Small business owners say they need relief, but funds have run out
When the Michigan Economic Development Corporation opened up applications for its first-come, first-served small business grant program Tuesday, it expected to see about 667 businesses ask for a grant of up to $15,000.
But instead more than 22,000 small business owners showed up online to apply for financial lifelines. If every business received a
grant, it would have totaled $323 million, Mark Burton, president and CEO of the MEDC, said in an interview with the Free Press.
But just $10 million was available through Tuesday’s Pure Michigan Small Business Relief Initiative. Three minutes after the program opened at 9 a.m., 6,600 people were in the queue, Burton said.
“(The money) was likely gone in a matter of seconds,” he said.
Meanwhile, a program launched earlier this year by the MEDC that offered a total of $100 million, with three weeks to apply, had 37,000 applicants.
“It was just a remarkable snapshot in time,” he said. “That underscores the desperation that’s there moving into the winter.”
The MEDC decided to make the Pure Michigan initiative a first-come, first-served program to get the money out quickly, understanding that many businesses are struggling with slow sales due to rising COVID-19 cases that have driven many consumers to stay home, along with a new set of restrictions on business by the state.
Relief funds expire just as they’re needed most
It was a strategic decision to set up the program this way, Burton said. But for the majority of the federal Coronavirus Aid, Relief and Economic Security (CARES) Act funds that the state received, along with Kent, Macomb, Oakland and Wayne counties and the City of Detroit, there’s a fast-approaching deadline to distribute the funds by the end of the year.
The $2 trillion CARES Act package was passed and signed into law March 27. The state of Michigan was allocated $3 billion while four counties and the City of Detroit received their own allocations because they have a population of 500,000 or more.
Most of that money has already been distributed in order to meet the deadline, but the funds are expiring just as the need is growing. Demand has come in waves throughout the pandemic and evolved over time, economic development officials say.
In March, when a broad swath of businesses shut down under the state’s stay home order, businesses needed capital to pay rent and utilities.
“Once many of those businesses were allowed to reopen, their financial circumstances changed a little bit,” Burton said. “The crisis evolved in September. Cases (of COVID-19) from the public health side were down, business activity was way up.”
Now business activity is down once again. “It’s the survival capital access that they need to pay fixed costs,” he said.
The virtual line was ‘insane’
That’s why Brittni Brown, who owns the Detroit public relations firm the Bee Agency, applied. Her business took a hit earlier on in the pandemic, but recovered throughout the summer and fall. Having received one $5,000 grant earlier this year, she felt she was in a good place financially, but is nervous heading into 2021.
“We still don’t know how that looks,” Brown said. “I don’t know if clients will be able to continue to keep up“because of the state’s restrictions on certain businesses.
She said the queue of tens of thousands of business applying for the MEDC grants was
“just absolutely insane.”
For Brown, the experience of witnessing tens of thousands of businesses virtually line up for grants was anxiety-inducing. It made her realize that the reasons she applied — the uncertainty heading into 2021, not knowing when business conditions would improve — were exactly what the other small businesses were feeling.
“It was scary,” Brown said. She eventually logged off, taking herself out of the queue without a grant.
Uncertainty brings anxiety
Even for businesses that applied and received several grants — like April Anderson, the owner of Good Cakes and Bakes in Detroit — there’s a lot of anxiety heading into 2021.
“I worry about January and February when we’re already slow,” Anderson said. “The extra costs of gloves, sanitizer and masks, I think that’s going to put a little worry on us at the beginning of the year. Those extra costs are now a permanent part of our budget.”
Anderson applied for the most recent MEDC grant, and did eventually get through at 7:45 p.m. She’s waiting to see if she’ll be approved for the grant. While she is confident the business will stay afloat heading into the new year, “we’ve exhausted some of the cushion we had pre-COVID,” Anderson said.
The grant money she received previously all went to reconfiguring the bakery to allow for social distancing and buying masks for both staff and customers, gloves and hand sanitizer to adjust to the new regulations associated with COVID-19.
In many cases, that’s what the money was intended for: helping businesses adjust to changes brought on by the pandemic, whether it’s restaurants transitioning to take-out only or retailers installing plexiglass barriers.
The state and counties created programs that they thought would help small businesses stay open in the long term. For example, Macomb County paid out $5.2 million that went to helping businesses create an online presence.
But as the needs changed, so did the programs. After distributing $68.5 million to small businesses, Wayne County offered $500 debit cards directly to the workers who lost hours or were laid off as a result of the new restrictions from the state. The $4 million program, launched last week, had 20,000 applicants. They’re adding $2 million based on demand, said Khalil Rahal, assistant county executive for Wayne County.
But that’s all financed with CARES Act funding, and it’s almost gone and expiring soon. Now, counties have to get creative.
Looking for new ways to help
Vicky Rowinski, the director of Macomb County’s Planning and Economic Development department, said just as the county’s allocation of CARES Act funding was nearly all spent, the new set of restrictions went into effect.
She said she and her team are looking at ways to help restaurants reduce the cost of inventory, possibly helping to buy in bulk to reduce costs.
Burton, meanwhile, is advocating for the state Legislature to pass a $100 million relief package and for additional federal support. He views the latest MEDC grant as the first step in helping businesses survive the winter, followed by additional relief packages.
If that happens, “we can likely collectively carry our small businesses through what’s going to be a very difficult winter,” he said.