Small businesses in Michigan struggling during the pandemic soon will get to apply for a share of $100 million in grants as the state dedicates a portion of its funding from the federal CARES Act to employers with fewer than 50 workers.
The Michigan Strategic Fund (MSF) board voted Tuesday morning to approve the plan for coronavirus relief for businesses and a separate $15 million allocation to fund COVID-19 safety measures in the agriculture industry.
The funding is “so critical to our state’s economic well-being,” said Mark Burton, president and CEO of the Michigan Economic Development Corporation, which oversees the MSF. “We see that there’s a need out there.”
The new Michigan Small Business Restart Program will turn to 15 local state economic development offices so that they can use the combined $100 million to award individual grants worth up to $20,000. Each office will get a minimum of $3.5 million, with some getting more.
The largest share is going to the Detroit Economic Growth Corporation, which will receive $15,545,450. Other southeast Michigan groups to administer funds include Ann Arbor Spark, $8,545,455; Oakland County, $11,045,455; and Macomb County, $7,545,455. The Right Place, based in Grand Rapids, will get $9,545,455.
Funding can be used for costs like payroll, rent, mortgage payments or utility expenses.
The move comes “at a really important time,” said Brian Calley, president of the Small Business Association of Michigan. “The financial suffering among the smallest of businesses is really severe.”
Michigan remains in phase 4 of Gov. Gretchen Whitmer’s reopening plan, with retail stores and restaurants statewide opening at 50 percent capacity early in the month. Other businesses also have been able to resume some operations, like hair salons and office work that can’t be performed remotely.
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But other businesses — like indoor gyms — remain closed, and recent coronavirus testing trends are raising concerns. Gov. Whitmer closed bars July 1 after an outbreak originating in an East Lansing brew pub spread to more than 150 people, and state health officials continue to watch an increase of positive tests among people ages 20-29.
Nationally, cases are spiking in states like Texas, Arizona and Florida, which has reopened and still expects schools to be in-person this fall.
All of that keeps Michigan small businesses on edge, Calley said. Amid that, many also are repositioning their operations to minimize contact and buying additional equipment to protect staff and customers.
“There’s a high degree of uncertainty out there,” Calley said. “There is plenty of nervousness about what the national numbers mean.
“A month ago, they said ‘Yeah, it’s still really tough, but we’ll keep on inching forward,’” he said of business owners. “Now we’ve seen steps back … and that just puts a little more uncertainty into it than was already there.”
Thirty percent of small businesses that receive the new Restart funding must be owned by women, minorities or veterans, according to state guidelines.
Coronavirus “has impacted certain businesses more than others,” said Burton of MEDC. “From a long-term economic recovery standpoint, it’s critically important that we address some of these inequities that we’re seeing in the impacts.”
The $100 million in the Restart funding for small businesses and $15 million for agriculture comes from the $3 billion in federal coronavirus relief funds received by Michigan. Both programs were created in the state’s $880 million midyear spending bill, which Gov. Whitmer approved on July 1.
Unclear so far is whether the new small business funding — which follows other state-run loan and grant programs and the federal Paycheck Protection Program — will be enough for many small businesses to survive the depths of the economic downturn.
A survey released June 4 by the SBAM showed 1 in 7 small business owners remained concerned they will not survive the pandemic. Six of seven small businesses said sales declines were their biggest concern, and 60 percent of them expected drops of 25 percent or more.
Burton said the success of the Restart program — and whether it’s enough for Michigan’s businesses — will be dictated in part by how well the state controls the spread of the virus.
“We have seen that the need for the programs we have deployed thus far has well-exceeded the funds available,” Burton said.
“It all hinges on how we all behave individually and collectively as we control the public health side of this and minimize further impacts.”
Applications for the Restart grants can be made starting Wednesday, July 15, at michiganbusiness.org/restart. They will run through Wednesday, August 5.
Businesses and nonprofits with 50 or fewer total employees are eligible. The business or nonprofit must demonstrate that it is affected by the COVID-19 emergency and show an income loss. Recipients of Michigan Small Business Relief Program Grants are ineligible. A business that received other Michigan or federal assistance is eligible to apply.
Each economic development office will be able to use up to 5 percent of the amount of the grants they’re awarding for administrative costs. For an agency receiving the base $3.5 million, that would be $175,000.
The geographic allocations:
- Detroit Economic Growth Corporation – $15,545,450
- Oakland County – $11,045,455
- The Right Place – $9,545,455
- Ann Arbor Spark – $8,545,455
- Flint & Genesee Chamber – $8,045,455
- Macomb County – $7,545,455
- Southwest Michigan First – $7,545,455
- Lansing Area Economic Partnership – $5,545,455
- InvestUP – $4,545,455
- Networks Northwest – $4,545,455
- Saginaw Future – $3,545,455
- Otsego County Economic Alliance – $3,500,000
- Target Alpena – $3,500,000
- Lakeshore Advantage – $3,500,000
- Middle Michigan Development Corporation – $3,500,000
Meanwhile, the $15 million in Michigan Agricultural Safety Grants will be divided between agricultural processors and farms, the state says:
- $10 million in grants will be provided to processors statewide, with amounts between $10,000 and $200,000.
- $5 million in grants will be available to farms statewide, with amounts between $10,000 and $50,000.
Grants must fund costs related to COVID-19 including testing costs, personal protection equipment, facility needs, increased sanitation costs, employee training, and upgraded safety procedures for farm-provided housing, according to the state.
In mid-June, health officials identified outbreaks in Lapeer, Oceana and Branch counties among farm workers. In Oceana County, along Michigan’s west coast, more than 183 cases since May 1 had been traced to two agriculture outbreaks, with 102 of those cases in two farms.
Applications can begin July 15 at michiganbusiness.org/agsafety, and they’ll be awarded on a first-come, first-serve basis. They’ll be processed by East Lansing-based GreenStone Farm Credit Services.