Hundreds of millions of dollars is available to help Michigan small businesses reopen their doors following a months-long shutdown. The challenge, counties distributing the funds say, is getting the grants and loans to businesses quickly when they need help the most.
In the early days of the pandemic, the Michigan Economic Development Corporation sent out money to counties to distribute to small businesses, with funding coming from the Michigan Strategic Fund, which uses public funding for economic development purposes. Demand was intense and the funds weren’t enough to meet demand. Some counties struggled to distribute that money quickly.
Separately, counties are now sitting on hundreds of millions of dollars from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, and are trying to learn from their past mistakes and distribute the money as quickly as possible.
More: Local governments, small businesses to receive some of counties' CARES Act money
"If we delay expenditures of the money for too long, the very businesses we’re trying to help will die on the vine," said Warren Evans, executive of Wayne County, on a conference call with reporters Thursday.
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.
About $117 million for the City of Detroit; $188 million for Wayne County; nearly $220 million for Oakland County; $152 million for Macomb County, and nearly $115 million for Kent County.
They are at various stages of allocating funds, which counties envision could be used for paying off rent, mortgage, or utility payments, maintaining payroll, or buying personal protective equipment (PPE).
In some ways, they say they are filling a void that was expected to be filled by the Paycheck Protection Program. County executives say businesses have complained either about receiving less money than expected, or not being able to get a loan entirely.
More: Metro Detroit businesses hope to not lose out again on Paycheck Protection Program
Most small businesses' first shot at receiving funds was in March, when the MEDC announced its Michigan Small Business Relief Program. The state agency distributed up to $20 million in grants and loans to counties and economic development corporations.
Turning businesses away
Macomb County received $930,000, according to Vicky Rad, director of planning and economic development for Macomb County. About 2,000 businesses applied for the grant, and only 148 were awarded one, she said.
“We had to say, ‘Sorry, we can’t help you,’ ” Rad said. “That was a really sad time because businesses were in panic mode.”
One business that did receive the grant was The Pantry Restaurant in Sterling Heights. Lisa Lauretti, one of the owners, applied for the grant almost immediately after Gov. Gretchen Whitmer said restaurants had to shut down on March 16. She tried keeping the restaurant open for carryout business for a few weekends, but business was slow.
"That didn't pan out," said Lauretti. "It wasn't worth it. It was more sitting around than anything."
But still, rent and utilities were due.
"I didn't have a cushion before we closed," she said.
She did eventually get a $10,000 grant after a month, and she spent most of it on rent. Lauretti also got a $120,000 PPP loan, and the majority of that has been used to maintain her payroll.
Lessons learned from a slow rollout
Restaurants like Lauretti's, along with retail stores and personal service businesses, are what Oakland County is targeting with its $32 million grant program, using its CARES Act funds.
"We're trying to lean in," said Sean Carlson, deputy executive at Oakland County. "People need relief now and it's important to get it out."
The county is trying to work quickly to get the money out after a slow rollout of its $1.15 million grant from the MEDC. While Oakland County matched the funds, bringing the total amount available to $2.3 million, in a week the county received 7,700 applications, totaling $80 million in requests. They were only able to give grants to 797 companies, just a little more than 10% of the total that applied.
"We were inundated," Carlson said.
As soon as the county's CARES Act money came in, Carlson immediately planned to distribute $15 million in funds to small businesses.
"One of the reasons we were able to rebound so quickly after the 2009 recession was our small businesses and downtown communities," said Carlson. "They are a very important fabric of our community."
But the county was not equipped to process a large number of payments quickly, and allocation was slowed from issues as mundane as emails being sent to spam and applicants incorrectly filling out parts of their application. Grants are still being sent out to awardees after announcing the program at the end of April.
"We're trying to streamline it to get the money out as quickly as possible," Carlson said.
Balancing quick distribution and long-term strategy
Rad said Macomb County also struggled to provide money immediately. Demand was intense and the county wanted to get the money to businesses so they'd have money to reopen.
"The last thing we want to see is an empty building," said Rad. "We want to at least provide some relief."
But now that the county has announced another round of funding targeted for early July — $20 million in CARES Act money designated for small businesses — demand has slowed. Rad said she expects it's some combination of burnout from businesses juggling reopening and applying for numerous grant applications.
Wayne County announced its first round of funding for small businesses with CARES Act funding Thursday, with plans to distribute $50 million to a total of about 5,000 businesses. The county's application will go live at the end of the month.
"We think it will be a critical shot in the arm," said Evans, adding that he intentionally didn't put many restrictions on how the money can be used.
Counties have until the end of the year to allocate the money, and they're trying to balance getting the money quickly to businesses so they have money to reopen, but also thinking strategically about the best way to use the funds.
Rad is looking at other entities that also may need money, such as nonprofits and education, and also how to help set up businesses for long-term success.
"We're not sure what three months from now looks like," she said. She said ideas are being tossed around now for how to spend the money, such as helping small businesses create or improve their online presence, which could potentially help them increase sales long-term.
For Lauretti though, who reopened the Pantry on June 8 at 50% capacity, she's worried about her restaurant's immediate future. Business has been slower than she expected, and she's spent most of the money awarded.
"I had a little meltdown yesterday thinking we can’t pay the bills and the PPP loan back," she said. "It helped to get business back up and running. But if people aren’t coming in, it’ll run out."
Lauretti said she's planning on applying for the next round of funding from Macomb County, hoping that will get her through at least another few months.
Where to get help
Metro Detroit counties and the city of Detroit are offering a variety of loan and grant programs, with funding coming from a variety of sources.
- Detroit small businesses should go to https://ift.tt/31bQUau
- Wayne County is offering a loan program with TCF Bank. More information can be found here: https://ift.tt/2V4qlQI. To apply for a “Wayne County Back to Work: Small Business Readiness Grant," go to https://ift.tt/2zRBeht.
- To apply for Macomb County's $20 million grant program, go to https://ift.tt/2YkMywa.
- For more information about Oakland County's $32 million grant program, go to https://ift.tt/2zRN1wg.
Contact Adrienne Roberts: amroberts@freepress.com.
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