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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.
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.
The Small Business Administration (SBA) partially guarantees loans made by lenders to small businesses. This guarantee makes SBA loans popular with small business owners because they usually come with low interest rates, since they are less risky for the lender.
Businesses that experience a seasonal buildup in receivables and inventory can use revolving lines of credit to finance temporary cash flow deficits.
Businesses use term loans to finance projects, like a plant expansion, or for an acquisition that require larger amounts of money. These loans are usually repaid over several years and can come with either a fixed or variable interest rate.
You can use an equipment finance loan to pay for an expensive piece of machinery rather than paying the full price upfront. These loans are repaid in installments over several years.
Accounts receivable financing is a good way to speed up your cash flow. Lenders will use the receivables as collateral and make advances against your invoices as they are created, and you don’t have to wait for your customer to pay to receive your funds.
Michigan has a large number of commercial banks, credit unions and nonprofit organizations that make loans to small businesses.
The Huntington 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.
Small Business P2 Loans is managed by the Michigan Department of Environment and makes 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.
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Brian Ashley and Dale Beydoun
(313) 306-3200[email protected]
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 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.
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California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through Lendio Partners, LLC, a wholly-owned subsidiary of Lendio, Inc. and a licensed finance lender/broker, California Financing Law License No. 60DBO-44694.