WEST MICHIGAN — Following up a successful launch earlier this year, Grand Rapids Opportunities for Women expects to receive additional federal funding next spring to continue providing microloans to small business owners across a nine-county region.
The funding from the U.S. Small Business Administration will enable the Grand Rapids-based GROW to expand the microloan program in mid-2013.
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Microloan Program Manager Bill Hahn expects the funding to come through in April, when the new fiscal year begins for the SBA microloan program. He couldn’t say how much GROW will get, other than it’s “substantially more” than the $200,000 the organization received last summer to launch the microloan program.
“It should give us a good platform to really define the program as far as the lending activity goes. It will really allow us to have more activity than we (had) this year,” Hahn said.
Working through an advisory committee, GROW can also begin planning how to permanently sustain the microloan program as a constant source of credit for small businesses that need funding to cover startup costs or to buy new equipment to grow. The new SBA funding allows GROW “to figure out what we actually want the program to be and how we want it to behave,” Hahn said.
“The expansion funds from the SBA will allow us to drive to that point,” he said. “This isn’t something we really want to stop in five years. I don’t think there’s any thought of it ever stopping.”
GROW could return to the SBA again for additional funding in the future, although the hope is that small businesses repaying their microloans will replenish the fund enough to lend additional loans.
The initial SBA funding allowed GROW to loan up to $50,000 to small business owners in Kent, Ottawa, Muskegon, Newaygo, Montcalm, Ionia, Barry, Allegan and Kalamazoo counties. Entrepreneurs can use the fixed-rate loans to buy equipment, machinery, furniture, fixtures and materials and for operating capital. They must repay the loan within six years.
Microloans made using the original $200,000 exceeded expectations, Hahn said. GROW has so far approved 15 loans totaling $153,121 to 10 small businesses.
GROW received about 100 applications and inquiries on the program.
The interest proved a strong need for micro-lending in the area, said Bonnie Nawara, CEO of GROW.
“It tells me there is a big demand,” Nawara said. “I think we’re only touching the tip of the iceberg and reaching that potential market.”