Finance & Incentives

Michigan Works! Southeast is dedicated to making sure that businesses in Lenawee County, Michigan, have the skilled workforce needed to succeed, and that job seekers are connected to local Lenawee County employers with careers that align with their interests and skillsets. Our workforce investment board makes critical decisions on federal, state, and local funding to maximize our investments in the community and create economic prosperity for businesses and individuals. Our alignments with economic development, education, and the business community drives innovative workforce initiatives, as well as an outstanding level of employment and training services through our network of One-Stop Service Centers.

The CEED MicroLoan Program assists women, low-income individuals, minority entrepreneurs, and other small businesses that need small amounts of financial assistance. Under this program, SBA makes direct and guaranteed loans to Intermediaries such as CEED, who use the proceeds to make loans to eligible borrowers. CEED lends up to a maximum of $50,000.

Applicants to the CEED MicroLoan Program must meet the following requirements:

• Businesses must be in Oakland, Livingston, Macomb, Lenawee, Jackson, Hillsdale, Monroe, Washtenaw, or Wayne County.
• Complete loan package and supporting documentation.
• CEED Loans are made on a secured-basis with personal guarantees, sometimes including collateral and/or a cosigner. Loans are made at an interest rate of prime plus four percent.
• The rate is fixed at the time of the loan closing. The borrower will pay loan closing costs and filing fees. Credit Requirements are determined on an individual basis.

Under the Brownfield Redevelopment Act PA 381 of 1996, as amended, Lenawee County created a Brownfield Redevelopment Authority (BRA) to develop and implement Brownfield projects. A Brownfield Redevelopment Authority is a resource that may use Tax Increment Financing (TIF) as a tool for property redevelopment.

The County Brownfield Redevelopment Authority may be involved with eligible property throughout the county, but may not include a project in their Brownfield plan unless the affected municipality concurs that the site in their community may be included in the county’s plan.

Lenawee County Brownfield Redevelopment Authority Process
The Lenawee County Brownfield Redevelopment Authority reviews proposals for the redevelopment of eligible property and determines what financial incentives are necessary to assist the redevelopment. The authority prepares a plan that identifies the Brownfield projects. Each project section of the plan includes the description of the eligible property, the eligible activities, the TIF approach to be taken, and other issues related to the subject parcels. The authority then recommends that the County Commission holds a public hearing regarding the plan and subsequently acts to approve with modifications or deny the plan. The authority would recommend revisions to the plan as new projects are submitted or revisions are requested on existing plan projects.

Lenawee’s Brownfield Redevelopment Authority Board of Directors is made up of 12 Lenawee residents appointed by the County Commissioners and typically meets on the third Thursday of the month.

The Lenawee County Business Revolving Loan Fund program has the funding necessary to assist businesses to get started, grow, and provide jobs in Lenawee County. Since 2009, the LCBRLF has made loans to businesses totaling over $1,800,000, with loans ranging from $70,000 to $400,000.  Loans are particularly tailored for businesses that, for whatever reason, have found it difficult to meet traditional lending institution requirements.

We provide loans for:

• Equipment upgrades
• Facility expansion
• Commercial Real Estate
• Business Acquisition
• Inventory
• Start-up Capital
• Working Capital

Loan Terms & Rates
The LCBRLF interest rates are higher than traditional bank rates, reflecting the level of risk associated with projects that do not meet traditional bank financing criteria. Terms and amortizations are tied to the planned use of the funds.

Revolving Loan Fund Loan Requirements:

• The LCBRLF cannot provide more than 50% of the funds required for the project.
• At least 1 new full-time job has to be created for every $35,000 borrowed.
• The project CANNOT be started before the LCBRLF loan has been approved by the State.  Thus it is imperative that the LEDC be contacted as early as possible.
• Collateral will be sought and personal guarantees are required by all owners of 20% or more.

What is a Land Bank?
A land bank is a public authority created to efficiently hold, manage, and develop the tax-foreclosed property.

1. Land banks act as a legal and financial mechanism to transform vacant, abandoned, and tax-foreclosed property back to productive use. Generally, land banks are funded by local governments’ budgets or the management and disposition of tax-foreclosed property.
2. In addition, a land bank is a powerful locational incentive, which encourages redevelopment in older communities that generally have little available land and neighborhoods that have been blighted by an out-migration of residents and businesses.
3. While a land bank provides short-term fiscal benefits, it can also act as a tool for planning long-term community development. Successful land bank programs revitalize blighted neighborhoods and direct reinvestment back into these neighborhoods to support their long-term community vision.

Land Bank Benefits
While abandoned and vacant properties depress property values, discourage property ownership, and attract criminal activities in the surrounding area, a land bank provides tools to quickly turn these tax-reverted properties back into usable parcels that reinvest in the community’s long-term vision for its neighborhoods. Landbank programs act as an economic and community development tool to revitalize blighted neighborhoods and business districts. Land banks can benefit urban schools, improve tax revenues, expand housing opportunities, remove public nuisances, assist in crime prevention, and promote economic development.

The Michigan Business Development Program is a new incentive program available from the State of Michigan. The program is designed to provide grants, loans or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or provide investment.

The Michigan Business Development Program (MBDP) is available to eligible businesses that create qualified new jobs and/or make a qualified new investment in Michigan. The qualified new jobs must be held by Michigan residents and be in addition to those maintained in Michigan prior to the project. Eligible investment includes investment made by the business in Michigan in support of the project and approved by the State. Preference may be given to businesses in need of additional assistance for deal-closing and second stage company gap financing.

Any business seeking to qualify for MBDP support on the basis of job creation must create a minimum of 50 qualified new jobs. If a project is in a rural county (a county with a population of 90,000 or less) or qualifies as a high-technology activity, in which case the business must create a minimum of 25 qualified new jobs.

The State may consider the following factors when considering a project for MBDP Support:

• Out-of-state competition
• Net-positive return to Michigan
• Level of eligible investment in the project
• Business diversification
• Near-term projects with identified financial support
• Re-use of existing facilities
• Near-term job creation
• Level of wages for new jobs
• Employer-provided benefits
• Strong links to Michigan suppliers
• Whether the project is in a distressed or targeted community

Performance-Based Grant
MBDP support in the form of a grant will be performance-based, with preference given to eligible businesses seeking to locate or expand in Michigan rather than in another state. MBDP support in the form of a loan shall also be performance-based, with preference given to qualified businesses needing assistance to expand in Michigan. Loans may include flexible terms and conditions, including below-market interest rates, extended grace and repayment provisions, forgivable terms, and flexible security requirements.

The MBDP will not provide support under this program for retail or retention projects. MBDP support for any project may not exceed $10,000,000.

Lenawee’s 2019 average non-homestead property tax rate was 48.71 mills, or $48.71 per $1,000 of assessed property, with real property subject to taxation at 50% of current market value.

Industrial & High-technology property tax exemption:

Public Act 198 of 1974 (P.A.198) provides property tax abatements to industrial processors, high-technology activity companies, research and development laboratories, and large communication centers, which can reduce certain property taxes by up to 50%.  A P.A. 198 abatement is negotiated at the local municipal level and is available for up to 12 years.  An investment made within the negotiated time will be eligible for the abatement.   Numerous P.A. 198 abatements have been granted throughout Lenawee County, Michigan, over the years to provide incentives and stimulus for industrial development and expansion.

New Warehousing, Distribution, and logistic Facilities in Border Counties:
Public Act 138 provides up to a 50% reduction in property taxes for a new warehouse, distribution, or logistic facilities locate in a border county (Lenawee is a border county).  To qualify for this incentive, at least 90% of the facility, excluding the surrounding green space, must be used for warehousing, distribution, or logistic purposes and occupy a building or structure at least 100.000 square feet in size.

Obsolete Property Exemption
Public Act 146 of 2000 provides for a tax incentive to encourage the redevelopment of obsolete buildings into commercial or commercial housing.  The tax incentive is designed to assist in the redevelopment of older buildings, in which a facility is contaminated, blighted, or functionally obsolete.  The taxable value on a facility is frozen for up to 12 years.  By freezing the taxable value, a business can significantly improve a building without increasing the property taxes on the building.

Commercial Rehabilitation Act:
Public Act 210 of 2005 provides a property tax abatement for commercial real property that is 15 years or older.  The primary purpose and use is the operation of a commercial business enterprise or multi-family residential use.  The commercial rehabilitation tax freezes the taxable value of that building and only levies specific taxes on the new investments.

Guaranteed Loan Programs (Debt Financing)

Small Business Administration (SBA) does not make direct loans to small businesses. Rather, SBA sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and microlending institutions). The SBA guarantees that these loans will be repaid, thus eliminating some of the risks to the lending partners. So when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA requirements with an SBA guaranty. SBA-guaranteed loans may not be made to a small business if the borrower has access to other financing on reasonable terms.
Basic 7(a) Loan Program.

7(a) loans are for eligible borrowers for starting, acquiring, and expanding a small business. This type of loan is the most basic and the most used within SBA’s business loan programs. Borrowers must apply through a participating lender institution.  7(a) Loans are typically structured with the SBA providing up to a 90% guarantee and the borrower providing between 10% – 30% equity depending on the project.  Loan proceeds can be used for real & personal property as well as inventory, working capital, and accounts payable.

Certified Development Company (CDC) 504 Loan Program

“The 504 Loan Program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization.  504 loans are made available through Certified Development Companies (CDCs), SBA’s community-based partners for providing 504 Loans.  504 Loans are typically structured with SBA providing 40% of the total project costs, a participating lender covering up to 50% of the total project costs, and the borrower contributing10% of the project costs. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs.

Loan proceeds can be used for real & personal property and the refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment.   HOWEVER, The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing (except for projects with an expansion component or that meet the temporary refinancing provisions of the Small Business Jobs Act of 2010).

Michigan Business Growth Fund Collateral Support Program

“The recent economic downturn has resulted in suppliers’ property, plant, and equipment being devalued by as much as 80 percent. This leaves suppliers little or no collateral value to borrow against in order to fund diversification projects.   The intent of the Michigan Business Growth Fund—Collateral Support Program (mbgf–csp) is to supply cash collateral accounts to lending institutions to enhance the collateral coverage of borrowers. These accounts will cover all or a portion of a calculated collateral shortfall as described by the lending institution.

To qualify, a business must be engaged with a private lender for the purpose of acquiring a commercial extension of commercial credit and must exhibit a collateral shortfall according to the lender’s analysis.

The borrower must have no more than 750 employees and otherwise comply with all state and federal requirements for the program.

Michigan Business Growth Fund Loan Participation Program

“Typically, lenders underwrite using historical cash flows from a business to calculate debt service coverage ratios. This practice impedes the ability of businesses to expand and diversify, especially during a slow economy. The Michigan Business Growth Fund—Loan Participation Program (MBGF– LPP) was designed to address this obstacle.

The intent of the MBGF–LPP is to participate with lenders to finance diversification projects when faced with borrowers whose projected cash flows are considered speculative by the lender. The MBGF–LPP will purchase a portion of a loan from the lender and offer a grace period on the program’s portion for up to 36 months. MBGF–LPP participation will be advantageous to lenders in two ways: 1) it will limit the project exposure of lenders; and 2) it will offer borrowers “free cash flow” during the grace period allowing full coverage on the lender’s portion of the loan. This will enable suppliers to acquire the needed financing to diversify into new growth industries.

To qualify, a business must be engaged with a private lender for the purpose of acquiring a commercial extension of commercial credit for a diversification or expansion project and must exhibit a cash flow shortage according to the lender’s analysis.

Borrower must have no more than 750 employees, and otherwise comply with all state and federal requirements for the program.

The Michigan Pre-Seed Capital Fund supports high-tech start-up companies as they near commercial viability by providing access to up to $250,000 (matched dollar-for-dollar with outside investments) early-stage capital, accelerating company development. As a central fund to the Michigan SmartZoneSM Network, these funds are designed to support this critical stage in the development lifecycle to prepare companies for follow-on private investment. Companies developing technologies in Advanced automotive, manufacturing and materials, alternative energy, homeland security, and defense and life sciences, statewide are eligible for these funds through the Michigan SmartZone Network.

Business Accelerator Grants to start-up companies for up to $50,000.  The grant will provide funding for consulting services such as business modeling, marketing, strategic planning, or intellectual property advice.  The criteria for application is that the company is Technology-driven, especially with defensible intellectual property.  The company must have less than $1 million in the outside investment and less than $1 million or $2.5 million in 12-month trailing revenue (depends on program requirement).  The company is registered with the State of Michigan and at least half the employees physically work in Michigan.

These grants are awarded through a competitive review process.  Companies receiving more than $15,000 in accelerator services will pay a 10% fee to the business accelerator.

The Lenawee Now UDSA Loan program has the funding necessary to assist small businesses get started, grow and provide jobs in Lenawee County. Started in 2013, this program works in concert with private financing (banks, equity) to provide micro-financing for projects up to $40,000. Loans are particularly tailored for businesses that, for whatever reason, have found it difficult to meet traditional lending institution requirements.

We provide loans for:

• Equipment upgrades
• Facility expansion
• Commercial Real Estate
• Business Acquisition
• Inventory
• Start-up Capital
• Working Capital

Loan Terms and Rates
The Lenawee Now USDA Loan program interest rates are higher than traditional bank rates, reflecting the level of risk associated with projects that do not meet traditional bank financing criteria. Terms and amortizations are tied to the planned use of the funds.

Loan Requirements:

• The LEDC USDA Loan program cannot provide more than 75% of the funds required for the project.
• The project CANNOT be started before the LEDC USDA loan has been approved by the USDA. Thus it is imperative that the LEDC be contacted as early as possible.
• Collateral will be sought and personal guarantees are required by all owners of 20% or more.

As part of the Greater Ann Arbor Region, Lenawee Businesses have access to a wealth of venture capitalists and angel investors. The mission of these private firms is to make equity investments in early-stage and emerging growth companies. Contact the Michigan Venture Capital Association for more information.