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Financing

Otsego County Economic Alliance, Inc. (OCEA) will point you in the right direction to financial programs and resources that may be beneficial to help your business.  Call for a consulatation appointment or feel free to visit some of the links listed below. 

Business Assistance: Operating guidance to capital funding - Pure Michigan Business

Michigan Business One Stop 

Michigan Certified Development Corporation Loan Programs 

Small Business Association of Michigan Financial Management 

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Micro Loan Program

Loans up to $25,000 are available for business start ups and expanding small businesses. The interest rate is 7% fixed with a 5 to 7 year term. There is a $200 origination fee and a $15 per month servicing fee. Contact OCEA at (989) 731-0288 for more information.

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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.

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Venture Capital Firms (MEDC)

Equity capital is the financing made available for investment in promising firms but with a risk of exposure greater than what is acceptable to traditional institutional lenders. Financing is provided by sophisticated investors who seek investments that hold the prospects for large capital gains.

Such investors are referred to as venture capitalists or angel investors. Venture capitalists may be: a) privately owned firms licensed and regulated by the U.S. Small Business Administration or; b) non-regulated firms. The former group is known as Small Business Investment Companies (SBICs). SBICs provide financing in the form of equity capital, debt financing with an equity sweetener, and in some cases, straight long-term loans. The non-regulated firms, which specialize in equity financing, are referred to as Venture Capital Companies (VCCs). Click here for more information.

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U.S. Small Business Administration

U.S. Small Business Administration has a comprehensive website offering tools to support you in starting and maanaging your business. The SBA 7a Loan Guuaranty serves as the SBA’s primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels. It is also the agency’s most flexible business loan program, since financing under this program can be guaranteed for a variety of general business purposes.

Loan proceeds can be used for most sound business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements, and debt refinancing (under special conditions). Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets. Click here for more information.

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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 which will provide lasting community benefits. It is not intended that the guarantee authority will be used for marginal or substandard loans or for relief of lenders having such loans. 

A borrower may be a cooperative organization, corporation, partnership, or other legal entity organized and operated on a profit or nonprofit basis; an Indian tribe on a Federal or State reservation or other Federally recognized tribal group; a public body; or an individual. A borrower must be engaged in or proposing to engage in a business that will:

1.    Provide employment;

2.    Improve the economic or environmental climate;

3.    Promote the conservation, development, and use of water for aquaculture; or

4.    Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems.

Individual borrowers must be citizens of the United States (U.S.) or reside in the U.S. after being legally admitted for permanent residence. Corporations or other nonpublic body organization-type borrowers must be at least 51 percent owned by persons who are either citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence. B&I loans are normally available in rural areas, which include all areas other than cities or towns of more than 50,000 people and the contiguous and adjacent urbanized area of such cities or towns.

Private Activity Bonds (MEDC)

Private Activity Bonds (formerly called Industrial Development Revenue 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 which 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.) to an average 75-85% of prime. 

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Northern Initiatives

Northern Michigan loan program has the funding necessary to assist you as you get started and/or as you expand. Loans are particularly tailored for businesses that, for whatever reason, have found it difficult to meet traditional lending institution requirements. Northern Initiatives offers its lending services to start-ups and existing businesses located in the Upper Peninsula and nothern Lower Peninsula of Michigan, as well as five Wisconsin counties that border the Upper Peninsula. Contact: Pete Cambier (231) 743-9599. Click here for more information.