Michigan Strategic Fund votes in favor of economic relief program for small businesses, up to $20 million in grants and loans

On March 19, 2020, the Michigan Strategic Fund (MSF) unanimously voted to approve a $20 million economic relief program intended to provide financial relief to small businesses struggling in the wake of the COVID-19 crisis.

The Michigan Small Business Relief Program authorizes the Michigan Economic Development Corporation (MEDC) to provide up to $20 million in support for small businesses. The funding is divided between $10 million in small business grants and $10 million in small business loans to support businesses facing drastic reductions in cash flow and the continued support of their workforce.

The $10 million in grant funding will be provided to local or nonprofit economic development organizations throughout the state to provide grants up to $10,000 each to support certain small businesses that have realized a significant financial hardship as a result of the COVID-19 virus.

In order to qualify for grant support, businesses must meet the following criteria:

• 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, as well as meeting additional criteria;
• The company has 50 employees or fewer;
• 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.

Additionally, the program will authorize the MEDC to provide up to $10 million for small business loans to one or more Community Development Financial Institutions (“CDFI”) or a licensed SBA not-for-profit institutions (“Eligible SBA Non-Profit”), or directly from the MSF to eligible borrowers to be used to provide low-interest loans with flexible repayment terms to support certain small businesses statewide that have realized a significant financial hardship as a result of the COVID-19 outbreak. Loans to eligible borrowers must be $50,000 or more and are capped at $200,000.

In order to qualify for loan support, businesses must meet the following criteria:

• 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 can demonstrate an income loss of as a result of Executive Order 2020-9.
• The company can demonstrate that it is unable to access credit through alternative sources;
• 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 has fewer than 100 employees;

The Michigan Small Business Relief Program will be a top priority for the MEDC, with funds being available no later than April 1, 2020. The MEDC anticipates that at least 1,100 businesses across the state will benefit from this program.

FIND THE FULL RELEASE HERE ON THE MEDC WEBSITE.