With loans tailored for businesses that have found it difficult to meet traditional lending institution requirements. A Not-for-Profit, Community Development Financial Institution, Northern Initiatives delivers loans and business services to small business owners and entrepreneurs who create jobs and enable the people and communities of northern Michigan to thrive.
SBA 504 Loans (MCDC)
The SBA 504 Loan Program provides healthy small and medium-sized businesses with long-term fixed-rate financing for the acquisition or construction of fixed assets. Projects are financed through a unique public/private partnership that involves private lenders financing 50% of project costs, MCDC covering up to 40% of project costs, and small businesses investing at least 10% of project costs. By taking a secondary collateral position on project assets, SBA provides a “collateral cushion” for the primary lender and reduces the amount of equity normally required of the borrower.
The SBA 504 Loan Program is a “take out” financing program. The SBA offers an up-front commitment to finance a project. The participating private lender provides interim financing, advancing the full amount of project funds during the construction/acquisition period. After the project is completed, the SBA reimburses or “takes out” the participating lender by the amount of the original loan commitment. MCDC loans are actually funded by the sale of 100% federally guaranteed debentures on the open market. Click here for more information.
Small Business Administration Programs
The Small Business Association (SBA) programs extend from lines of credit to loan guarantee programs. These programs provide small businesses with financing that might be harder for smaller ventures to acquire. Find a more detailed description here.
USDA Business & Industry Loan Guarantee
The purpose of the B&I Guaranteed Loan Program is to improve, develop, or finance business, industry, and employment and improve the economic and environmental climate in rural communities. This purpose is achieved by bolstering the existing private credit structure through the guarantee of quality loans that will provide lasting community benefits. It is not intended that the guarantee authority will be used for marginal or substandard loans or for the relief of lenders having such loans. Open to a wide variety of partnerships and individuals, click here to learn more.
Private Activity Bonds (MEDC)
Private activity bonds are an attractive source of financial assistance to economic development projects in Michigan. They provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates.
Public facilities that generate a revenue stream (parking structures, for instance) have traditionally been financed by municipalities through tax-exempt “revenue bonds.” Private Activity Bonds apply this same tax-exempt finance mechanism to the “public purpose” of economic development. The governmental unit borrows money from private capital markets, secured only by the project’s revenues rather than the government’s full faith and credit. Interest income earned on bonds issued by a governmental entity to finance a project for a private company which has demonstrated a good public purpose is exempt from federal, state, and local income taxes, thereby reducing the cost of capital (including the cost of letters of credit, remarketing fees, etc.). Visit this link to learn more.
Here are more Michigan programs and resources for business owners.