Resources - Financing
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 $15 per month servicing fee. For more information or an application, contact the Otsego County Economic Alliance.
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.
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.
SBA 7a
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.
Industrial Development Revenue Bonds, MEDC
IDRBs 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." IDRBs 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. Click here for more information.
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.
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