Michigan Industry trade group, American Hotel and Lodging Association (AHLA) estimates the total projected travel revenue of the hotel business in Michigan for 2021 is $583,773,888, which is down -59.8% due to the COVID pandemic and mandated shutdowns.
Michigan hotels generated $1,451,699,080 in 2019 when more people were traveling, which was +$867,925,192 more in revenue vs. 2021 Michigan Hospitality numbers.
The hospitality industry is one of the most important sectors of the economy. Along with Michigan restaurants, two of the biggest hit industries. The Small Business Administration (SBA) understands that and has put in place a disaster loan program specifically for hotel owners.
Michigan Hospitality Industry SBA EIDL Disaster Loans for Hotel Owners
The SBA’s Economic Injury Disaster Loan (EIDL) program offers up to a $2 million increase in loans to help businesses affected by a declared disaster. Hotel owners can use these loans to pay for operating expenses, such as employee salaries, rent, and utility bills.
In addition, EIDL funds may be used to meet any disaster-related need such as debris removal, emergency protective measures, repair/rebuilding expenses, or property replacement. Expenses not directly related to repairing damage from a disaster cause would not be considered “eligible” for this guidance.
If you have suffered a substantial economic injury and are one of the following types of businesses located in a declared disaster area, you may be eligible for an SBA EIDL:
- Small business
- Small agricultural cooperative
- Most private nonprofit organizations
Hotel Eligibility for SBA EIDL Disaster Loans for Hotel Owners in MI
To be eligible for an EIDL loan, a business must have been adversely affected by a declared disaster. This could include lost revenue due to the disaster, increased costs related to the disaster, or damage to the business’s physical property.
- Substantial economic injury means the business is unable to meet its obligations and pay its ordinary and necessary operating expenses.
- EIDL provides the necessary working capital to help small businesses impacted by a disaster survive until normal operations resume.
- EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.
SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. The loan amount will be based on your actual economic injury and your company’s financial needs, regardless of whether the business suffered any property damage.
A business may qualify for, both, a Michigan SBA EIDL and a physical disaster loan.
The maximum combined loan amount is $2 million. A separate SBA Disaster Assistance program known as business physical disaster loans covers property damage.
Use of proceeds
- Working capital and normal expenses such as the continuation of health care benefits, rent, utilities, and fixed debt payments
Terms
- The interest rate will not exceed 4%.
Maturity
- Up to 30 years, with repayment term to be determined by the ability to repay the loan
- No prepayment penalty or fees
Collateral requirements
- Required for loans over $25,000
- Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and a value equal to or greater than the amount of the loan.
How to Apply for a Michigan SBA EIDL Loan for Hotel Owners?
- Apply online for a Michigan SBA disaster assistance loan. Michigan SBA will send an inspector to estimate the cost of damage, once your application is completed and submitted.
- Complete, sign, and date IRS Form 4506-T with your application, giving permission for the IRS to provide SBA with your tax return information.
- The COVID EIDL deadline for Michigan Hotels that have never applied for an EIDL loan yet, is December 31, 2021. Reconsiderations and Increase Requests for Michigan Hotels continue into 2022.
Additional Information on Michigan Hospitality Industry SBA EIDL Disaster Loans for Hotel Owners
Contact the SBA Disaster Assistance Customer Service Center at:
Phone: 800-659-2955
TTY: 800-877-8339
Email: [email protected]
The Application Process for Michigan Hospitality Industry SBA EIDL Disaster Loans for Hotel Owners
New Loan
If the small business is a first-time COVID EIDL applicant, complete the following steps to apply:
- Confirm eligibility (review FAQs and below Loan Eligibility section).
- Complete Intake Form.
- Sign up to create a portal username via an SBA email invite.
- Complete portal steps and submit relevant documents.
- Respond to SBA requests for signature, confirmation, and documents.
The average SBA decision timeline for $500,000 or under is several weeks.
Increased Loan
If the small business has already obtained a loan via COVID EIDL before and does not already have an outstanding loan increase application in process, complete the following steps to apply for a loan increase:
- Confirm Eligibility.
- Log onto Account on SBA Portal (do not apply for another loan) to submit loan modification.
- Complete portal steps and submit relevant documents.
- Respond to SBA requests for signature, confirmation, and documents.
The average SBA decision timeline for $500,000 or under loans is several weeks. The average SBA decision timeline for greater than $500,000 loans is one and a half months.
Required Documents for Michigan Hospitality Industry SBA EIDL Disaster Loans for Hotel Owners
- For loans of all sizes, federal income taxes, IRS Form 4506-T, and ODA Form P-022-Standard Resolution are required.
- For loans greater than $500,000, the following additional documents will be solicited:
- SBA Form 2202 – Schedule of Liabilities
- SBA Form 413 – Personal Financial Statement
- List of Real Estate Owned (template on intake form)
- For all loans, additional verification documentation may be solicited by the SBA through the review process
Loan Eligibility for Hotel Owners
To obtain a loan via COVID EIDL, small business owners must meet the eligibility requirements.
Additionally, below are the credit score requirements:
- $500,000 or under: 570
- greater than $500,000: 625
Small businesses must qualify for a certain loan amount by completing the economic injury formula which takes into account two years’ worth of revenue and the cost of goods sold to produce an eligible loan amount.
Michigan Hotel and Hospitality Conclusion and Summary
The Small Business Administration (SBA) is committed to helping Michigan hotels and small businesses impacted by the COVID-19 pandemic. The agency has established the Economic Injury Disaster Loan (EIDL) program to provide financial assistance to qualifying businesses including the hospitality sector in MI.
The COVID EIDL deadline for Michigan Hotels that have never applied for an EIDL loan yet, is December 31, 2021. Reconsiderations and Increase Requests for Michigan Hotels continue into 2022.
Michigan Hotel and Hospitality Help: Get SBA Loan Assistance for Your Hotel Business
Was Your Michigan Hotel SBA EIDL Loan Denied?
Has your hospitality SBA EIDL loan been denied for your MI hotel location?
We can assist you in filing for an SBA EIDL loan reconsideration appeal for your hotel business.
Schedule Your Free Disaster Loan Consultation to see if we may be able to help your hotel locations with the SBA Loan Reconsideration Process in Michigan.
Need an Increase on Your Michigan Hotel SBA EIDL Loan?
Did you already receive a Michigan SBA EIDL loan for your hospitality and travel business?
We can assist your business in requesting additional SBA EIDL loan funds through the increase request process.
Schedule Your Free Disaster Loan Consultation to see if we may be able to help your hotel business with the SBA Increase Request Process in Michigan.
Cover Image Credit: 123RF.com / Kadmy. / Disaster Loan Advisors.