Companies and real estate projects that received state incentives through a grant, loan or equity investment from the Michigan Strategic Fund could get emergency relief under an initiative approved today to ease the economic hardship triggered by the COVID-19 pandemic.
The Strategic Fund Board action allows the Michigan Economic Development Corp. to provide deferrals for up to 12 months on loan payments, as well as to extend for up to a year milestone due dates and maturity dates, or other dates that are built into existing loan, grant or equity agreements with companies.
The MEDC also can extend for up to 12 months the deadlines for companies to execute loan, grant and equity agreements, plus eliminate and reduce milestones that companies must meet for creating jobs as part of their grant.
The emergency relief would go to companies and projects that have received state incentives and are now “facing drastic reductions in cash flow or delays in project progress due to the pandemic,” according to an MEDC staff memo to board members.
The MEDC has been contacted by companies that received past incentives and are concerned about the coronavirus pandemic’s effect on their cash flow. Grant recipients also have experienced delays in their projects that will hinder their ability to meet milestones and deadlines, said Michele Wildman, senior vice president of community development at the MEDC.
“We are already seeing impacts across the board as far as projects that we support,” Wildman said during this morning’s Michigan Strategic Fund Board meeting that was held via conference call.
Through the initiative, the Michigan Strategic Fund wants “to assist in the long term sustainability of all projects and businesses that it has provided financing to, allowing the companies to provide similar relief to numerous small businesses, resident tenants, and employees trying to make ends meet in this difficult time,” according to the MEDC memo.
The Michigan Strategic Fund presently has 46 loans and agreements with real estate developments located “in some of the state’s most vulnerable communities.” There are also 328 companies with active business development grants and 208 recipients of funds in a capital access program.
The Michigan Strategic Fund will offer the relief for a year to any “awardee or ultimate beneficiary negatively financially impacted as a result of the COVID-19 pandemic,” according to the MEDC staff memo.
Applicants for relief would have to remain current in reporting requirements in their agreement with the Michigan Strategic Fund and submit periodic reports during the deferment period that could consist of lender updates, residential and commercial occupancy for real estate projects, jobs, and other information the MEDC requests.