fbpx
Published in Economic Development

State, federal lawmakers reach agreement on COVID-19 relief packages

BY MARK SANCHEZ and ANDY BALASKOVITZ Monday, December 21, 2020 02:03pm

Editor’s note: This story was updated with comments from a Small Business Association of Michigan briefing on Monday.

State and federal lawmakers have each reached consensus on COVID-19 relief that will support small businesses like restaurants and venues still confronting pandemic-related restrictions.

The state House today passed and sent to Gov. Gretchen Whitmer a $465.1 million state aid package that will provide “survival” grants to ailing small businesses and entertainment venues that were closed or had their operations limited by state orders.

This morning’s House passage of Senate Bill 748 on a 97-5 vote follows the state Senate’s approval of the supplemental appropriations bill Friday night by a wide margin.

Whitmer said in a statement that she’ll sign the legislation.

“This bipartisan relief bill will provide families and businesses the support they need to stay afloat as we continue working to distribute the safe and effective vaccine and eradicate COVID-19 once and for all,” Whitmer said. “There is still more work to do to beat this virus and grow our economy. All Michiganders have a personal responsibility to do their part and mask up, practice safe social distancing, and avoid indoor gatherings where the virus can easily spread from person to person.”

The legislation includes $55 million for small business grants through the Michigan Strategic Fund (MSF), working with 15 local and nonprofit economic development corporations in the state. Another $3.5 million in grants through the MSF would go to eligible entertainment venues.

A new Department of Health and Human Services emergency order took effect today that allows entertainment venues like theaters, casinos and bowling alleys to reopen under capacity restrictions. The emergency order also extends a ban on indoor dining until Jan. 15.

Passage of the state package in Lansing, combined with COVID-19 cases that are trending “in the right direction” and a second vaccine coming out soon, has “gotten me feeling a little bit more optimistic about the future,” Small Business Association of Michigan President Brian Calley said Monday during a virtual briefing for members.

“The state really did do a great job with the supplemental that just passed and the difference it will make for small businesses in particular,” Calley said.

The $220 million earmarked for the state’s unemployment insurance trust fund will cover the extension of unemployment benefits from 20 to 26 weeks. The allocation is “symbolically important” to avoid an increased state assessment on employers to replenish the trust fund from a higher unemployment rate, Calley said.

He also expects the $55 million for small business grants of up to $20,000 to go fast.

“$55 million sounds like a lot, but at $20,000 per business, it’s limited,” he said. “It’ll be like winning the lottery to get some of it.

The separate $3.5 million will fund grants of up to $40,000 for entertainment venues.

The state aid also includes an employee assistance fund that will provide $1,650 to bar and restaurant employees who were laid off or furloughed because of the extension in the state’s order.

Federal relief

Meanwhile, Democrats and Republicans in Congress reached a deal on Sunday for a $900 billion federal relief package that includes $600 payments to adults who make less than $75,000.

The plan, which could be voted on today, also includes $15 billion in support for entertainment venues and $284 billion to bring back the Paycheck Protection Program for small businesses. The PPP revival includes provisions specific to the restaurant industry. The plan provides businesses with a forgivable loan of up to 2.5 times its monthly payroll costs, though restaurants could seek loans up to 3.5 times monthly payroll costs.

During the first two rounds of PPP that ended in October, the SBA approved $16.0 billion in loans for more than 128,000 small businesses in Michigan.

“The action taken by Congress today will keep tens of thousands of restaurants from closing in the coming months,” Tom Bené, president and CEO of the National Restaurant Association, said in a statement. “A second round of PPP, combined with unique enhancements for the restaurant sector, will provide critical access to capital. Restaurant operators and their employees are dedicated to serving their communities, and today’s bipartisan agreement will give them the opportunity to do that through the holidays. However, the long-term economic challenges facing independent, franchise, and chain restaurants will not end with the new year, and we will continue to press federal and state leaders for the support that will put us on the road to recovery.”

The National Federation of Independent Businesses reported last week that 45 percent of small businesses responding to a recent survey said they would apply for another or re-apply for a PPP loan. More than one in five survey respondents said they would no longer operate within seven to 12 months under current economic conditions.

The federal relief would also allow businesses that previously received a PPP loan to deduct expenses the funding covered. Deducting those expenses were previously prohibited.

Loans less than $150,000 can receive automatic forgiveness.

“It is a little sweeter for us as business owners,” Leon LaBrecque, a director at the Michigan Association of CPAs and chief growth officer of Sequoia Financial Group in Troy, said during SBAM’s briefing. “We think this will stave off a second wave of a U.S. recession. This may be the saving piece that will save us a little bit.”

Read 10046 times Last modified on Monday, 21 December 2020 16:15
SUBSCRIBE TO MIBIZ TODAY FOR WEST MICHIGAN’S FINEST BUSINESS NEWS REPORTING >