Small Business Loans in Michigan
Michigan, the Great Lakes State, offers an attractive environment for small businesses. Its moderate corporate and personal income tax rates combined with a reasonable cost of living make it easier for entrepreneurs to startup businesses and attract employees. The good news is that Michigan has a wide range of lenders who are standing ready to finance aspiring small-business owners.
Types of Michigan Small Business Loans
Although Michigan businesses operate in a moderate-cost environment, they occasionally need outside capital to fund a startup or, if they are an existing business, to finance expansion and growth.
SBA loans
SBA loans are business loans that are partially backed by the Small Business Administration (SBA), a federal agency. These loans are serviced by private lenders, but are popular because they generally have good interest rates.
Line of credit
Use a line of credit as a flexible form of financing. Unlike with a loan, this option does not involve a big disbursement upfront that you must repay, providing a flexibility that better fits many entrepreneurs’ needs.
Term loan
Term loans are common small business loans in which you would apply for a large disbursement of capital and then repays it over several years, along with fixed or variable interest.
Equipment finance
With equipment financing, you receive a piece of equipment and then pay off the cost of the equipment in installments. This way, your business can make money off the equipment immediately, even if you don’t have the funds to buy it at the sticker price.
Accounts receivable financing
Accounts receivable financing is an alternative form of business financing in which your unpaid invoices serve as collateral for a lump disbursement of funds.
Michigan Small Business Loan Options
Michigan has many commercial banks, credit unions and nonprofit organizations that offer loans to small businesses.
The Huntington Bank also known as TCF Bank, is one of the nation’s leading lenders for SBA loans and has branches located throughout the state of Michigan and the Midwest.
Michigan First Credit Union Is a nonprofit membership-oriented organization that provides loans to its customers at lower rates and fees than other commercial lenders.
Opportunity Resource Fund provides loans to small businesses throughout the state of Michigan for working capital, inventory financing, business expansion and other short-term capital needs.
The Small Business P2 Loans program is managed by the Michigan Department of Environment and provides loans that are used for projects that increase sustainability, reduce waste, and conserve energy.
Michigan Economic Development Corporation matches small business owners with lenders who can provide start-up capital and expansion.
Detroit Development Fund provides financing, training and consulting to businesses owned by entrepreneurs of color.
Invest Detroit is a mission-driven lender, investor and partner that supports businesses and growth in Detroit and the surrounding area.
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FAQ About Small Business Loans in Michigan
Read experiences from Michigan business owners.
Mahony's Home Improvement
I had the recent opportunity to talk with Tim Mahony of Mahony’s Home Improvement. Tim was looking for a way to finance bigger projects so he could expand his business. Here’s what he had to say about his experience with Lendio.
Tell me a little bit about your business.
I own Mahony’s Home Improvement, we are a remodeling company that specializes in bathrooms, kitchens, and flooring. We do it all, but those are our specialties.
Why and when did you start it?
I started the company back in 2012 because I had been working for a contractor that was teaching me the business and I thought I was ready to go out on my own. I was wrong, and the first year was a huge learning experience for me.
How did you get the initial capital to start your business?
The initial capital came from Christmas presents and bidding tools into jobs actually. I would borrow what I needed until I had the money to purchase my own tools. The first year was dedicated to funding the business.
What keeps you going? What’s your passion that drives your business?
My family and my drive for success keep me going every day.
What did you need funding for?
This isn’t my first company, I have failed in the past. This is my longest running company with over 3 years and having a passion for the work itself greatly helps. With the line of credit, I got from Lendio, I have been able to take on bigger projects. Customers don’t like giving a complete stranger thousands of dollars for materials before the job begins so I’ve been limited in the size of the projects I could do, until now. I have 3 jobs going on as we speak that are bigger than any other jobs I’ve ever gotten because I had the line of credit to pay for the materials myself.
How was your experience with Lendio?
I found Lendio on a google search along with multiple other companies. I chose Lendio because of the rep, Tracy Schultz. Unlike the other companies, she continued to call just to check on things. I changed my mind about 20 times on what kind of funding I wanted and what I was going to use it for, and she stayed on top of it, always updating me on the progress. She made me feel like I wasn’t just another sell.
My experience with Lendio was fantastic. They got me more money than I thought I could ever get and I will always use them in the future.
I would definitely recommend Lendio to all of my contractor friends and already have to a few.
What general business advice do you have for other small business owners?
My business advice I give everyone is to just get up every day and go to work. Every day will not be the greatest, you will not make a million each day, and there will be days you want to give up. You just have to go to work, do what you do best, make every customer as happy and as satisfied as you can possibly make them, and at the end of the day, know you did everything you could to make your business successful that day. Continue doing that and everything should work out.
You can find out more about Tim’s remodeling business here. To get started with Lendio, visit www.lendio.com.
FAQs
In addition to state and local organizations that promote small businesses, nonprofit SCORE has several offices in the state to provide mentoring to aspiring entrepreneurs. The SBA also steps in with its Small Business Development Center to provide advice and make suggestions with preparation for financial planning and funding. The state-funded Michigan Economic Development Corporation stands ready to provide even more business resources and suggestions for financing small businesses.
If you think your business may qualify for a grant, you can start your search at the federal site Grants.gov. For grants more specific to the state of Michigan, you can visit the Michigan Labor and Economic Opportunity site which describes grants to small businesses for specific purposes, such as building up exports.
The Michigan Business Development Program offers grants and other economic assistance to businesses that create qualified new jobs — 25 in rural areas and 50 in standard areas.
Motor City Match offers grant funding of up to $100,000 to new and expanding businesses in Detroit.
Motor City Restore – now part of Motor City Match – offers grants of up to $25,000 to cover 50% of total project costs for improvements to business storefronts.
The first step is to decide on your business structure. You can start out as a sole proprietorship and you’ll need to register the name of the business with the county of operation. If you decide on a corporation or a Limited Liability Corporation (LLC), you need to register your company with the Michigan Secretary of State. You’ll also need to check local and state regulations to see if you need any specific permits or licenses.
After taking care of the paperwork, you need to prepare the documentation that your lenders require. Typically, you’ll need a business plan, financial statements, and cash flow projections. Your financial projections should show why you need the loan and how you intend to pay it back.
The type of loan depends on its purpose. If you have a seasonal business and experience temporary increases in accounts receivable and inventory, a revolving line of credit will likely work. If you’re looking to purchase a piece of equipment, equipment financing could be a good fit. The financial consultants at online platforms like Lendio can give you advice and help you decide in just a few minutes which loan works for your situation—and at no cost to you.
Banks and nonprofit organizations in Michigan want to provide funds to small businesses that increase economic activity in their communities. Everyone gains when new businesses startup and existing businesses expand and add more employees. The availability of funds for small businesses to finance their operations is critical for the growth of local economies.
Ready for funding?
See what you can qualify for on the Lendio Marketplace.