Two Michigan congressmen behind legislation that would create a $50.5 billion relief fund for small businesses nationwide hope to get it included in the next federal aid package that may come before Congress this summer.
The proposed RELIEF for Main Street Act would allocate funding to aid companies with 20 or fewer full-time equivalent employees, or no more than 50 employees for businesses in a low-income and rural community. The bipartisan legislation would use the well-established federal Community Development Block Grant formula to distribute funds to communities that have already launched or would create a local relief fund to assist small businesses affected by the COVID-19 pandemic.
Proponents of the proposal want to provide aid to small businesses that have been unable to access or did not meet guidelines for the U.S. Small Business Administration’s Paycheck Protection Program that nationwide has provided forgivable loans to more than 4.5 million small businesses for $511 billion. The SBA still has more than $100 billion in PPP money to lend.
The RELIEF for Main Street Act is “intended to add one more tool in the toolbox that we need to deal with the financial impact from the coronavirus pandemic,” said U.S. Rep. Dan Kildee, D-Flint, the legislation’s main sponsor.
“There is no one silver bullet that is going to solve the many problems we face as the result of this. This is a health crisis that is at the same time an economic crisis, but what we need to be able to do is scale and tailor the response to the crisis itself to the real needs that are out there,” Kildee said during a recent webinar hosted by the Michigan Municipal League.
Kildee and co-sponsor U.S. Rep. Fred Upton, R-St. Joseph, touted the legislation during the MML webinar and urged local leaders to advocate for the bill’s passage. Other sponsors include Reps. Brian Fitzpatrick, R-Pa., and Dwight Evans, R-Pa. Companion legislation in the U.S. Senate has been introduced and sponsored by Sens. Cory Booker, D-N.J., and Steve Daines, R-Mont.
Talks in Washington, D.C. continue about a possible new federal aid package that could come up for consideration in July and include assistance to cities and states, Upton said. He and Kildee hope to get the RELIEF for Main Street Act inserted into that legislation.
“That’s when we have our hand up,” Upton said, calling the legislation “an important foot in the door to try and recover from this terrible crisis that’s impacting maybe our state worse than many others.”
“We need to be prepared, and part of getting our economy moving again is everybody needs to get moving again, and this is a special lifeline, I would call it, to our small businesses, particularly in some of our urban settings,” Upton said. “This would provide the funds for small businesses with fewer than 20 employees, particularly minority-owned businesses and low-income and rural communities — folks who are the most vulnerable.”
Kildee concedes that getting the legislation attached to the new federal aid package is “going to take some heavy lifting.” Kildee, Upton and other backers are working to build further bipartisan support for the bill.
“This is a bill that when you talk to your member of Congress, partisan ideology doesn’t even come up. This is about helping small businesses, helping Main Street, helping communities large and small through something that nobody planned for, that nobody could have predicted,” Kildee said. “The cost of it, while it’s not insignificant, is nothing compared to the cost of us not intervening, because when we lose those businesses, we lose the employment and we lose the fabric of a downtown, a small town, a Main Street, and that’s really hard to replace.”
The RELIEF for Main Street Act has the backing of 95 mayors across Michigan who in May signed a letter of support. They include Kalamazoo Mayor David Anderson, Battle Creek Mayor Mark Behnke, Muskegon Mayor Stephen Gawron and Lansing Mayor Andy Schor.
In their letter to Congressional leadership, the mayors noted that the COVID-19 pandemic “is wreaking havoc on small businesses across cities, suburban municipalities and rural towns, particularly micro businesses that employ fewer than 20 employees and offer services vital for our communities — restaurants, bars, coffee shops, barbershops, hair salons, auto repair shops, family farms, dry cleaners and many others.”
Local relief funds created in communities around the state “are massively oversubscribed,” and federal funding for them “builds on what is already working,” the mayors wrote.
“This will enable more small businesses to survive this economic crisis, ensuring that the recovery will be quicker and more evenly distributed across cities, suburbs and rural areas and regions of the country,” according to the letter. “It will also enable our communities to evolve products and strategies that are more aligned with the reopening of the economy, particularly around the revival of Main Streets and other key business districts.”
A number of grants or loan funds have sprung up this spring in communities around the state. Among them were initiatives in Battle Creek, Grand Rapids, Muskegon, Grand Haven, Holland, Lansing and Kalamazoo.
Emergency grant and loan funds in Battle Creek awarded nearly $1.6 million to local small businesses and nonprofit organizations, said Battle Creek Unlimited CEO Joe Sobieralski. The BCU grant fund was backed with $250,000 in initial support from the W.K. Kellogg Foundation and $350,000 from the Consumers Energy Foundation.
Federal legislation that leverages existing funds is “an excellent idea, and it’s necessary,” Sobieralski said. He specifically cites situations in which new small business owners were preparing to open when the pandemic hit. Because they lacked a tax return for the prior year, they could not qualify for a PPP loan, Sobieralski said.
“There are perhaps dozens of cases like that in each specific community,” he said. “It could be a highly effective program for the square peg in the round hole. There are folks out there that didn’t fit the mold for what the PPP was designed for.
“It’s very scary times for businesses that are in those situations.”
Filling a need
In a recent survey by the Small Business Association of Michigan, nearly one in seven respondents out of a sample of 600 said they were unsure they would survive the pandemic.
Sobieralski expects the economic effects on small businesses from the pandemic will last well into 2021. He believes that some form of aid for small employers needs to continue at least through next spring, especially if the second wave of the pandemic hits later this year.
If bars, restaurants and event venues are only allowed to operate at 50-percent capacity for months, or if a second wave of the COVID-19 pandemic hits in the fall, “it’s going to be hard,” Sobieralski said.
“When are we going to understand what our new normal is going to look like?” he said. “I’m thinking programs like this are going to be needed to get folks to about March 2021 or June 2021.”
Among the latest relief efforts, the Michigan Economic Development Corp. last week awarded nearly $1 million to 22 communities statewide to assist 229 small businesses located in downtowns, neighborhood business districts and commercial areas.
The MEDC’s Match on Main program awarded up to $50,000 to communities. West Michigan recipients include Paw Paw and Zeeland, which received $50,000 apiece. The City of Zeeland used the funds to assist 10 small businesses, and Paw Paw aided 12 companies.
Kent County also created a new business relief fund this month using $25 million from the $114.6 million it received through the federal CARES Act. The Grand Rapids Area Chamber of Commerce will manage the Kent County Small Business Recovery Program that’s intended for small businesses that started before Feb. 28 and have up to 25 full-time employees.
Approved June 11 by county commissioners, the program will offer grants of $5,000 to $20,000 to small businesses, depending on their size, operating costs, and how well they score against a set of metrics.