The latest state effort to provide financial aid to Michigan small businesses and entertainment venues that are ailing from the COVID-19 pandemic and resulting restrictions has a relatively short application window based on previous demand.
Applications for the $55 million Michigan Small Business Survival Grant Program open at 9 a.m. on Jan 19. The application process closes at noon on Jan. 22.
Entertainment and live music venues can apply for the $3.5 million Stages Survival Grant Program beginning at 9 a.m. on Jan. 21. The applications window for Stages grants closes at noon on Jan. 28.
The small window for the Small Business Survival Grant Program stems from an expectation that demand will easily outstrip available funding because of a “far, far greater need that exists than any amount of resources that we are facilitating,” Michigan Economic Development Corp. CEO Mark Burton said last week. Grant programs last year to provide relief for thousands of small businesses statewide quickly depleted available funding, he said.
A $10 million grant fund in December “very literally was exhausted in minutes,” Burton said. Given the “enormous demand” expected for the new grants, the MEDC opted to set a short application period, he said.
“We believe that the demand will continue to be extremely high and will continue to outpace any of the resources we’re making available,” Burton said. “It’s just the experience that we have seen in the demand for these and keeping a window open longer. We don’t want to continue that sort of false hope when it comes to people putting in applications well beyond the funds being exhausted.”
The Michigan Strategic Fund board voted unanimously on Jan. 14 to formally authorize both grant programs, made available through a COVID-19 relief package that state legislators passed in late December and Gov. Gretchen Whitmer signed into law.
Strategic Fund board member Susan Tellier, of Caledonia, was concerned that the small application window was “harsh” and will only “exacerbate the frustration of the small business owners” already struggling through the pandemic.
The MEDC did set a period between Strategic Fund board approval of the grant programs and opening applications so it and local economic development organizations had time to promote and create awareness, “as well as to give an opportunity for the small businesses to be prepared with the materials that they need to submit the application,” said Josh Hundt, MEDC’s executive vice president and chief business development officer.
When the application process opens for either grant program, Burton expects high demand for the “desperately needed relief.”
“There continues to be an overwhelming need for relief from the economic impact of COVID-19 from small businesses all across the state. While Michigan continues to see progress from public health restrictions compared to other states, we also recognize that many of our small businesses have made significant sacrifices over the course of this effort to save lives and to repeatedly flatten the curve,” Burton said.
Both grants are based on need and are not first-come, first-served.
The MEDC expects that grant funds will begin flowing to approved recipients by the end of January, with a “significant majority to be fully allocated and distributed to the small businesses by Feb. 28,” Hundt said.
The biggest demand for grants will clearly come from restaurants and small businesses in the hospitality industry that have felt the brunt of the state-ordered restrictions, said Eric Seifert, principal of Muskegon-based Left Coast Capital Resources LLC.
“They’re hurting,” said Seifert, who is part of a review committee in Muskegon that will vet local grant applications. “It’s a killing field out there. It’s really sad.”
Small businesses, venues prioritized
Under the $55 million Michigan Small Business Survival Grant Program that’s modeled after similar efforts last year, the MEDC will work with 15 local economic development agencies across the state to review applications and award funding.
Small businesses that “have realized a significant financial hardship because of the COVID-19 emergency” and have been temporarily closed because of state orders can get up to $20,000 in grant funding, according to an MEDC memo. Small businesses that remained open but had their operations limited are eligible for a grant up to $15,000.
The grants are for small businesses that have one to 100 full- and part-time employees and operate in an industry affected by state orders that can demonstrate a resulting income loss. Grant recipients can use the funding for working capital to cover payroll, rent, mortgage payments, utility expenses or other similar expenses.
Through the $3.5 million Stages Survival Grant Program, the MEDC will provide $40,000 in grant funding to live music and entertainment venues that were “negatively impacted by the COVID-19 virus and related measures to protect public safety,” according to the MEDC.
The Stages Survival Grant Program is designed for music and entertainment venues in the state with fewer than 30 employees full time and were operating as of Feb. 29, 2020. Eligible venues include those that generated at least 33 percent of 2019 gross revenues from live music or ticket sales, or at least 70 percent through cover charges, ticket sales, production fees, nonprofit educational initiatives, or the sale of beverages, food, and merchandise at events. The venues will also have to show that revenue in the second quarter of 2020 was no more than 10 percent of the second quarter of 2019.
Venue operators must not have a majority ownership by an issuer of securities listed on a national security exchange, or own venues in more than one country or in more than two states.
The Michigan Independent Venue and Promoter Association will accept, review and approve grant applications on behalf of the MEDC. If awarded under the Stages Survival Grant Program, live music and entertainment venues are ineligible for the Business Survival Grant program.
MEDC Chief Operating Officer Amanda Bright McClanahan estimates that Michigan has about 100 entertainment and live music venues that are eligible for the venue grants.