Michigan Small Business Relief Program to Provide Grants & Loans to Michigan Small Businesses Impacted by COVID-19
The Michigan Strategic Fund has approved economic relief for Michigan small businesses impacted by COVID-19.
The Michigan Small Business Relief Program authorizes the Michigan Economic Development Corporation to provide Michigan small businesses with up to $10 million in small business grants and $10 million in small business loans.
The loans and grants may be used by businesses as working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business.
Details on how to apply for the Michigan Small Business Relief Program are forthcoming. Grant and loan funds are to be available on or around April 1, 2020.
Grant Eligibility
The purpose of the grants is to provide up to $10 million in grant funding to economic development organizations or nonprofit economic development organizations, through the allocation of grants up to $10,000 per business, to support eligible small businesses statewide that have realized a significant financial hardship as a result of the COVID-19 outbreak.
“Eligible Business means a business that:
- The company is in an industry outlined in Executive Order 2020-9, or any subsequent Executive Order of similar intent (“EO”), or demonstrates it is otherwise affected by the COVID-19 outbreak, that meets one or more of the following: provides support to impacted employees, is located in a downtown district or high impact corridor or has 50 employees or less, or is a company that provides services to companies outlined in the EO and requires additional employees to support to companies or employees impacted by EO;
- 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; and
- The company is able to demonstrate an income loss as a result of the EO, or the COVID-19 outbreak.”
Loan Eligibility & Terms
The purpose of the loans is to provide up to $10 million in small business loans to Community Development Financial Institutions (“CDFI”), licensed SBA not-for-profit institutions (“Eligible SBA Non-Profit”), and Michigan Strategic Fund eligible borrowers to support small businesses statewide that have realized a significant financial hardship as a result of the COVID-19 outbreak.
“Eligible Business means that:
- The company is in an industry outlined in Executive Order 2020-9, or demonstrates it is otherwise affected by the COVID-19 outbreak, or is a company that provides goods and services to companies to the aforementioned;
- 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;
- The company can demonstrate an income loss as a result of Executive Order 2020-9.”
“The terms of the loans are as follows:
- Loans to eligible borrowers must be $50,000 or more and are capped at $200,000;
- Interest rates for the loans are .25% per annum;
- The interest is only for 60 months following loan closing followed by a fully amortizing 60-month term;
- Repayment terms will be determined based on business need and are anticipated to be monthly interest only payments for the first 60 months following closing. Payments made in excess of interest due will be applied to principal. Once principal is repaid, it may not be redrawn. Payments of principal and interest will begin at 61 months following closing and will be paid monthly with all principal due to be repaid no later than 120 months following closing.”
Industries Outlined in Executive Order 2020-9
“Industries outlined in Executive Order 2020-9 include the following:
- Restaurants, food courts, cafes, coffeehouses, and other places of public accommodation offering food or beverage for on-premises consumption;
- Bars, taverns, brew pubs, breweries, microbreweries, distilleries, wineries, tasting rooms, special licensees, clubs, and other places of public accommodation offering alcoholic beverages for on-premises consumption;
- Hookah bars, cigar bars, and vaping lounges offering their products for on-premises consumption;
- Theaters, cinemas, and indoor and outdoor performance venues;
- Libraries and museums;
- Gymnasiums, fitness centers, recreation centers, indoor sports facilities, indoor exercise facilities, exercise studios, and spas;
- Casinos licensed by the Michigan Gaming Control Board, racetracks licensed by the Michigan Gaming Control Board, and Millionaire Parties licensed by the Michigan Gaming Control Board; and
- Places of public amusement not otherwise listed above. “Place of public amusement” means a place of public accommodation that offers indoor services or facilities, or outdoor services or facilities involving close contact of persons, for amusement or other recreational or entertainment purposes. A place of public amusement includes an amusement park, arcade, bingo hall, bowling alley, indoor climbing facility, skating rink, trampoline park, and other similar recreational or entertainment facilities.”
We will continue to update this alert as soon as more details become available. Please visit the Michigan Economic Development Corporation Resource Page for additional information.
Jonathan L. Kirkland
248.258.1422
kirkland@butzel.com.
Robert H. Schwartz
248.258.2611
schwartzrh@butzel.com
Steven R. Eatherly
248.983.6953
eatherly@butzel.com
