While Michigan small businesses are being hit hard by repercussions of the coronavirus and the precautionary measures taken to control its spread, steps are being taken to provide some relief in the form of low-interest loans and grants. Two programs were announced this week by the U.S. Small Business Administration (SBA) and Michigan Economic Development Corporation (MEDC).
Following a request by Gov. Gretchen Whitmer, Michigan has been declared eligible for disaster loan assistance through the SBA. Businesses impacted by the coronavirus can apply for loans of up to $2 million. Loans are available with a 3.75 percent interest rate and terms as long as 30 years. Deferment of payments for up to four months is also available.
Borrowers can apply directly to the SBA at https://disasterloan.sba.gov/ela/. Applicants will need to create an account with a username and password. The application requires a significant amount of financial information and will be rejected if not complete. If approved, funds will be available in approximately 30 days (approximately 21 days to process application and five days for documentation).
The MEDC has also announced a program to provide $20 million in loans and grants for businesses impacted by the COVID-19 outbreak, although some details – including how to apply for them – are still pending.
Funds for both the MEDC loan and grant programs are expected to be available on or about April 1, 2020. Funds from either program may be used for various expenses, including working capital to support payroll, rent, mortgage payment, utility expenses or similar expenses that occur in the ordinary course of business.
The MEDC grant program will be administered through local economic development organizations or nonprofit economic development organizations and provide grants of up to $10,000 each to eligible businesses. Qualifications for eligible businesses include:
- 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.
The MEDC loan program will provide up to $10 million in loans with a 0.25 percent interest rate and terms of interest-only for 60 months, followed by a full-amortizing 60-month term. Qualifications for eligible businesses include:
- 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 of as a result of Executive Order 2020-9.
Additional information can be found online at michiganbusiness.org/covid19/