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State and Federal Relief Programs Available To Help EUP Small BusinessesFree Access



Although seemingly slow to initially react, the State of Michigan and the federal government have now started to roll out massive relief programs to address the severe economic consequences resulting from spread of COVID-19. Never has the U.S. intentionally shut down so much of its commercial operations and told so many people to stay at home. Separate from the healthcare effects, the impacts on the financial condition of individuals, families, and businesses are like nothing we’ve ever seen. Individuals and business owners in the Eastern Upper Peninsula should carefully review the various financial programs available to help their businesses survive this extraordinary period.

Generally, the government has acted so far on three levels.

First, the Federal Reserve Bank is using what is called “monetary policy” to inject trillions of dollars into the financial system. The “Fed” has many ways to do this, including the lowering of interest rates (to encourage more-affordable lending and investing), buying government and corporate bonds and thereby adding liquidity (meaning cash) into the financial markets, and other more esoteric but very important activities relating to assuring the functioning of the financial system. Those are all extremely important actions, but individuals and small businesses don’t usually directly benefit from them.

Second, the federal government has passed a $2 trillion package of relief programs that will quickly provide direct financial support for businesses, including low-cost loans, grants, and direct investments into companies. The new legislation is called the Coronavirus Aid, Relief, and Economic Security (CARES) Act. When the government takes financial action and injects capital directly and indirectly into the economy, that is called “fiscal policy.” While we are all staying home, these financial benefits are not really intended to stimulate the economy because those funds won’t be used for going to restaurants, traveling, going to entertainment venues, etc. Rather, the purpose of this funding is to simply support individuals’ basic expenses such as paying the mortgage, the electric bill, and other expenses while we stay at home. The support for businesses and industries are intended to keep those businesses going, until we all get back to our normal lives of working and enjoying ourselves in public. Some commentators suggest that this is just the first of other massive relief programs that will be needed.

Third, the State of Michigan has also passed a smaller fiscal policy package of programs at the state level intending to produce results similar to the federal actions, but from state agencies and departments.

Although billions of dollars have been allocated to major industries such as the airlines, certain large manufacturers, and other large companies that have been hit hard, there are also billions of dollars allotted to small businesses. In fact, there are so many aspects to these federal and state relief programs that it is difficult to figure out what a small business should consider pursuing, let alone how to apply for and receive the relief funds. Although not a comprehensive review of these plans, below is a summary of some of the most-prominent programs that might be applicable to an EUP small businesses.

Federal Programs U.S. Department of Agriculture – Rural Development

The USDA offers multiple opportunities for relief in the areas of the USDA Guaranteed Loan Program, Direct Loan Program, Multi- Family Housing rules and protections, Rural Utilities Service, and Rural Business-Cooperative Service. A good source to learn more about these programs can be found on the website of Michigan’s First District Congressman, Jack Bergman: bergman.house.gov/ news/ documentsingle. aspx? DocumentID=610.

Paycheck Protection Program

Under this program, a small business can borrow up to 2.5 times its monthly payroll with the loan being forgiven if those employees are retained for a period of time. Importantly, businesses will be allowed to re-hire currently laid off employees and then apply for the funds under this program. More information can be found here: sbaloanprogram.com/ paycheck-protection-program/. Importantly, no collateral or personal guaranty is required for these loans. U.S. Small Business Administration (SBA) – Economic Injury

Disaster Loan (EIDL)

Over $1 billion has been approved under the CARES Act for low-interest loans from the SBA for small businesses, small agricultural cooperatives, and not-for-profits that incur losses as a result of COVID-19. More information about this program can be found here: disasterloan.sba.gov/ela/ Information/EIDLLoans. These loans (often called Section 7(a) loans) are being facilitated through local financial institutions such as banks and credit unions. EUP small businesses can contact their local lenders to start that conversation. The loans are 100% guaranteed by the U.S. Treasury, which means that a bank or credit union should be very willing to make these loans. Unlike most SBA loans, these EIDL loans are available without any SBA determination that the borrower can’t obtain a loan elsewhere.

State of Michigan Programs Michigan Economic Development Corporation (MEDC)

The Michigan Economic Development Corporation (MEDC), through its Michigan Strategic Fund (MSF), has authorized a $20 million program called the Michigan Small Business Relief Program. The program will be administered by the MEDC to assist small business owners that demonstrate a loss of revenue due to suspected or restricted operations caused by COVID-19. The program is divided into two parts: $10 million designated for low-interest loans, subject to several qualifying criteria; and, $10 million set aside for grants for similar needs. More information can be found at the COVID-19 portion of the MEDC website: www.michiganbusiness.org/covid1 9/. The grants and loans are requested for using the same application form. Locally, businesses in Sault Sainte Marie can contact Jeff Holt of the Sault EDC at jholt@saultcity.com or (906) 632- 5778, and other Chippewa County business can contact Chippewa County EDC President Chris Olson at (906) 322-5639 or chrisolson@ chippewacountyedc.com. For businesses in Mackinac and Luce counties, contact InvestUp at www.investupmi.com and (906) 277- 2055, which is leading the effort for the entire U.P. It should be noted that at this time only $500,000 of the $10 million in grants is allocated for U.P. businesses.

Managing Employees Status

The State of Michigan strongly urges employers to place employees on temporary leave and advise the worker that they expect to have work again within 120 days instead of terminating such employees. This approach will still allow such employees to receive other state and federal assistance, including unemployment benefits. More information about how Michigan employers can avoid layoffs and other employee-related matters relating to COVID-19 can be found at this Michigan Department of Labor website: www.michigan.gov/leo/ 0,5863,7- 336- 78421_ 97241_ 98677—,00.html. Employers can also consider cutting back employee hours instead of temporary leave or termination (while still allowing the employees to collect partial unemployment benefits) by using the Work Share Program detailed here: www.michigan.gov/workshare.

Aside from direct support for small businesses, small business owners and others will benefit from a range of relief, including direct government payments of up to $1,200 per adult and $500 per child for families with incomes of up to $198,000, the deferral until at least July 15, 2020, for payments due for 2019 taxes, plus a huge range of individual assistance relating to unemployment insurance, food assistance programs, and many others.

Any business or individual meeting the qualifications should actively seek out the benefits they need and are legally entitled to. As the situation evolves, it is likely that additional funds will become available in future programs at both the state and federal levels.

Donald Moore is a lawyer and investor based in Hessel. He is developing the Hessel Hub Technology Center in Hessel while continuing to advise clients and investors in the EUP and around the world as one of the EUP’s remote workers.

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