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How will awards be determined?
Eligible businesses that were in operation on October 1, 2019, may receive a grant based on a percentage decline in year-to-year total sales in Michigan (2020 from 2019) up to a cap that is the lesser of the amount of their “financial hardship” or $5 million.
Eligible businesses that began operation after October 1, 2019, but before June 1, 2020, may receive a grant of 25% of their “financial hardship,” which represents their calendar year 2020 fixed costs.
Should the Growing MI Business grant program becomes oversubscribed, awards will be prorated on an equal basis to ensure that all eligible businesses may receive an award.
When determining lease payments/expenses, shall any discounts provided to Leasee be accounted for in the calculations for "financial hardship?"
When determining "financial hardship" for businesses that were not in operation until after October 1, 2019, but before June 1, 2020, the calculation will include 17% of rent paid by the lessee, which is 17% of the discounted rate.
Can residential property taxes or mortgage payments be considered when calculating lease costs?No, applicants cannot count residential property costs, including taxes, towards their business lease costs. Property taxes cannot include property taxes classified as residential. Amounts paid towards mortgage (principal/interest/etc.) loans/payments are not eligible to be counted in lease costs calculation.
May an applicant submit estimated total sales?
Applicants must submit actual total sales information and supporting documentation. Estimated total sales calculations will not be accepted.
Should I include Economic Injury Disaster Loan (EIDL) or Employee Retention Tax Credits (ERC) in my business’ total sales figures?No. The financial hardship calculation for a business in operation prior to October 1, 2019, is based on a year over year decline in sales between 2019 and 2020. Any funding received from the Economic Injury Disaster Loans or Employee Retention Tax Credit will not count towards the financial hardship calculation. However, any EIDL and/or ERTC funds may not used to cover the same expenses as the Growing MI Business Grant.
If my business paid a state inspection fee indirectly as part of a contract with a property management company during 2020, should this fee still be included in the grant application?
Yes. If your business paid a 2020 inspection fee through a property management company or other contractor, you should include the inspection fee (but only the inspection fee and not any additional charges imposed by the contractor). However, the documentation you submit to prove your business paid the fee must clearly establish:
- that the fee your contractor or property management company paid was for an inspection conducted on behalf of your business.
- inclusion of the fee in your payment to the contractor or property management company is discernable whether by invoice or other means in the exact amount charged by the governmental entity.
- that the contractor actually paid the fee to the State of Michigan (or a political subdivision).
If any one or more of these elements is not included in the documents you provide, the inspection fee will not be considered in the calculation of the grant award, which may reduce the amount of the grant award.
If the applicant is a holding company that receives lease payments, can those payments be counted as expenses in the financial hardship calculations?An eligible applicant cannot include property tax expense or lease costs in its financial hardship calculation that was incurred and paid by another entity (e.g., holding company or related entity).
If an applicant applying as a subsidiary makes lease payments to their holding company, can those lease payments be counted as expenses in the financial hardship calculations?Yes, a business can include lease payments made to another entity e.g., a holding company, as their lease cost as part of the financial hardship calculation if the applicant business is a separate business entity (separate FEIN/EIN). Treasury may review the lease amounts to determine if they are commercially reasonable and may also require assurance that they were in effect during the year 2000.
When calculating lease costs for the Financial Hardship calculation, are “Michigan Property Tax” and “percentage of lease costs” interchangeable?No. They are not interchangeable. These are separate expenses used for calculating financial hardship under the program. Michigan property tax refers to the amount of non-residential property taxes paid by the applicant for calendar year 2020. The percentage of lease costs refers to the amount of annual lease cost for the year 2020 for business facilities that rent space. Businesses that lease and own facilities used for their business will supply both their property tax expense for non-residential property and their annual lease costs. Applicants that neither lease nor own property for their business will not report either.
What if my business has a triple net lease?A business may have a triple net lease, but its name is not on the property tax bill, and it may not report the lessor’s property tax. It should report 17% of its lease costs.
What is included in total sales?“Total sales” is defined as the total sales in Michigan made by the applicant business plus apportioned Paycheck Protection Program receipts (PPP loans that have been forgiven) plus apportioned Restaurant Revitalization receipts (federal Restaurant Revitalization grants). Treasury will look to several different sources to determine Michigan sales, including, but not limited to Michigan and Federal tax returns. If the taxpayer is a single filer (non-UBG) AND a C Corp (or LLC filing as a C Corp), Treasury will look to line 9d of the 4891 for total sales. If the taxpayer is a UBG and a C Corp (or LLC filing as a C Corp), Treasury will look to Form 4897 line 16. If the taxpayer is a restaurant, hotel, or B&B, regardless of ownership type, Treasury will look to the Michigan Form 5081 Sales, Use, and Withholding Return line 1A, 1B, or 2B. For most businesses, IRS forms 1120, 1120S and 1065, line 1C or form 1040, Schedule C, line 3 is where annual sales can be found. Treasury will work with businesses and their financial advisors to arrive at the required numbers.