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The state of Michigan has a rapidly growing number of small businesses and job opportunities. If you are looking to start a small business in Michigan, you can benefit from a variety of financial resources and support available within the state, including regional banks, credit unions, and non-profit organizations.
After the 2008 economic crisis, Michigan recovered quickly enough and now has almost 900,000 small businesses, making up 90% of Michigan’s economy. It’s a priority for the Michigan authorities and other companies to invest in this state’s small businesses.
Top Six Michigan Small Business Loan Options
1. Detroit Community Loan Fund
The Detroit Community Loan Fund is a certified Community Development Financial Institution and is explicitly aimed at small business owners who historically have not had access to capital and loans. The fund seeks to provide loans to women and minorities, groups most financial aid institutions have continually overlooked.
To access this fund, you’ll have to pay a $100 application fee, and you can ask for anything between $5,000 and $50,000. You can pay the loan back at a flat 7% rate, and you have an option to pay back only interest during the loan term and pay the principal back at the end.
The fund doesn’t place many restrictions on what you can use the money for. You can use it for working capital, equipment, business expansion, purchasing materials, supplies, or property improvements. The most significant restriction is that you can’t purchase real estate with the Detroit Community Loan Fund.
2. Huntington National Bank
In 2021, TCF Bank moved to Huntington and is now Huntington National Bank.Huntington National Bank is a top provider of Small Business Administration loans (SBA), guaranteed by the U.S government. These loans offer low interest rates on large loan amounts. You also get long repayment periods. Huntington National Bank is the #1 lender of SBA loans in the region from 2008 to 2021. In 2018, they issued a total of $57 million in SBA loans. Since these loans come with a government guarantee, the bank is more willing to provide an SBA loan to small business owners who wouldn’t otherwise qualify.
If you’re not interested in an SBA loan, Huntington National Bank also offers various other loans and lines of credit to small business owners.
To qualify for an SBA loan, you’ll need a strong credit record and established business revenues. A bank loan is not for companies that require working capital, but rather for a business looking to expand. In other words, these loans are more applicable to established enterprises rather than start-ups.
3. Opportunity Resource Fund
For start-ups, the Opportunity Resource Fund is a great option. It also provides working capital loans to existing Michigan businesses. You may be wondering, “How to get a small business loan in Michigan through the Opportunity Resource Fund?” To do so, you have to meet specific requirements. Your company has to work towards a social goal, like employing unemployed individuals or training at-risk youth. You’ll have to submit a complete business plan with your application and down payment for the loan.
For loans under $150,000, you have to provide a 10% down payment, while for loans above $150,000, the fund requires a down payment of 15%. Additionally, you also need to provide a guarantee. This can be in the form of real estate, inventory, or other assets. In individual cases, the fund has also accepted personal guarantees
4. Michigan Department of Environment, Great Lakes, and Energy (EGLE)
The Michigan Department of Environment, Great Lakes, and Energy (EGLE) provides Pollution Prevention (P2) loans to small businesses. You can apply for a P2 loan if your small business works towards sustainability. If you’re engaging in energy conservation or waste reduction, your business could qualify for a loan.
To be eligible for a P2 loan, your business has to be independent and not part of a franchise or chain. You can’t have more than 500 full-time employees, and the business shouldn’t be a dominant entity in your industry. While you can run a for-profit business, you have to be involved in projects regarding waste reduction, sustainability, or energy conservation.
The P2 will grant loans up to $400,000 with a 5% interest rate. The government provides half of the funding, while private lenders offer the other half.
5. Invest Detroit
As part of initiatives to expedite Detroit’s economic growth, Invest Detroit was formed by several philanthropic and local organizations to provide loans to small businesses. It targets those that don’t qualify for traditional business loans. Your business can receive a capital influx between $50,000 and $2.5 million.
Invest Detroit offers assistance with writing business plans, mentorship programs, and technical training in various areas. You can also apply for equity financing from Invest Detroit’s venture capital arm.
6. Michigan First Credit Union
A credit union is often a good place to apply for financing. These institutions work on a members-only basis but are usually more community-oriented than banks. Since credit unions are nonprofit organizations, their interest rates are generally much lower than traditional banks. If you don’t have a good credit record, low revenues, or other aspects that conventional financial institutions look for, a credit union could still grant a loan.
If you live or work in the state of Michigan, you can qualify for a loan from the Michigan First Credit Union. You can apply for SBA loans, conventional term loans, or U.S. Department of Agriculture-backed loans. You can contact any Michigan First Credit Union branch to apply for a small business loan.
Top Six Local Small Business Loan Options in Michigan
Interest Rates | Credit Check | Loan Amounts | |
Detroit Community Loan Fund | 7% flat rate | Aimed at people who haven’t had access to credit | $5,000-$50,000 |
Huntington National Bank | Depends on the credit score | Yes | Varies according to the type of loan |
Opportunity Resource Fund | Depends on the credit score | Yes | Varies according to the type of loan |
P2 Loans | 5% flat rate | Yes | Up to $400,000 |
Invest Detroit | Not specified | Yes | $50,000-$2.5 mil |
Michigan First Credit Union | Competitive rates | Yes | Varies according to the type of loan |
Top Online Michigan Small Business Loan Options
In addition to the local Michigan small business loan options, you should also consider looking into nationally-available online small business loans. These loans are easily accessible, and the requirements are typically lower than you’d otherwise find.
