GLADWIN COUNTY – The latest Gladwin County Chamber of Commerce Zoom meeting last Friday, May 8 was a platform for the Small Business Development Corporation and the Gladwin County Economic Development Corporation to provide important information to local business owners that are expecting to reopen soon.
The two representatives that spoke for the SBDC and the GCEDC were Jeff Punches and Bob Balzer, respectively. Jeff Punches was the first to speak, and he began by providing a presentation through his display on the Zoom meeting. After giving some background of the SBDC, Jeff included that his office offers one-on-one consulting with businesses as well as “anybody that needs help.” These consultations can be accessed through the SBDC website by navigating to the website and selecting ‘request business consulting.’ Jeff then began to speak about two different types of loan programs that have been very popular due to the COVID-19 pandemic.
Economic Injury Disaster Loan (EIDL)
The first loan he spoke about was the Economic Injury Disaster Loan (EIDL). This loan is acquired through the U.S. Small Business Administration (SBA) and the application can be completed on their website at sba.gov. According to Jeff, this loan has run out of funding, but is in the process of being reloaded.
“Right now, the only people that can apply are businesses that applied [before the loan lost funding] that need to reapply […] but it should be opening back up soon,” Jeff said.
The SBA website currently shows that due to the latest funding from Congress, the EIDL loan is now available for applications from agricultural businesses. Other specific requirements can be found under the EIDL loan section of the SBA website.
The interest rate for the loan totals to 3.75 percent and stays relatively low due to most businesses receiving a 30 year payment term for the loan.
“The payments are pretty low,” Jeff said. “Typically, it is about six months of working capital. What you would do is upload your financial statements and your tax records and then they would be able to look at it and determine what your average monthly working capital is; and then from anywhere within two to six months, they would offer it to you and you could refuse it, accept less, or you could take the full amount.”
Jeff spoke about an advance grant that is part of the EIDL program that is based off of the number of employees working at the business. The grant will provide up to $1,000 per employee with a maximum of $10,000 in total funding. According to Jeff, the grant funding would become available to businesses faster than the loan funding would.
He believes the process for both the loan and the grant can be “maddening” for some people due to the SBA’s lack of communication. The process can take time and the advance money will often times be added to a bank account without any status updates or notifications whatsoever.
Paycheck Protection Program (PPP)
This program is offered through traditional banks and credit unions or even some online payment transaction services such as PayPal. The PPP will evaluate a company’s average monthly payroll cost and multiply it by 2.5, offering that total amount as a loan. If the money provided is through the loan, then it is at one percent interest over two years, after a six month deferment. However, it is possible to have a large amount of the loan, if not the entirety of it, forgiven turning the loan into a grant. In order to make this work, there are specific compliances that need to be met and according to Jeff, not all of them have been determined yet.
“This is kind of a dangerous loan,” Jeff said. “Since the amortization period is only 24 months, if a business does have to pay it back, then the payments will be fairly significant. It’s not right for every business; if your able to get up and running and have a demand for your product or service, then it’s a good idea, but if you’re after the 8 week period and you don’t have a demand for your business and you have to lay people off again, then it may not be the best option.”
It is possible to apply for both the PPP and the EDIL loan according to Jeff. However, if a business receives grant money from the EDIL, that money is then subtracted from any forgiveness from the PPP loan.
Having a preparedness and response plan established is a requirement by the state for businesses to reopen to the public. The information for what needs to be included as part of this plan is explained in detail on the Michigan.gov website. Jeff believes there are some other things business owners should do upon reopening. “Communicate to your employees and your customers that you are taking this seriously, and that you are taking their health seriously. Be clear and transparent with the steps that you are taking so that you are showing them that this is a safe place to work and a safe place to do business.”
Bob Balzer from the Gladwin County Economic Development Corporation and MichiganWorks! began his presentation by recommending business owners to review their business plans (if they haven’t already). He believes that right now is the best time for business owners to revisit their businesses and make it the best possible business it can be. Bob spoke directly to business owners in the meeting.
“I want to encourage you to allow me and the EDC to be your point of contact,” Bob said. “If there are things you need, pieces of information, research done or contacts made, let me know and I will be your middle person for whatever your business needs to thrive in our community.”
He then mentioned his recent involvement with the Michigan Small Business Relief Fund. The state had a total of $10 million that they had to grant competitive regions that then applied for the funding. The local region of Clare, Gladwin, Arenac, and Gratiot received $200,000 of the state money through the fund. Gladwin County then received a total of $30,000 from the regional amount. According to Bob, the county averaged about $1,500 per small business that was distributed to about 20 different businesses throughout the county.
“We also had Chemical Bank and the Gladwin County Community Foundation grant $10,000 each to the Gladwin County EDC, which we then did microgrants to another 10 or so businesses, so we were able to support about 30 businesses in Gladwin County through the total of $50,000 that we received through those grants.
That was one of the most fun things I have done, even though it was a lot of work.” Bob said.
Knowing personal business finances is an important factor for reopening according to Bob. Owners will want to be financially aware of where their business stands when they reopen and be able to monitor the finances in order to budget for savings, future events and retirement. If owners are struggling with budgeting or interpreting their finances, Bob believes contacting an accountant would be the best course of action. He also believes that business owners should begin communicating with their employees about reopening with a strong work ethic.
“I would really urge you to consider taking a look at your employee training needs and preparing them right now to provide the best customer service that you can possibly provide in your industry. That is going to be key, because people are going to look at the ‘top-notch’ businesses and gravitate towards them as we come out of these mandates.”
Bob provided many other words of advice for the local business owners. He also recommends that if any business owners are curious to hear more ideas or preparations they could be making, that they should call the MichiganWorks! office and that either himself, or others at the office will be able to assist them.
For more information, contact the local MichiganWorks! office at 989-426-8571 or the SBDC online at sbdcmichigan.org or by calling their Mt Pleasant office at 989-317-4623.