It is impossible to capture every source of financing that may be available or to address each entrepreneur's unique situation; therefore, use this section on financing as one tool in your search for financing, but do not consider it as all-inclusive. The section is divided into two parts:
- The Organizations & Programs portion addresses who is actually lending money and from what program the money is coming from.
- The Tools portion provides additional resources that can be used to continue searching for financing or to help you prepare your grant or loan application once you have found a possible source.
Organizations & Programs
A bank loan is one of the more common forms of small business financing. Several banks have a presence in Osceola County. These include Chemical Bank, Huntington Bank, and Lake-Osceola State Bank.
The Small Business Administration (SBA) is the largest source of long-term small business financing in the nation; however, the SBA does not lend directly to borrowers. Instead it guarantees a portion of the loan in the event the borrower defaults. Loans are provided by lenders who choose to structure their own loans by the SBA's requirements and then apply and receive a guaranty from the SBA on a portion of the loan. The lender and SBA share the risk that a borrower will not be able to repay the loan in full.
The most basic and commonly used loan is the SBA 7(a) loan. During fiscal year 2015 Michigan lenders backed 2,485 loans totaling $663.7 million through the SBA 7(a) lending program. Although the SBA 7(a) is the most common loan program there are other SBA loan programs. The SBA website lists information concerning all of these programs.
Intermediary Relending Programs (IRPs) assist in the development of new small businesses and the expansion of existing businesses by providing financing to individuals and businesses that are unable to obtain conventional financing. Typically a larger organization will loan money to another party (the intermediary) that makes loans to businesses. The Small Business Administration and the United States Department of Agriculture, Rural Development have funded two intermediary relending programs in which Osceola County businesses may borrow from. Great Lakes Energy serves as the "intermediary" for both programs. With each program Great Lakes Energy can finance 30% of the total project, with a financial institution financing 50% of the total project, and the applicant having a 20% equity. The loan term is set to match that of the participating financial institution, up to 10 years.
Revolving Loan Fund Program loans up to a maximum of $100,000. There is no minimum. The interest rate, at the discretion of the board of directors, varies from one-half of the prime rate at the time of the loan approval to one-half plus 2%.
- The Zero Interest Loan Program loans up to a maximum of $600,000. There is a $100,000 minimum loan. As its name implies this is a 0% interest loan.
The Northern Lakes Economic Alliance administers both programs on Great Lakes Energy's behalf. Applications are reviewed quarterly. Any "for profit business" can apply for either of the two loans. Job creation will be considered as a factor when reviewing the application. To obtain complete information on either program contact the Northern Lakes Economic Alliance.
Microloans assist small businesses to start-up and expand. As the name indicates, these are small loans. The typical microloan made by a Small Business Administration intermediary is about $13,000; however, they can be made up to $50,000.
Northern Initiatives offers microloans ranging from $2,000-$50,000 that are 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. For more information contact Northern Michigan Initiatives.
Certified Development Corporation (CDC) 504 Loan Program
The Small Business Administration (SBA) Certified Development Corporation (CDC)/504 Loan Program provides small and medium-sized businesses with long term fixed rate financing for major fixed assets such as equipment or real estate. Businesses must have a tangible net worth of less than $15 million and an average net profit of less than $5 million for the past two years. Projects are financed through a unique public/private partnership involving private lenders financing 50% of the project costs, a Certified Development Company (CDC) as an agent of the SBA providing up to 40%, and the small business investing at least 10%.
The Michigan Economic Development Corporation's capital locator tool can be used to find and connect with capital providers that are active in Michigan and have an interest in your company’s stage and sector.
Whether you’re considering starting a business or already in business you will find the Michigan Small Business Development Center (SBDC) is a helpful resource for understanding the range of financing options available to you. Their programs and specialists can also help you prepare loan packages, analyze financials, and prepare annual budgets.
New Funding Sources For Food Related Businesses is a directory of various sources of financing available to food hubs and local food-related businesses. The directory is published by the Michigan State University Center for Regional Food Systems.
NextEnergy is a convener, collaborator, and service provider accelerating advanced energy technologies through industry and venture development. Each month NextEnergy compiles relevant funding opportunities for energy and transportation innovators and posts these opportunities on their website under Funding Opportunities.