Small Business Information
Small businesses are the backbone of Michigan’s economy and the economic driver in many of our local communities. I'm working to ensure that all small businesses are able to obtain access to the federal loans and capital they need to stay afloat during the Coronavirus pandemic.
Here are helpful documents and answers to frequently asked questions about different resources that are available to your small business.
Small Business Owner's Guide to Accessing Federal Resources - Click here to download the full guide
I have engaged with small businesses across Michigan about the devastating toll this pandemic is taking on their companies and employees and supported key measures to help them get through this crisis. That is why I pressed for vital increases in small business funding that were included in the CARES Act and subsequent legislation that I helped pass and that has been enacted.
The CARES Act established the new Paycheck Protection Program (PPP) to provide support to small businesses, including in Michigan. The PPP provides 100% federally guaranteed loans to small businesses. Importantly, these PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. The PPP is providing much-needed relief to small businesses all across Michigan so they can sustain their businesses and keep their workers employed.
After the first round of PPP funding lapsed, Congress passed the Paycheck Protection Program and Health Care Enhancement Act to reauthorize the PPP and allow financial institutions to continue serving the needs of small businesses and nonprofits in Michigan.
What types of businesses and entities are eligible for a PPP loan?
Businesses and entities must have been in operation on February 15, 2020.
Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.
Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.
What are affiliation rules?
Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Please see this resource for more on these rules and how they can impact your business’s eligibility.
How much money can I apply for?
Loans can be up to 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.
What do PPP loans look like?
All loans under the PPP have the following identical features:
- Interest rate of 1%
- Maturity of 2 years
- First payment deferred for six months
- 100% guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA
How do I apply?
The SBA guarantees the loans, so borrowers will need to apply through banks, credit unions and other lenders. Approximately 1,800 private lenders are already approved to issue 7(a) loans, and the Treasury Department plans to issue new regulations that will make it possible for almost all FDIC-insured banks to make SBA loans soon. Simply put, the best thing to do is to contact your lender, whether it is a community bank, credit union, or other financial institution, and inquire about applying for a 7(a) small business loan. You can find your nearest PPP approved lender here: https://www.sba.gov/paycheckprotection/find
What if I can’t repay the loan?
There is a loan forgiveness component included in the bill for businesses that retain their workers or rehire ones that were laid off. Those businesses would be eligible for forgiveness on portions of their loans used for certain costs—including payroll, rent payment, mortgage obligations and utilities—that are incurred during an 8-week period starting on the loan’s origination date. The amount of forgiveness will take into account the number of workers retained or rehired.
What types of non-profits are eligible for PPP loans?
In general, 501(c)(3) and 501(c)(19) non-profits with 500 employees or fewer as most non-profit SBA size standards are based on employee count, not revenue. You can check here.
Can I get more than one PPP loan?
No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
What is an Economic Injury Disaster Loan (EIDL) and what is it used for?
EIDLs are lower interest loans of up to $150,000, with principal and interest deferment at the Administrator’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
Who is eligible for an EIDL?
Those eligible are the following with 500 or fewer employees:
- Sole proprietorships, with or without employees
- Independent contractors
- Cooperatives and employee owned businesses
- Tribal small businesses
Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-profits of any size. See below for more info on size standards.
My private non-profit is not a 501(c)(3). Is it still eligible for an EIDL and a grant?
Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law. However, a recipient that is principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or primarily engaged in political or lobbying activities is not eligible to receive an EIDL. If you are uncertain whether you qualify, please consult with legal counsel to determine whether your organization meets program criteria.
What is an Emergency Economic Injury Grant (EEIG)?
An EEIG is an “advance” on your EIDL. A borrower may request for an up-to-$10,000 advance on their EIDL that does not need to be paid back. Additionally, EEIG funds are supposed to be disbursed within 3 days of applying for your EIDL.
Employee Retention Tax Credit
What is the Employee Retention Tax Credit?
Businesses that do not receive a PPP loan are eligible for the Employee Retention Credit. The Employee Retention Credit is a fully refundable tax credit for employers that must fully or partially suspend their business or experience a significant decline in gross receipts due to COVID-19. The credit is equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees, up to $10,000 per employee.
For more information, please see the IRS FAQ on the Employee Retention Credit.
If you’re looking for more information on different resources available for small businesses, click here.
If you have a question about the Coronavirus, please fill out this form and a member of our staff will respond to your question: https://www.peters.senate.gov/coronavirus-questions
If you’re looking for other federal resources available for you or your family please visit: https://www.peters.senate.gov/coronavirus
If you need any further assistance, please visit: https://www.peters.senate.gov/contact/email-gary