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Federal loans aim to help small businesses survive coronavirus slowdown

Melissa Nann Burke
The Detroit News

Washington — Michigan officials are seeking a declaration from the federal government that would make low-interest disaster loans available to the state's small businesses that are struggling as the coronavirus pandemic slows consumer spending. 

Gov. Gretchen Whitmer on Monday officially notified the U.S. Small Business Administration that she is seeking an Economic Injury Disaster Loan Declaration for the state, and officials said they expect that application process to be completed this week. 

Michigan Gov. Gretchen Whitmer notified the U.S. Small Business Administration that she is seeking an Economic Injury Disaster Loan Declaration for the state.

Congress this month passed legislation making $1 billion available to the SBA to grant low-interest loans to small businesses, small agricultural cooperatives and nonprofits to help make up their temporary loss of revenue as a result of the COVID-19 pandemic. 

If secured, the Economic Injury Disaster Loans may offer up to $2 million in aid.

"It’s been inferred to us this won’t be regular federal process. They will turn it around very quickly," said former Lt. Gov. Brian Calley, president of the Small Business Association of Michigan.

To encourage "social distancing," federal health authorities have urged Americans to work from home, avoid social gatherings of more than 10 people and skip non-essential travel and shopping trips — steps that have already hurt local businesses and transportation companies such as airlines. 

Whitmer on Monday issued a sweeping order to shutter all dine-in eateries, performance venues, indoor sports facilities, movie theaters, recreation centers, libraries and gyms through at least March 30 to slow the disease's spread.

Michigan has confirmed 65 coronavirus cases since the disease was first detected in the state a week ago. 

Unlike usual SBA loan guarantees secured through a bank, these specific disaster loans will come directly from the Small Business Administration itself. Businesses will submit a loan application online and provide certain documentation to prove their economic injury, Calley said. 

"This is a loan, not a grant. Not free money. But for some businesses where the issue is not just overall losses but cash flow over some period of time, a working capital loan option is going to make a big difference," Calley said. 

The loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the impact of the pandemic, according to the SBA.

Businesses with credit available elsewhere are not eligible, the agency said this week. The interest rate will be 3.75% for small businesses without credit available and 2.75% for nonprofits for a maximum term of 30 years.

The state is gathering information from counties to demonstrate economic damages, providing financial data and projecting what their business losses will be for the next year, Calley said.

Businesses that could benefit from the loans may begin to collect the information and records that they will need to apply, such as tax returns from recent years and balance sheets.

Rep. Elissa Slotkin, D-Holly, distributed tips for business leaders in her district last week including notice of the SBA disaster loans. She also advised business owners concerned about lines of credit and loan repayments to contact their bank to ask about delayed or deferred payments.

“Banks are attempting to figure out how to manage loan repayment and new lines of credit, and it's well worth exploring the possibilities with them,” she said.

The Michigan Economic Development Corporation said the state also has programs for small businesses that can provide working capital during times of economic uncertainty.

“We are working with small business organizations and partners around the state to ensure that every possible resource is made available to businesses, communities, entrepreneurs and others around the state, and we will continue to provide updates as soon as they’re available," MEDC CEO Mark Burton said in a statement. 

Resources for small businesses: 

SBA disaster assistance customer service center: (800) 659-2955 or

MEDC’s call center: (888) 522-0103 or

Michigan Small Business Development Center: