How to Secure a Small Business Loan in Michigan

aving enough funds to help boost steady cash flow and working capital is crucial to sustaining and growing your small business.To ensure you have a buffer in the event of leaner times (or business emergencies), getting financial assistance in the form of grants or loans could be the right move.

Like many other states, Michigan offers many loans and grants to help small businesses operate and grow. In this guide, we’ll cover a number of small business loan and grant opportunities in Michigan and share a few alternative funding sources you may want to pursue.

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Small business loan opportunities in Michigan

Opportunity Resource Fund

The Opportunity Resource Fund is a nonprofit Community Development Financial Institution, or CDFI. Its mission is to provide small business loans to entrepreneurs in Michigan, including working capital loans and access to startup capital. 

Loans typically average a five year repayment term and small businesses can borrow anywhere from $10,000 to $250,000. 

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Some of the eligibility requirements include: 

• Your business needs to be working towards a social goal like investing in underserved areas
• Submit a completed business plan 
• Pay a down payment (the amount depends on how much you borrow)
• Put down collateral such as inventory, real estate, or offering a personal guarantee

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You can apply online. Note that you’ll need to pay a $50 application fee. 

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Small Business P2 Loans

The Small Business P2 (Pollution Prevention) Loan Program offers loans for small businesses working towards waste reduction, energy conservation, and sustainability. Offered through the Michigan Department of Environment, Great Lakes and Energy (EGLE), you can borrow up to $400,000 at a competitive rate.

You'll need to work with a partner lender to offer half the financing, and EGLE will provide the rest.

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Some of the criteria you'll need to meet for their business loans include: 

• Have 500 or fewer employees 
• Be an independently owned and operated business 
• Be a for-profit company that doesn't dominate its industry

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You can contact EGLE to determine whether your business projects are eligible and get a complete list of eligibility criteria.

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Invest Detroit

This loan program partners with Detroit-based organizations to encourage economic growth by helping businesses that aren't able to qualify for traditional financing.

Small business owners who qualify can borrow anywhere from $50,000 to $750,000, though it may consider larger loans on a case-by-case basis. Loan terms differ depending on the loan, though most will need to be secured by some sort of collateral. 

To qualify, your business should be located Detroit, have at least two employees, and prove that there is potential for your business to create more jobs and grow revenue. You can start the application process by filling out their online application form.

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Detroit Community Loan Fund (DCLF)

Another CDFI, the Detroit Community Loan Fund's mission is to offer loans for small businesses from underserved communities. Small business owners can borrow between $5,000 and $50,000 with a 7% interest rate. Though you'll need to pay a $100 application fee, you don't have to worry about other costs like origination or closing fees.

To apply for a loan, contact a representative from DCLF, who will refer you to a business service organization. With this organization, you'll put your application together. If you qualify, you'll also be able to receive training and technical assistance.

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Small business grant opportunities in Michigan

Motor City Match

The Motor City Match program awards $500,000 each quarter in small business grants and is run by the Detroit Economic Growth Corporation (DEGC). You can apply for funding if you're (1) a new business looking to lease commercial space in the Detroit area or (2) an existing business looking to open a new location or renovate your current space. 

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Michigan Business Development Program

This organization offers grants for small businesses that aim to revitalize the community through job creation. Certain industry- and region-specific requirements may apply. To find out more, contact the Michigan Economic Development Corporation and request an application.

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Accelerate Michigan Innovation Competition

Part of an Invest Detroit program, Accelerate Michigan allows entrepreneurs to compete for up to a collective $1 million in prizes by presenting their business ideas to investors. To submit an application to compete, contact the program.

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Consider loan alternatives

Outside of the loans and grants outlined above, there are a number of alternative funding sources you can pursue. These include:

• Invoice factoring, which involves selling your invoices to a factoring company in exchange for a percentage of the invoice’s total value
• Business lines of credit, which involves getting a a credit limit you can borrow, repay, and borrow again
• Merchant cash advances, which involve borrowing money against future sales

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Consult our piece on business loans for more information about types of financing.

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Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.