Options for Struggling Businesses in Flint
Businesses in Flint, Michigan, have struggled for a number of reasons. These include economic difficulties, declining population, and a water crisis that has affected the city for over ten years. Faced with these struggles, businesses find it hard to survive. However, there are choices available to those who wish to recover their businesses.
1. Loans and Grants by the Government
1.
Government Grants and Loans
The foremost course of action for a struggling business is to apply for a government subsidy or loan. Both the federal government and Michigan state offer initiatives to assist businesses in surviving and expanding.
Federal Programs
As a business owner in Flint, being informed regarding the options offered by the federal government can help you make the right choices for your business.
- The Small Business Administration (SBA) provides financial assistance to small businesses. It has loan programs that allow businesses to borrow a small amount in microloans or up to millions of dollars under a 7(a) loan. [1]
- Another federal program, Economic Injury Disaster Loan (EIDL) provides assistance to businesses affected by disasters. Many businesses applied for this loan after suffering losses due to the COVID-19 pandemic. These loans can help cover expenses such as fixed debts, accounts payable, and other operational costs. [2]
- The Department of Housing and Urban Development (HUD) offers the Community Development Block Grants (CDBG) for economic growth in underserved areas. Flint qualifies for this grant due to its hardships. [3]
State and Local Level Programs
- The Michigan Small Business Development Center (SBDC) offers resources for small businesses. These resources range from financial counseling to loan opportunities. Michigan SBDC helps businesses develop recovery strategies as well as find financing sources. [4]
- Another state-level organization is the Michigan Economic Development Corporation (MEDC. It offers programs like Michigan Strategic Fund programs to revive businesses, and Pure Michigan Business Connect, to link local businesses with new markets and investment opportunities. You can also obtain grants from MEDC through the Match on Main initiative. [5]
2.
Restructuring and Debt Management
If your business is struggling with debt, consider restructuring strategies. You can reorganize the debts so that they become manageable. Restructuring allows you to pay creditors while maintaining business operations, and restructuring can save your business.
There are different restructuring strategies, from debt consolidation to filing for bankruptcy, to get rid of the debts.
Debt Consolidation
Debt consolidation involves combining multiple debts into a single loan with a lower interest rate or extended repayment terms. When debts are consolidated, the monthly payments are reduced, which means that your business has more money to spend on its operations.
Filing for Bankruptcy
In some situations, filing for bankruptcy is seen as a last-ditch attempt to restructure the debts. Businesses can file for bankruptcy under Chapter 11 or Chapter 7.
- Chapter 11 Bankruptcy: Chapter 11 is suitable for companies that believe they can return to profitability with some restructuring. This type of bankruptcy allows businesses to continue operating while reorganizing debts. You can work with your creditors to create a plan for repaying debts over time.
- Chapter 7 Bankruptcy: In cases where a business cannot realistically continue operations, Chapter 7 involves liquidating the company’s assets to pay off creditors. While this results in the closure of the business, it can provide a fresh start for the owners, allowing them to discharge their debts and potentially start anew.
Negotiating with Creditors
Another restructuring strategy is working directly with creditors to negotiate more favorable repayment terms. Creditors often prefer to negotiate rather than risk losing the entire debt through bankruptcy. A business can request reduced interest rates, extended repayment schedules, or even partial debt forgiveness in exchange for timely payments.
3.
Pivoting Business Models
For businesses struggling in Flint, one option available is pivoting to a new business model. Sometimes the business struggles because the demand for the product or service being offered goes down. If this is the case with your business, a pivot will make fundamental changes to the business strategy. You should take into account the changing market needs for pivoting the business model.
Adapting to E-Commerce
As a business owner in Flint, you should consider using an e-commerce model. This way you will be able to reach a customer base outside Flint. Even if you have a traditional brick-and-mortar setup, e-commerce can open up additional revenue streams.
The Flint & Genesee Chamber of Commerce is a local organization that offers resources and workshops to help businesses transition into e-commerce. This includes guidance on setting up websites, integrating payment systems, and using digital marketing to reach a broader audience. [6]
Remote Services and Work-from-Home Options
If the nature of the business allows it, transitioning to remote services can reduce overhead costs and allow a business to continue operating during periods of uncertainty.
4.
Local Partnerships and Collaborations
Struggling businesses in Flint can benefit from local partnerships and collaborations with other businesses, non-profits, and community organizations. In a tight-knit community like Flint, building relationships can lead to mutually beneficial outcomes.
Collaborative marketing allows businesses to pool resources and reach a wider audience without bearing the full cost of advertising or promotional efforts. For instance, restaurants, retail stores, and service providers can work together to create themed events or promotions that encourage customers to visit multiple businesses in a single trip. Flint’s Downtown Development Authority (DDA) frequently promotes collaborative efforts between downtown businesses to boost foot traffic and sales. [7]
Sharing space is another form of collaboration. If your business is struggling with high overhead costs, you may consider moving into shared office spaces or co-working facilities. Flint offers several co-working spaces where entrepreneurs can work alongside other small business owners, exchanging ideas and fostering innovation. For example, many local entrepreneurs and freelancers use Foster Coffee Company, located in downtown Flint, as a space to work, collaborate, and share ideas in a creative and community-driven environment.
5.
Revitalization Programs
Flint has been the focus of several revitalization programs aimed at boosting the local economy and supporting small businesses. Business owners can tap into these initiatives to secure financial aid, technical assistance, and community support.
- The Flint & Genesee Chamber of Commerce plays an active role in supporting local businesses through a variety of programs. Their Economic Development team works with businesses to provide technical assistance, connect them with financing options, and offer mentoring. [8]
- Flint is home to several federally designated Opportunity Zones, which offer tax incentives to businesses that invest in economically challenged areas. Businesses that establish operations or expand within these zones may qualify for significant tax breaks on capital gains. This program encourages long-term investment in Flint, particularly in real estate and development projects. [9]
Businesses in Flint have access to a variety of options to help them overcome economic challenges and find financial relief by adapting to changing market conditions. As a business owner in Flint, you can rebuild and thrive despite the economic hurdles you face.
FAQs
The SBA offers loan programs like the 7(a) Loan and microloans, while the EIDL provides low-interest loans to disaster-affected businesses.
The 7(a) Loan guarantees funds to lenders, allowing businesses to borrow up to $5 million for various needs.
Collaborating with other businesses and organizations can help pool resources, share costs, and reach a broader audience.
Opportunity Zones offer tax incentives for businesses that invest in economically distressed areas like Flint, encouraging long-term growth.
Sources:
[1] 7(a) loans. (n.d.). U.S. Small Business Administration. https://www.sba.gov/funding-programs/loans/7a-loans
[2] Economic Injury Disaster Loans. (n.d.). U.S. Small Business Administration. https://www.sba.gov/funding-programs/disaster-assistance/economic-injury-disaster-loans
[3] CDBG: Community Development Block Grant Programs. (n.d.). HUD Exchange. https://www.hudexchange.info/programs/cdbg/
[4] Michigan Small Business Consulting Services & Resources | MI SBDC. (2024, September 18). Michigan SBDC. https://michigansbdc.org/
[5] Home | Michigan Business. (n.d.). Michigan Economic Development Corporation (MEDC). https://www.michiganbusiness.org/
[6] Home – Flint & Genesee Chamber of Commerce. (2024, October 11). Flint & Genesee Chamber of Commerce. https://www.flintandgeneseechamber.org/
[7] What’s Happening in Downtown Flint. (n.d.). https://flintdda.org/
[8] Flint & Genesee Group. (2024, August 12). Economic Development – Flint & Genesee Group. https://www.flintandgenesee.org/economic-development/
[9] KMoore. (2018, April 11). City of Flint Receives Opportunity Zone Designations. City of Flint. https://www.cityofflint.com/flint-receives-opportunity-zone-designations/
