Additional Coronavirus Relief Available to Michigan Businesses as Loans or Grants

In Michigan, additional coronavirus relief resources are available through the Michigan Small Business Relief Program established by the Michigan Strategic Fund (MSF) and administered by the Michigan Economic Development Corporation (MEDC) as either loans or grants.

Separately from relief offered by the U.S. Small Business Administration, the MSF authorized the Michigan Small Business Relief Program (Program), providing up to $20 million in grants and loans to support business workforce continuity and reductions in cash flow.

The Program authorizes up to $10 million in small business grants and $10 million in small business loans to provide emergency relief to businesses directly impacted by the COVID-19 outbreak. A business may only receive a grant or a loan, but not both.

The MEDC anticipates that at least 1,100 businesses across the state will benefit from this Program, with funds being available no later than April 1, 2020. Applications are now open.

How to apply?

For Grants:

• Grant funding will be provided to 15 local economic development organizations (EDOs) covering 83 counties in Michigan that will then evaluate and award grant applications up to the maximum amount to eligible companies;
• For example, the Lansing Economic Area Partnership has successfully secured $600,000 and its application process is now ACTIVE for businesses in that region: http://www.purelansing.com/businessrelief;
• Applications or recommendations for loans will be referred from the partner EDOs to the MEDC for evaluation and disbursement;

For Loans:

• There is one application, whether for grants or loans;
• As noted above, partner EDOs will refer applications to the MEDC for loan consideration;
• Loan funding is available up to $10 million;

Updates relating to the Program, including application availability, can be found here.

Who will be eligible?

For Grants:

• 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.

For Loans:

• The company is in an industry outlined in Executive Order 2020-9 (EO), 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.

What is the maximum loan/grant amount and interest rate for loans?

• Loans to eligible borrowers will range between $50,000 and $200,000
• 0.25 percent per annum
• Grants up to $10,000 

What are the permitted uses of the loan/grant?

• Permitted uses include working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business

What are the payment terms on loans?

• Interest only for 60 months following loan closing followed by a fully amortizing 60-month term

We will continue to supplement this alert as more information on this Program becomes available. For more information, please contact Jarrod Smith (517-374-9124 or jtsmith@dykema.com), James Kiefer (517-374-9126 or jkiefer@dykema.com), N. Banu Colak (517-374-9176 or nbcolak@dykema.com), or your Dykema relationship attorney.

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