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Sunday, 16 August 2015 22:00

Huntington commits to $5 million in microloans in West Michigan over 5 years

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As Huntington Bank commits $5 million to extend its microlending initiative to West Michigan, the bank has also forged partnerships with organizations to work with prospective business borrowers in the region.

Grand Rapids Opportunities for Women, the Michigan Small Business Development Center and LINC Community Revitalization signed on to provide mentoring, business coaching and other assistance to would-be entrepreneurs seeking financing through the Pure Michigan Micro Lending Initiative.

John Irwin, Huntington Bank’s West Michigan president, considers the partnerships with the community organizations an essential part of bringing the microloan program to 12 counties in the region. By combining the financing with in-kind support, Huntington wants to mitigate the potential for failure and improve the chances of new businesses to succeed and eventually move into traditional financing, Irwin said.

“I want to try to really ensure success,” he said. “I want these companies to grow into traditional borrowers from the bank.”

Huntington Bank launched the microlending initiative with the Michigan Economic Development Corp. in southeast Michigan in late 2013 with a $5 million commitment over five years. The initiative has so far lent $1 million through 18 loans and has “others in the pipeline (that are) well toward closing,” according to a bank spokesman. All of the companies funded remain in business and are repaying their loans.

The bank has since forged partnerships with organizations to extend the initiative into West Michigan with a subsequent $5 million, five-year pledge. The initiative will make loans as small as $1,000 and as large as $250,000 to small businesses and startups that have been unable to qualify for traditional bank financing. They’ve typically been declined because they lack sufficient collateral or an established track record — or because the owner has credit issues they need to work out.

“The thing about this program is that they can do loans to businesses that no banks can do,” Irwin said. “A lot of these businesses, they really do have good ideas, but they lack that ability to get that initial financing or they lack the ability to get access to resources.”

Prospective borrowers seeking a loan through the initiative will first get referred to one of the partnering community organizations to fix whatever got them denied for the traditional bank financing. The groups will also help the borrowers hone their business skills.

“Their job is to find a way to help out whatever way they can,” Irwin said.

GROW, for instance, helps clients with crafting business and marketing plans, financial forecasting and planning.

The revolving loan fund will operate through the Detroit- and Lansing-based Opportunity Resource Fund, which is an established Michigan microlender. The fund will perform the due diligence and underwriting for loan requests of $50,000 and more. GROW, which has had its own microloan program since 2011 that’s funded by the U.S. Small Business Administration, will handle loans of less than $50,000.

The Huntington-backed microloan initiative complements the financing that GROW has been doing for four years and the support it provides entrepreneurs, CEO Bonnie Nawara said.

“It helps open the market for our program,” Nawara said. “There’s a much broader outreach than what we can do alone. It brings much more to our community and resources to our small businesses.”

Since 2011, GROW’s microloan program has provided loans totaling more than $765,000 to 47 small businesses that created 79 jobs within 90 days of their opening.

Read 3630 times Last modified on Tuesday, 18 August 2015 16:37

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