January 08, 2015
To watch a video on the collaborative effort behind microlending in Detroit, visit: https://www.youtube.com/watch?v=-xaf338xJe8
Thursday, Jan. 8, 2015
LANSING, Mich. — Patrick Beal is proof that Detroit’s economic renewal can be measured one person, one business and one commitment at a time. Beal is the type of millennial-age entrepreneur who sees opportunity where others see blight – literally.
Beal’s Detroit Training Center, which trains and certifies workers in blight removal, is among four Detroit-based businesses that received loans totaling $231,000 as part of the Pure Michigan Micro Lending Initiative launched in November 2013 by Gov. Rick Snyder, and based on a partnership between Michigan Economic Development Corporation and Huntington Bank.
“A vibrant Detroit requires a commitment by developers of large-scale projects along with the growth of small businesses throughout the city,” said Snyder. “Creating a climate and the financial means for small businesses to thrive is beginning to foster further investment and job growth in Detroit’s revival. And equally important, people are taking pride in starting a business and want to be a part of the city’s growing and diversifying economy.”
The program lends from $5,000 to $100,000 for early-stage and established businesses with a critically reviewed plan by nonprofit micro lenders Detroit Development Fund (DDF), Detroit Micro Enterprise Fund and Michigan Women’s Foundation. The collaborative provides mentorship, consulting services and much-needed capital to borrowers who might be considered a risk by conventional private-sector lenders. The New Economy Initiative provides grants to DDF.
To attract the private bank lender, MEDC guarantees to cover loan losses up to 20 percent of the total fund, or the equivalent of up to $1 million.
“MEDC mitigates some of the risk, and makes it easier for us to assist a business,” said Michael Fezzey, regional president of Huntington Bank, which is among the top small business lenders in the state. “Microlending for small businesses can turn a neighborhood into a community.”
Based on the success of the Detroit-based program, Fezzey said Huntington will provide an additional $20 million to distribute through community micro lenders around the state. With the success of the program, he expects other private lenders to collaborate in building a micro-lending fund that could grow to $250 million.
The four businesses receiving micro loans through Detroit Development Fund, Detroit Micro Enterprise Fund and Michigan Women’s Foundation include:
Pure Michigan Micro Lending Initiative is one of two high-profile programs aimed at increasing small business investment in Detroit.
In September, more than 60 small businesses owners in Detroit and Southeastern Michigan graduated from the Goldman Sachs 10,000 Small Businesses initiative, an innovative economic development enterprise supported by Gov. Snyder, Goldman Sachs Chairman and CEO Lloyd Blankfein, Detroit Mayor Mike Duggan, White House Senior Advisor Valerie Jarrett, Warren Buffett and Michael Bloomberg.
Business owners participated in more than 100 hours of courses on accounting, human resources, negotiation and marketing along with one-on-one workshops.
Collectively, Pure Michigan Micro Lending Initiative, 10,000 Small Business and Michigan’s participation in the federal State Small business Credit Initiative presents one of the largest and most innovative approaches to foster small business growth in the country.
In many ways, supporting small businesses with loans smaller than what private lenders offer is a direct way to plant seeds of future economic growth, said Ray Waters, president of Detroit Development Fund.
“As these businesses receiving micro loans succeed, they become job creators, and with their growth they become long-term investors in the city,” he said. “It’s wonderful so many large companies are locating in Detroit, but the backbone of Detroit is built by small businesses.”
Born and raised in Detroit, Nicole Farmer has seen her share of changes in the business climate during the last few decades in Michigan’s largest urban region. Today, she points to one striking positive difference from five years ago, a time when the recession ravaged the economy and the future of the city dangled in the balance.
“For some people, it takes years for their dream to become a reality,” said Farmer, founder of Life Line Businesses Consulting Services, a Detroit-based consulting firm that prepares entrepreneurs for starting or expanding their business in the city. She provides businesses assistance to prospective lenders seeking loans at Detroit-based micro borrowers.
“People see someone they know starting a business – a pedicure shop, a barber shop, two sisters working together to sell their jams and preserves,” she said. “It’s all about building hope and a sense of ownership.”
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