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