$10M grant fund launched for small Michigan businesses hurt by COVID limits

The eight-person staff at 734 Brewing Co. still goes to work daily, even with the Ypsilanti tasting room closed through at least Dec. 8 due to the coronavirus. 

During the original statewide shutdown of nonessential businesses in March, employees were laid off at the brewery, said co-owner Patrick Echlin. Unemployment benefits included an extra $600 per week in federal aid at that time, which made the move bearable.

This time, Echlin said, there is no extra federal aid after Michigan health officials shuttered indoor dining and bars as well as movie theaters and casinos as of Nov. 18 due to escalating cases of the coronavirus across the state.

“We don’t want them to be put in that position again,” Echlin said of the workers. “I don’t think it’s fair.”

But maintaining a full staff isn’t easy at the brewery, which has averaged a 60 percent sales decline during the pandemic. It ramped up its alcohol delivery service to customers even as cold weather hindered outdoor seating, with the owners hoping to maintain staffing during the slow weeks.

Getting some financial assistance, Echlin said, “would be nice.”

That’s been a refrain across the industries hurt most by limits on indoor gatherings, like bars, restaurants, hotels, gyms and movie theaters. For the smallest operators, some of the challenges have been immense, with an estimated 2,000 restaurants already closed in Michigan due to the pandemic. 

State officials on Monday announced a new $10 million grant program to help them, with the funding targeting “small businesses that continue to be disproportionately affected by the negative impacts of the pandemic,” said Mark Burton, CEO of the Michigan Economic Development Corp.

The Pure Michigan Small Business Relief Initiative was approved Monday afternoon by the Michigan Strategic Fund.

The move will assist 700 or more small leisure and hospitality businesses or recreational facilities in Michigan affected by longer-term closures and lower capacity limitations during the pandemic and by the recent set of restrictions issued by Robert Gordon, director of the Michigan Department of Health and Human Services, under Gov. Gretchen Whitmer.

“When the governor issued her most recent order in conjunction with [Gordon] … we knew once again that this was a moment for us to step up and provide some much-needed relief,” Burton said.

The timing was important, Burton said, because the order immediately curtailed revenue for the affected businesses, even as many had already been through closures. Also, Burton said, the MEDC looked ahead to winter and the expected slowdown in seasonal business, particularly for restaurants, over coming months. 

“This was a moment for us to step up,” Burton said. 

The plan calls for $10 million in grants of up to $15,000 to be distributed to businesses in the troubled sectors with 2 to 50 employees and revenue of at least $25,000. Another $1 million will be allowed for administrative fees. Funding is coming through Community Development Block Grants provided to Michigan from the federal CARES Act, and it represents some of the state’s last dollars available through that $2 trillion nationwide plan.

Businesses eligible for the grants include:

• restaurants, bars and other food and beverage service providers
• travel and tourism destinations, including lodging providers
• live event venues and movie theaters
• conference and meeting facilities
• ice skating rinks
• indoor water parks
• bowling centers
• gyms and fitness centers

Those industries were disproportionately affected as  Michigan lost about 1.06 million jobs from February to April, when Michigan was under Gov. Gretchen Whitmer’s stay-at-home order. 

Other industries rebounded more quickly, though the state still is expected to be down 380,500 jobs at year-end. Recovery is projected to last beyond 2022, according to a recent University of Michigan economic forecast, which notes that in two years, the hotel and restaurant industry likely will still have 83,500 fewer jobs – a decline of 20 percent – from before the pandemic. 

The Michigan Restaurant & Lodging Industry says its surveys indicate that 8,000 Michigan restaurants could close permanently over the course of the pandemic. Hotels, meanwhile, are seeing a national unemployment rate of about 30 percent, and two-thirds of U.S. hotels warn that they could close, according to the American Hotel and Lodging Association. 

Work on the Pure Michigan Small Business Relief Initiative starts this week. Applications for a grant administrator will begin immediately, and businesses should be able to ask for consideration by Dec. 15, said Burton.

The first-come, first-serve grants will be distributed across the state. 

Allocations are divided among MEDC’s 10 regions, with the largest portion  – $3.55 million, or 35.5 percent – heading to Metro Detroit’s three counties. The second-largest portion is $1.3 million, which will be distributed in the 13 counties in the greater Grand Rapids area. The smallest distribution will be $400,000, or 4 percent, which is designated for the northeast Lower Peninsula. 

The program follows earlier grant programs run through the MEDC, including the $100 million Small Business Restart Grants. Burton said at least 18,500 Michigan businesses have received some assistance, with an estimated 147,000 jobs retained.

Echlin, of 734 Brewing, agrees with Burton that the latest restrictions “are really bad timing.” He’s been hoping the state will offer deferred tax collections, seeing that as – outside of grants – “the only lever left to pull.”

“Most restaurant, food and alcohol businesses focused on serving customers face to face are struggling right now,” Echlin said. 

“This time, the cards are stacked against us.”