Michigan's unemployment fund is in the red.

"Currently, the state's borrowed about $566 million from the U.S. Department of Labor, says Susan Corbin, deputy director of Michigan's Department of Labor and Economic Growth.

That's nearly $100 million more debt than just three weeks ago. Corbin says that increase is to be expected.

"It's just having to meet our normal needs and not having any money in our fund," she explains. "We've had a slight increase in unemployment the last month, but it's just to meet all the claimants' needs that are out there in Michigan."

The Unemployment Insurance Agency has seen a 28 percent increase in initial claims for state unemployment benefits from November 2007 to November 2008.

As unemployment increases, the state is likely to borrow more money from the federal government.

"They have a fund and we'll borrow from that fund when necessary," Corbin says.

To pay off interest on the loan, businesses that owe unemployment money to the state will pay per employee. That has the small business world worried.

"These are businesses that can't just wave a magic wand and get more customers," says Todd Anderson, vice president of government relations for the Small Business Association of Michigan.

"Like citizens in Michigan, they're struggling under this economy, so when you add this to the long list, there's not been a lot of good news for small business in Michigan," Anderson says.

The long list including the state's tax surcharge, an increase in minimum wage, and now the solvency tax means struggling small businesses must make tough decisions.

"Do they look at health insurance, or retirement benefits, or do they cut the marketing budget which might be crucial to getting new customers," Anderson asks. "Again, they're faced with not good options."