March 25, 2020

Kerr Russell’s Small Business Survival Guide

Government Support Programs:  MEDC and SBA

The Michigan Strategic Fund has authorized the funding of the Michigan Small Business Relief Program. This will provide up to $20 million in grants and loans to support businesses facing drastic reductions in cash flow and the continued support of their workforce. The Michigan Economic Development Corporation (“MEDC”) will provide grants of up to $10,000 to eligible businesses. These funds are expected to be available on or about April 1. The MEDC anticipates that at least 1,100 businesses across the state will benefit from this program.

The Small Business Administration (“SBA”) has established a program to provide loans up to $2,000,000 to small businesses, with a 3.75% fixed interest rate on loans to for-profit companies, and 2.75% fixed interest rate to non-profits, with up to a 30-year term and amortization. Loans may be used to pay fixed debts, payroll, accounts payable and other bills.

The Michigan district office of the SBA will be conducting periodic webinars on the program, including a webinar on March 25, 2020 with Congresswoman Debbie Dingell at 5:00 p.m.  See this link for more info click HERE.

Relief from Banks and Lenders

On March 22, 2020, a conglomeration of federal financial regulatory bodies, including the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp, issued a memorandum encouraging banks and other financial institutions to work with its customers impacted by the coronavirus. The memo can be viewed HERE.

Ally Financial Inc. announced last week that it would defer auto and mortgage payments for 120 days and permit new auto loan customers to defer their first payment for 90 days.

While banks and lenders are in the process of developing policies, small business owners should not be shy about reaching out to their lenders to ascertain what type of relief may be available.

Rent Deferrals/Relief

More and more landlords are offering rent deferrals or relief to help tenants through the crisis.  Bedrock, one of Detroit’s largest property owners, recently announced that it will not require certain restaurants and small retail businesses to pay rent for April, May and June.

Business owner tenants should reach out to their landlords to inquire into similar programs.  The last thing an owner wants during the current economic crisis is a vacant building.

Relief from Credit Card Payments and Bank Fees

Small businesses and their owners often use credit cards to reimburse expenses and for other short-term liquidity needs.  Many credit card companies are offering various accommodations to their borrowers, including fee waivers on monthly service fees, and a waiver of penalties for early withdrawals from CD.

For more support and information relating to COVID-19, please visit the Kerr Russell COVID-19 Resource Center. If you have questions relating to this article or other business law matters, please contact a Kerr Russell attorney.

 Jason W. Bank is the chair of the firm’s Bankruptcy and Restructuring department. He focuses his practice in the areas of commercial bankruptcy, out-of-court workouts, corporate restructuring and creditors’ rights. Jason has successfully guided numerous businesses through out-of-court restructurings and Chapter 11 reorganizations. He has negotiated resolutions of complex financial issues and debtor-creditor disputes and achieved consensual restructurings while avoiding bankruptcy or litigation.


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