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COVID-19 Economic Assistance Announced: Which Michigan Small Businesses Are Eligible?

March 20, 2020

Governor Whitmer has tasked the Michigan Economic Development Corporation (MEDC) to provide economic assistance to certain small businesses affected by losses related to COVID-19.

On March 19, 2020, the Michigan Strategic Fund (“MSF”) approved the Michigan Small Business Relief Program (the “Program”). The Program will be developed to assist small business owners that demonstrate a loss of revenue due to suspended or restricted operations. At present, $20 million has been reserved for the Program, which will be developed and administered by the MEDC.

Categories of small business eligible under the program are those detailed in Executive Order 2020-09, including restaurants and other places of public accommodation offering food or beverages for on premises consumption; bars, breweries, distilleries and other places of public accommodation offering alcoholic beverages for on premises consumption; theaters, cinemas and indoor and outdoor performance venues; libraries and museums; gymnasiums and fitness centers; licensed casinos, racetracks and millionaire parties; and other places of public amusement.

The $20 million Program will have two parts:

Low-Interest Loans Program

A total of up to $10 million will be loaned by the MSF to one or more eligible Community Development Finance Institutions ("CDFI") or eligible licensed SBA not for profit institutions (“Eligible SBA Non-Profit”) lenders to make low-interest loans to affected small businesses meeting the below criteria (“Eligible Borrowers”) or may be loaned directly by the MSF to Eligible Borrowers. Loan availability is expected to be on or about April 1, 2020.

A CDFI or Eligible SBA Non-Profit must meet the following criteria to participate in the program:

An Eligible Borrower must meet each of the below criteria:

Loan terms:

Business Grant Program

Up to $10 million will be placed with one or more Local Economic Development Organizations (“Local EDOs”) or non-profit economic development organizations (“Non-Profit EDOs”) to make grants to certain small businesses affected by COVID-19 meeting the below criteria (“Eligible Businesses”). Funding availability is expected to be on or about April 1, 2020.

A Local EDO or Non-Profit EDO must meet the following eligibility criteria to participate in the program:

An Eligible Business must meet each of the below criteria:

Grant Terms

Loans and grants awarded under the Program will be subject to written loan or grant agreements in accordance with Michigan law and MSF guidelines and will include performance milestones governing disbursements and periodic financial and other information reporting requirements.

It is important to note that this Program is currently under development. The information provided above is general in nature as the MEDC continues to develop the overall application process, specify details of the eligibility criteria, and select qualified lenders for the loans and local economic development partners to manage the grant process. Please be advised that some of this initial guidance may change as more specifics are known. At present, interested parties should review EO 2020-9 for the industry categories eligible for the Program. Additional information is available on the MEDC’s website.

Miller Canfield is monitoring developments and in contact with program specialists at the MEDC, and will provide further details as they become available.

This is part of a series of our COVID-19 alerts providing clients with practical advice on measures they can take to navigate through these troubled times. Please contact the authors or your Miller Canfield attorney with further questions.

This information is based on the facts and guidance available at the time of publication, and may be subject to change.