A. Keweenaw Revolving Loan fund (KRLF)
The KRLF is owned and administered by the Keweenaw Economic Development Alliance (KEDA), and is capitalized with $135,000 of funds from the U.S. Rural Development Administration, Wal-Mart and matching funds from KEDA. The KRLF is designed as a "gap" financing instrument where other funding sources for a job-creating project are insufficient to cover all project costs. The KRLF provides loans to manufacturing, service and high tech companies in Keweenaw, Houghton and Baraga Counties that produce a product sold outside the area (thereby bringing in new dollars) or that produce a product currently being purchased outside the area (keeping dollars from leaving the area). Loans are normally from $15,000 to $75,000 depending on the financing "gap" and the number of jobs being created. The KRLF will consider taking a subordinate collateral position to other lenders as appropriate Loans can be for building, machinery and equipment and for working capital. Interest rates are according to the project risk, and loans are usually ballooned within 3-5 years. The KEDA Loan Committee meets as needed. Processing time from application to loan disbursement is usually a few weeks to 1 month. Contact Jeff Ratcliffe (906-482-6817 or email@example.com), KEDA Executive Director, for information or to apply.
B. Houghton County Revolving Loan Fund (HCRLF)
The Houghton County RLF has been active since 1988 and has a capitalization of $350,000. The Fund provides long-term "gap" financing for manufacturing, tourism or service sector projects that will create a significant number of permanent, well-paying jobs in the County. Specifically, it will provide up to one-third of total project funding or $15,000 per job created, whichever is less. The fund typically provides loans of $15,000-$75,000 for up to 15 years, often with balloon payments after three to five years. It loans funds at fixed rates from the current prime rate to 3 above prime, depending on risk. The Houghton County RLF Board is made up of seven members including two Houghton County Commissioners, an attorney, banker, accountant and two with small business backgrounds. The board meets on as needed basis. Because the State of Michigan overseas Fund activity and must review documents prior to lending, applicants should expect that the application process from application to closing will take 2-3 months. An applicant is requested to submit a business plan including historical and proforma financial statements. The KEDA Executive Director administers this fund. Jeff Ratcliffe (906-482-6817 or firstname.lastname@example.org) is the contact person for this fund, serving as both the County economic developer and as the RLF Manager.
C. Superior Edge RLF
Administered by the MTEC SmartZone, Superior Edge RLF provides "gap" financing to high technologyh businesses with preference to projects in th Keweenaw Peninsula. It was begun in 2010 and is capitalized at $140,000 using funds provided by the State of Michigan. Loan amounts are usually $10-75,000. It gives priority to those projects offering a higher job/cost ratio. The ratio of private sector dollars to RLF funds must be a minimum of 2:1. The term of the loans depends on the loan uses; normally loans are for 3-5 years. It provides loans to technology businesses that are unable to obtain bank or other funds, and can partner with other lenders. The SRLF Board is made up of 5 members including a banker, accountant, small business person, attorney, economic developer and a member of the MTEC Board of Directors. It meets on an as-needed basis and usually requries 2-4 weeks to process a loan once all application materials have been received. Contact Jon Leinonen at 906-487-7004 or email@example.com to apply or for more information.
D. Northern Initiatives
Northern Initiatives specializes in a variety of small business loan products and work with government and community organizations, and even traditional lenders, to help you expand an existing business or start a new one.
Types of Business Loans:
Microloans - These are loans $2,000 - $50,000, typically used for new businesses. Terms are usually three to six years. Oftentimes, borrowers are eligible for technical assistance, which includes training for accounting and financial functions, website development, eCommerce strategies and marketing assistance.
Small Business Loans - SBA Community Advantage 7A Loans These loans are less than $250,000 and are guaranteed by the United States Small Business Administration. The term can be 10 years or longer, and the interest rate is less than that of a microloan. These loans must have collateral that exceeds the loan amount. Borrowers with another guaranteed loan are not eligible.
Other Small Business Loans - Northern Initiatives has resources to offer loans from $50,000 to $500,000. These loans are made through a referral from a traditional lender or made in conjunction with a community bank. Terms for these loans can extend for 30 years.
USDA Business and Industry Loans - Northern Initiatives has the authority to grant loans from this federal program.
For more information go to http://www.northerninitiatives.com/business-loans/loan-programs/or contact Dale Cook, Commercial Lender for the Western UP, 715-923-0620, firstname.lastname@example.org
E. Michigan Pre-Seed Capital Fund
This fund supports high tech start-up companies as they near commercial viability by providing access to early-stage capital investment or micro loans to accelerate company development. Supported by a consortium of Michigan SmartZones, including the Michigan Tech Enterprise Corporation (MTEC) SmartZone, and the Michigan Economic Development Corporation, and funded by the Michigan Stragegic Fund, this capital will extend the personal investment of entrepreneurs during the critical pre-seed stage when they are at or near commercialization.
Eligible companies will need to be past the concept development and analysis phase, and have specific milestones identified for achieving commercialization and acceptable to a matching investing partner of the Pre-Seed Fund. These needs might include hiring key management or specialized consultants, regulatory review, contract manufacturing agreements, execugting marketing strategies and sales plans, etc. At this stage, the Pre-Seed Fund will consider funding $50,000 to $250,000 per company alongside their investmet partner who will provide a minimum one-to-one match.
For more information, contact Jon Leinonen, MTEC SmartZone Business Development Manager, at 906-487-7004 or email@example.com.
F. Downtown Development Authorities (DDA)/Tax Increment Financing Areas (TIFS)
Both the cities of Hancock and Houghton have Downtown Development Authorities which have established TIFS in the downtown and other areas of the cities in which commercial and industrial growth is being encouraged. A TIF is a state financing instrument which allows a DDA to "capture" the city and county property tax growth that results from economic development in the TIF area. These "captured" taxes can then be used for infrastructure improvements in support of development projects including the acquisition and clearance of blighted land and buildings, site improvements to make land usable for new construction, street and utility upgrading, planning and engineering. Tax increment revenues can only be expended for public purposes and not as a direct loan to any private individual or company. To be eligible, a project must be located in the TIF district.
G. Industrial Development Districts/Tax Abatement
Many municipalities are willing to grant tax abatement of 50% of local taxes on real and personal property for up to 12 years. Tax abatement applies only to new manufacturing facilities, reuse of existing manufacturing facilities or to research and development facilities. In order to be eligible, the project site must first be designated as an industrial development district by the municipality. The business must then submit an abatement application to the municipality within six months of breaking ground or beginning rehabilitation in the case of reuse. The application must first be approved by the local municipality and is then submitted to the Michigan State Tax Commission to ensure that the correct process was followed. The contact person is Jeff Ratcliffe, Keweenaw Economic Development Alliance (906-482-6817).
A. Michigan Business Development Fund
This program provides grants, loans or other economic assistance of up to $10 million to businesses that are creating qualified new jobs and making new investments in Michigan. The Michigan Strategic Fund will consider a number of factors in making these awards, including: out-of-state competition, private investment in the project, business diversification opportunities, near-term job creation, wage and benefit levels, new jobs, and net-positive return to the state. Business retention and retail projects are not eligible for consideration. For more information, contact Jeff Ratcliffe, Keweenaw Economic Development Alliance, at 906-482-6817 or firstname.lastname@example.org.
B. Michigan Community Revitalization Program
This program will provide grants, loans or other economic assistance of up to $10 million to projects that will revitalize regional urban areas, act as a catalyst for additional investment in a community to reuse vacant or historic buildings and promote mized use and sustainable development. For more information, contact Jeff Ratcliffe, Keweenaw Economic Development Alliance, at 906-482-6817 or email@example.com.
C. Charter One's Job Creation Loan Program
This state program is in partnership with the Michigan Economic Development Corporation. Below-market loans are available through this relatively new program. This program requires borrowers to create a minimum of one full-time job for every $40,000 borrowed at the fixed interest rate of 4.99% for the life of the loan. After 12 months, the offering rate for the program may be reset, and the new rate would be available for any loan booked in the second year of the program. The term of the loan will require that the specified jobs be created within three years after the funds are borrowed. These loans are for the purchase or upgrade of machinery and equipment, or building acquisition and remodeling. Contact Jeff Ratcliffe to begin the process.
D. Michigan Department of Transportation (MDOT) Economic Development Funds
MDOT economic development funds provide funding for road projects related to specific business start-ups and expansions in manufacturing, agriculture or food processing, tourism, forestry, high technology research, and mining. Projects such as construction or improvement of access roads and paving of parking areas (if publicly owned) are included as eligible projects if needed to support the business expansion or start-up. The project must also create or retain permanent jobs, and all project funds must be committed prior to expenditure of MDOT economic development funds. . The Houghton County Road Commission is the applicant for these funds. Contact Jeff Ratcliffe for more information at 906-482-6817 or firstname.lastname@example.org.
E. Job Training Funds
The State of Michigan provides an extensive array of customized and off-the-shelf training programs for manufacturing and research and development companies which are expanding or moving into the state. The monies can be used for on-the-job training or for customized or standard training programs requiring instructors, training materials and supplies. This includes sending employees out-of-shop or out-of-state for specialized training. Michigan Technological University has been one source of trainers for local industry. The contact person for state training assistance is Robert Peters, Michigan Works!, 906-280-4176 or email@example.com.
F. Michigan Pre-Seed Fund
The Michigan Pre-Seed Capital Fund supports high-tech start-up companies as they near commercial viability by providing access to early-stage capital to accelerate company development. These funds will extend the personal investment of entrepreneurs during the critical stage when they ae developing their businesses to the point of readiness for outside investment. These needs might include hiring key management executives or specialized consultants, regulatory review, contract manufacturing agreements, marketing stratetgies and sales plans, etc. At this stage, the Pre-Seed Fund will be able to fund $50,000 to $250,000 per company alongside their investment partner who will provide a minimum dollar for dollar match. The goal of the Pre-Seed Fund is to position these companies for follow-on investment. More information is available at http://www.annarborspark.org/business-resources/business-growth-expansion/pre-seed-fund/pre-seed-faqs/
J. Michigan Emerging Technology Fund
This program became effective January, 2008, and provides state matching dollars to federal SBIR/STTR awards to help companies bring their products to commercialization. More information is available at www.mietf.org
A. Economic Development Administration (EDA) & Rural Community & Economic Development (RCED) Administration Infrastructure Funding
Both of these federal agencies provide infrastructure grants to municipalities to support manufacturing start-up, expansion or relocation. They do not have defined ratios that determine their maximum grant amount per project, but will typically come in for up to $750,000 per project, assuming the private sector investment is substantial and there is significant job creation. Processing times for grant funds can easily require 12-18 months to arrange. The RCED also loans funds to municipalities for infrastructure improvements in support of a specific manufacturing development. These funds are easier and quicker to obtain but, of course, must be paid back by the municipality. These programs are accessed through the respective state-level agency representatives. Phil Musser, Keweenaw Economic Development Alliance, can make these contacts and arrange for applications to be completed.
B. Small Business Administration 504 Program
This program is a fixed asset financing program which offers small businesses long-term, fixed rate loans at a below market rate. Generally, projects estimated to cost between $200,000 and $10 million are suitable for the program. Local lenders provide 50% of project financing which is secured by a first collateral at current market interest rates. The SBA provides up to 40% of the loan through the sale of debentures at less than market rate, and takes a second collateral position. The SBA debenture funds are fixed rate financing; 20 years for real estate and 10 years for equipment. The Michigan Certified Development Corporation located in Lansing complets all debenture paperwork, packages and sells the debenture. The remaining 10% is provided by the small business in the form of equity which need not necessarily be cash. The borrower must create or retain one job for every $50,000 of SBA financing. Thus, a borrower gets a blended interest rate that is lower than receiving only a bank loan, and gets long term, fixed rate financing. Any for-profit business whose net worth is less than $7.5 million and whose average profit after taxes is under $2.5 million for the previous two years is eligible to apply. Contact Darlene Merit, Michigan Certified Development Corporation, at 231-878-1302, or firstname.lastname@example.org. Go to www.michigancdc.org for current interest rates.
C. Small Business Administration 7(a) Guaranteed Loan Program
Loans are obtained from participating banks which then apply for an SBA guarantee of 90% on loans up to $100,000 and 80-85% of loans up to the maximum amount of $500,000. This program may be used in conjunction with the SBA 504 program above as a companion loan for working capital, although the SBA's total exposure may not exceed $500,000 for both programs. Loan maturities may go up to 7 years for working capital, 12 years for machinery and equipment, up to 20 years for construction and 25 years for real estate. Loans of up to seven years cannot exceed prime + 2 1/4%, and loans of seven years or more cannot exceed prime + 2 3/4%. Also, the SBA charges the bank a one-time 2% guarantee fee which is normally passed on the to borrower. The participating bank fills out and submits the guarantee application which is normally processed by SBA within 30 days or less.