Area counties are handing over $3.5 million in revolving loan funds to private non-profit lenders, hoping to get the money into the hands of more small businesses.
Whereas previously counties would administer loan funds separately, the Michigan Economic Development Corporation has divided the state up into eight regions and is empowering private groups to adminster funds for each of those regions. The MEDC has named Traverse City Area Chamber Foundation administrator of the Regional Revolving Loan Fund for Grand Traverse and Benzie counties, and Northern Initiatives as the chosen RRLF administer for the Upper Peninsula and northeast Michigan regions.
The newly re-organized RRLF will allow eight more northern Michigan counties to have access to the program: Leelanau, Kalkaska, Leelanau, Wexford, Antrim, Manistee, Charlevoix, & Emmet counties. The Chamber Foundation and Northern Initiatives have formed a collaborative agreement, where Northern Initiatives provides back-end administrative support for potential loans. (This agreement is very similar to the way the Chamber Foundation’s Development Fund is managed.)
The intent by the county and the state is to get the loans into the hands of more businesses in a wider area than just the counties in which the funds are managed. Business owners outside the counties were already eligible, but it was discovered that many assumed that since the money was meted out by a county agency, it only would be available to businesses within that county. In some counties, funding went unused; in others, demand was higher than supply.
So far, the local programs’ funds consist of about $2 million in Community Development Block Grant funds that had been administered by Grand Traverse and Benzie counties. The TC Chamber’s fund consists of $1.5 million.
Officials acknowledged that the available funds don’t sound like much when it’s being divvied up for business loans throughout a large area. But Laura Galbraith, TC Chamber vice president, says that since it’s filling in the gaps between what’s needed and what banks will loan, it will go farther than people think.
“Northern Initiative has access to USDA funds and some private equity funds, too,” she adds.
The agencies hope to grow the funds through grants from other sources. Also, the repayment of the loans, including interest, will go back into the fund.
There are also hopes that non-profits can market the funds better.
So who’s eligible? Greg West of the Michigan Economic Development Corporation says preference will be given to businesses that will use the funds to hire people under Housing and Urban Development requirements, which state that 51 percent of the people hired must be of low to moderate income. Loans will also be considered when a business can show it’s needed to retain jobs.
Agency officials will meet with state officials next week to find out when they can begin issuing loans.