Banking & Finance, Economic Development, and Government

STEP program opens FY2020 applications

MEDC nets $900K grant from the SBA to help small businesses expand export markets.

October 25, 2019
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Michigan has once again received the top award in the nation from the U.S. Small Business Administration (SBA) State Trade Expansion Program (STEP) for fiscal year 2020, and several dozen companies in West Michigan are expected to benefit.

In its ninth year of receiving STEP funds, the Michigan Economic Development Corporation (MEDC) netted the maximum amount of $900,000, a $100,000 increase from the previous year. This is the third consecutive year the state received the largest STEP award in the nation.

The MEDC’s Michigan Strategic Fund is providing an additional $300,000 to support the Michigan STEP initiative, also called MI-STEP, for a total of $1.2 million in funding for FY20.

MI-STEP is designed to spur job creation by empowering Michigan eligible small business concerns, or ESBCs, to export their products.

The program has three primary objectives: increase the number of Michigan small businesses that export, increase the dollar value of Michigan exports and increase the number of Michigan small businesses exploring “significant new trade opportunities,” including expansion of export markets.

“Export sales help diversify companies’ customer bases, provide longer-term stability and can support higher-paying jobs,” said Jeff Mason, CEO of the MEDC. “This year’s STEP grant (reflects) the SBA’s strong confidence in Michigan’s successful execution of export promotion to increase international sales.”

STEP funding supports export development for ESBCs through financial assistance grants for trade missions, international sales trips and trade shows, along with website translation, localization and search engine optimization.

The awards do not cover meals, entertainment, cellphone charges, gifts, personal expenses, passport and visa fees, immunization expenses, legal fees and more.

John Sammut, president and CEO of Firstronic, a Grand Rapids-based electronics manufacturer, said his company is one of the many West Michigan small businesses that received FY19 funds.

He said in 2013, the first year the company participated in the program, Firstronic did about $7 million in total revenue, only about 5% of which was from exports.

Through the course of receiving STEP funding to accompany the MEDC on trade missions to Mexico and China over the past half-dozen years, the company has seen a significant increase in overall revenue — total revenue is expected to be at $50 million this year — partly thanks to an increase in exports.

“(Our) export program developed pretty rapidly and, eventually, became a significant part of our total business revenue,” Sammut said. “Over 50% of our revenue now is based on exports to Mexico, Canada, China, Hungary, Costa Rica — lots of different countries.”

He said besides using the funds to travel on trade missions, Firstronic also has updated its website, including adding a translation feature, and has hired a consultant to draw up a sales proposal for target customers.

“The program has been very successful for us,” he said.

Mae Labrie, global client relations coordinator with Supply Chain Solutions, has been managing SCS’s relationship with the MEDC for about a year, including the STEP program.

“SCS is happy to find such a great program. (STEP) has motivated SCS to expand our global markets by taking more international travels to see our customers and explore new prospects,” she said.

“We’ve used the STEP funds on several of our own customer visits, along with MEDC-held trade missions, (and) all have had great outcomes.”

Along with Les Brand, CEO of SCS, Labrie said she “highly recommends” other companies learn about and use the program.

Alyssa Tracey, director, international trade for MEDC, said in FY19, MI-STEP so far has served 78 companies in the 13-county region it defines as West Michigan, a number that could be surpassed in FY20.

MI-STEP is expected to support 224 ESBCs in FY20 with anticipated export sales totaling $128.1 million.

Each approved company is able to receive up to $15,000 in STEP funds per year. Data from the MEDC shows the average amount approved in FY19 was $5,000, Tracey said, although sometimes, companies estimate above what they need, so the average amount actually reimbursed per company was $3,528.

Tracey said the MI-STEP program is geared toward small and medium-sized businesses and does not cover agricultural exports, which are handled through the Michigan Department of Agriculture and Rural Development (MDARD).

MEDC has participated in STEP since 2011. Since then, the program has facilitated more than $3 billion in export sales through federally and nonfederally funded programs. In fiscal year 2018, export sales generated a total of $641.5 million. More than 300 companies received assistance through Michigan’s export grant programs with 560 fully executed grants and 100% of funds disbursed directly to companies.

Tracey said FY19 numbers still are being calculated, but as of Oct. 14, MEDC’s facilitated sales — or export revenue generated with help from MI-STEP — were at $640.6 million. In 2018, Michigan exported $57.9 billion in goods overall, which was 11.9% of the state’s GDP.

The MEDC’s export plan was developed and executed in collaboration with the U.S. Department of Commerce, Michigan SBA, Michigan Small Business Development Center, MDARD, MSU International Business Center, Automation Alley, Van Andel Global Trade Center, Networks Northwest and East & West Michigan District Export Councils, along with other state and local service providers.

Applications for FY20 MI-STEP grants are open to ESBCs. Details on how companies can apply are at michiganbusiness.org/services/international-trade.

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