Relief programs for small businesses spin up
Beyond the federal $2 trillion stimulus plan signed late last week, the state, Southeast Michigan municipalities and entrepreneurial support entities are pushing forward with their own programs aimed to throw a lifeline to small businesses.
Michigan’s economic performance had already been softening in recent months and the sudden halt of basically everything in the state with the exception of a handful of “essential” services such as grocery, pharmacies and delivery services has put the state into a tailspin.
“I’m afraid that businesses … are going to get missed, and it’s going to change the overall character of what the marketplace looks like,” said Brian Calley, president of the Small Business Association of Michigan. “When it comes back, it won’t look like it did before. And the part — and we’re trying to make that not the case — that might look different is fewer small businesses. That’s job No. 1 for us.”
The good news: Small companies will have plenty of programs to tap into. Most of the new resources available to business owners can be used for typical costs of doing business, such as rent, payroll and utilities.
The Michigan Economic Development Corp., the state’s top business attraction and marketing agency, on Friday formally launched the application process for its Michigan Small Business Relief Program. The program has two components: a $10 million fund for loans and a $10 million fund for grants.
The grants of up to $10,000 would be for companies with 50 employees or fewer; and the loans of up to $200,000 would be reserved for companies of fewer than 100 employees.
The program aims to boost up 1,100 businesses, particularly “Main Street businesses” in urban and rural areas of the state, said Josh Hundt, executive vice president of business development at the MEDC. The economic development organization plans to begin deploying funds by April 1.
“What we see is this program being a tool to support 1,100 of the hardest hit companies across the state,” Hundt said. “And (to) be there to complement all the other programs and services, both that were already in place and new tools that are coming on across all levels of government.”
Leaders in Michigan’s second-largest county announced a $3 million small-business stabilization fund late last week with $1.15 million in seed funding from the MEDC. Applications for funds begin this week and will target a variety of small businesses, particularly those that have been deemed nonessential by Whitmer’s order and forced to close.
“It’s all of those companies that have been identified in executive orders that are not part of the critical infrastructure that we’re looking to provide for,” said Sean Carlson, deputy county executive for Oakland County.
Additionally, the county plans to use $700,000 of the fund “to encourage companies to shift their manufacturing capabilities to the manufacture of personal protective equipment for hospitals and health care workers such as face masks, gowns and other needed items.”
Doing so could move many companies from the nonessential category to essential.
Companies can apply at Oakland County’s COVID-19 website.
The state’s largest county has partnered with Detroit-based TCF Financial Corp. on a $6 million low-interest loan fund. Businesses can receive between $5,000 and $50,000 to be used on things such as payroll, rent and utilities.
Interested companies can apply on TCF Bank’s website.
“Our goal is to strengthen the small businesses in the communities that are really struggling,” TCF Executive Chairman Gary Torgow told Crain’s last week. “Putting together this loan fund will give us the opportunity to quickly and as easily for a customer as possible to get these dollars out into the community so that small businesses that are struggling in the county will be helped as quickly as possible.”
The MEDC is also looking to support Wayne County and City of Detroit businesses via a $1.6 million fund done in partnership with the Detroit Economic Growth Corp., as Crain’s reported Friday.
Similar to metro Detroit’s two other major counties, Macomb County announced last week that it would partner with St. Clair Shores-based First State Bank to provide business relief to companies disrupted by COVID-19.
The county will use $800,000 in MEDC grants and up to $100,000 in matching funds from the bank.
“Local and small businesses across Macomb County have already felt the impact of this COVID-19 crisis — whether this means shutting their doors or laying off employees,” Vicky Rad, director of Macomb County’s Planning and Economic Development, said in a statement. “Our goal with this effort is to make sure they have the funding necessary to get through this period of uncertainty so they can remain open or reopen in the future and provide services and employment opportunities for our community.”
A conglomeration of partners in Washtenaw County has joined forces to provide relief for small businesses there.
Ann Arbor Spark, the Greater Washtenaw Region Small Business Development Center, Washtenaw County Office of Community and Economic Development and the Entrepreneurship Center at Washtenaw Community College have collaborated to create the Washtenaw Small Business Resiliency Fund. The fund will provide working capital grants of up $5,000 to small businesses.
Spark said it would work with the MEDC to secure additional funding to lend support.
In addition, the Song Foundation — headed by Ann Arbor-based Duo Security chief Dug Song and his wife Linh— have contributed $1 million in short-term funding to the Washtenaw Small Business Emergency Relief Fund, aimed as a bridge fund over the next 30 days until more state and federal resources come online. The fund is a partnership between the Office of Community & Economic Development of Washtenaw County and Ann Arbor Spark.
The funding will be targeted as follows: up to $1,000 for home-based businesses, up to $2,500 for businesses with less than 10 employees and up to $5,000 for businesses with 11-50 employees, with exceptions based on need.
The fund has a total of $1.15 million.
In a statement announcing the donation, Song noted his history working in the service industry before going on to start Duo Security, which became a business unit of Cisco through a $2.35 billion acquisition in 2018.
“My wife Linh and I know how critical these local businesses and jobs are in our community,” Song said. “We need small business employment to continue to be the backbone of economic opportunity. Small businesses are critical to our region and provide meaningful jobs that support our local community. We value these independent businesses that make Washtenaw County stand out as a unique place to live and work.”
TechTown Detroit, a business incubator program located in the New Center neighborhood, spent last week gathering about 400 applications for its Detroit Small Business Stabilization Fund.
The first round of applications closed Friday afternoon and TechTown President and CEO Ned Staebler said the organization was teeing up about $600,000 to begin sending out to small Detroit neighborhood businesses by either last Friday or as late as April 6, depending on banking issues.
“We are trying to make things as seamless and easy so businesses know where to go,” Staebler told Crain’s last week, adding that beyond financial support many small businesses are also seeking more practical support and advice about what they should be investing in at the moment and how to navigate the unemployment insurance process.
While the first round of support has closed, Staebler said he’s in constant contact with other business support programs such as the DEGC and New Economy Initiative on further rounds of support.
The “big kahuna” for small businesses, according to Calley with SBAM, is the more than $2 trillion federal response that President Donald Trump signed Friday afternoon.
The legislation contained significant money for large businesses like airlines and automakers, but also $377 billion that would provide eight weeks of cash flow assistance and help for small-business owners to maintain their payrolls.
Those who are approved and do maintain their payrolls can use that portion of their Small Business Administration loans to pay rent, mortgage and utilities and have that portion of the loan forgiven, retroactive to Feb. 15, according to a memo from the office of U.S. Sen. Marco Rubio, a proponent of the provision.
“This is a very big deal,” Calley said. “In terms of the scope, it’s impossible to know whether it’s enough for small business. But I also know that it’s unusual for there to be explicit small business support.”
Once signed into law, as is expected, the federal Small Business Administration and SBA-approved lending institutions could begin approving loans within a matter of days and have funds to small businesses within about 30 days, according to Romualdo Ancog, the Michigan district manager for the SBA. “This is pretty fast,” Ancog said on a conference call last week.
Posted By: Crain’s Detroit Business on March 29, 2020. For more information, please click here to read the source article.
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