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Michigan Small Business Loans

When existing businesses face difficulty with cash flow, a loan might be a good idea. Whether it’s an influx of capital to buy equipment or to pay salaries and wages, it’s great to have some extra cash.

Written by Tetiana Sitiugina-Babiuk - Independent writer and content strategist, updated on 10/10/2021

At a glance  After the 2008 economic crisis, Michigan recovered quickly enough and now has almost 900,000 small businesses, making up 90% of Michigan’s economy. It’s a priority for the Michigan authorities and other companies to invest in this state’s small businesses. Keep reading as we discover the options available.

Top 6 Small Business Loan Options in Michigan

Interest Rates

Credit Check

Loan Amounts

Detroit Community Loan Fund

7% flat rate

Aimed at people who haven’t had access to credit

$5,000-$50,000

TCF Bank

Depends on the credit score

Yes

Varies according to the type of loan

Opportunity Resource Fund

Depends on the credit score

Yes

Varies according to the type of loan

P2 Loans

5% flat rate

Yes

Up to $400,000

Invest Detroit

Not specified

Yes

$50,000 - $2.5mil

Michigan First Credit Union

Competitive rates

Yes

Varies according to the type of loan

Best Michigan Small Business Loans Explained 

1. Detroit Community Loan Fund

The Detroit Community Loan Fund is explicitly aimed at small business owners who historically have not had access to capital and loans. The fund seeks to provide loans to women and minorities, groups most financial aid institutions have continually overlooked. 

To access this fund, you’ll have to pay a $100 application fee, and you can ask for anything between $5,000 and $50,000. You can pay the loan back at a flat 7% rate, and you have an option to pay back only interest during the loan term and pay the principal back at the end. 

The fund doesn’t place many restrictions on what you can use the money for. You can use it for working capital, equipment, business expansion, purchasing materials, supplies, or property improvements. The most significant restriction is that you can’t purchase real estate with the Detroit Community Loan Fund.

2. TCF Bank

In 2019, the Minnesota-based Chemical Bank merged with TCF Bank - a large bank holding company headquartered in Detroit. Today, the bank operates 130 branches throughout the state, including 90 former Chemical Bank branches.

TCF Bank is a top provider of Small Business Administration loans (SBA), guaranteed by the U.S government. These loans offer low interest rates on large loan amounts. You also get long repayment periods. In 2018, the former Chemical Bank issued a total of $57 million in SBA loans. Since these loans come with a government guarantee, the bank is more willing to provide an SBA loan to small business owners who wouldn’t otherwise qualify. 

If you’re not interested in an SBA loan, TCF Bank also offers various other loans and lines of credit to small business owners. 

To qualify for a loan from TCF Bank, you’ll have to have a strong credit record and a proven revenue record. A bank loan is not for companies that require working capital but rather for a business looking to expand. In other words, these loans are more applicable to established enterprises rather than start-ups. 

3. Opportunity Resource Fund

For start-ups, the Opportunity Resource Fund is a great option. It also provides working capital loans to existing businesses. You may be wondering, “How to get a small business loan in Michigan through the Opportunity Resource Fund?” Well, you have to meet specific requirements. Your company has to work towards a social goal, like employing unemployed individuals or training at-risk youth. You’ll have to submit a complete business plan with your application and down payment for the loan.  

For loans under $150,000, you have to provide a 10% down payment, while for loans above $150,000, the fund requires a down payment of 15%. Additionally, you also have to provide a guarantee. This can be in the form of real estate, inventory, or other assets. In individual cases, the fund has also accepted personal guarantees. 

4. Michigan Department of Environment, Great Lakes, and Energy (EGLE)

The Michigan Department of Environment, Great Lakes, and Energy (EGLE) provides Pollution Prevention (P2) loans to small businesses. You can apply for a P2 loan if your small business works towards sustainability. If you’re engaging in energy conservation or waste reduction, your business could qualify for a loan. 

To be eligible for a P2 loan, your business has to be independent and not part of a franchise or chain. You can’t have more than 500 full-time employees, and the business shouldn’t be a dominant entity in your industry. While you can run a for-profit business, you have to be involved in projects regarding waste reduction, sustainability, or energy conservation. 

The P2 will grant loans up to $400,000 with a 5% interest rate. The government provides half of the funding, while private lenders offer the other half. 

5. Invest Detroit

As part of initiatives to expedite Detroit’s economic growth, Invest Detroit was formed by several philanthropic and local organizations to provide loans to small businesses. It targets those that don’t qualify for traditional business loans. Your business can receive a capital influx between $50,000 and $2.5 million. 

Invest Detroit offers assistance with writing business plans, mentorship programs, and technical training in various areas. You can also apply for equity financing from Invest Detroit’s venture capital arm. 

6. Michigan First Credit Union

A credit union is often a good place to apply for financing. These institutions work on a members-only basis but are usually more community-orientated than banks. Since credit unions are nonprofit organizations, their interest rates are generally much lower than traditional banks. If you don’t have a good credit record, low revenues, or other aspects that conventional financial institutions look for, a credit union could still grant a loan. 

If you live or work in the state of Michigan, you can qualify for a loan from the Michigan Credit Union. You can apply for SBA loans, conventional term loans, or U.S. Department of Agriculture-backed loans. You can contact any Michigan Credit Union branch to apply for a small business loan.

Top Online Michigan Small Business Loan Options

Besides the best Michigan small business loan options, you should also consider looking into a nationally available online loan. These loans are easily accessible. 

1. Fora Financial - Best for Short-Term Loans

Fora Financial is a trusted fintech lender providing easy access to business loans for thousands of entrepreneurs in Michigan. This online company offers merchant cash advances and short-term loans that can range between $5,000 and $500,000, providing much-needed support for businesses operating in a broad range of industries, from hospitality to construction.

Fora Financial is known for its fast turnaround times, with approval usually provided within 24 hours, and the fund disbursement - within the first 72 hours. To qualify for a loan, your business must have been in operation for at least six months, with annual revenue of $12,000 or more. In addition, you should not have any open or unsettled bankruptcies.

2. Fundbox - Best for Lines of Credit

Fundbox is an online platform offering important financial services to small businesses, including short-term lines of credit and invoice factoring.

The loan amounts with Fundbox can range between $1,000 and $100,000, with repayment terms varying between 12 and 24 weeks. The application process is fairly straightforward, and you can expect to receive the funds very quickly after approval.

In order to qualify for these financing options, your business must have annual revenue of $25,000 or more and be in operation for at least three months. In addition, your personal credit score should be no less than 500. However, the good news is that Fundbox loans don’t require a personal guarantee or collateral and don’t have any hidden fees.

3. Kabbage - Best for Invoice Factoring

Kabbage was one of the first lenders to provide loans to businesses that didn’t have a credit record. It has a good reputation, not only for speedy access to funds but also for ease of use. If you have a bad credit history, you can still qualify for a loan. Loans start at a minimum of $5,000 with repayment periods as short as six months, which allows you to pay off debt quickly. 

The application process is also quick and easy, with small business owners applying for loans online. Another advantage of Kabbage’s model is that it allows you to borrow the money you need and not overcommit to unnecessary credit. 

Unfortunately, you’re going to pay, though, since Kabbage has some of the highest interest rates on the market. This is understandable because it takes on high-risk clients. The repayment structure is also complicated, and it can be hard to figure out exactly how much you need to put aside to meet the repayments. The staff is available seven days a week to help with any questions. 

4. BlueVine - Best for Lines of Credit 

If you’re looking for more competitive interest rates, you can consider BlueVine for your loan needs. When you get a loan from BlueVine, you can access the money within a few days. You can contact personal customer support with ease, even though it’s online-based. The starting price for loans is $10,000. 

BlueVine isn’t available in every state, so you should check for availability in Michigan before you fill in the application forms. You have to repay the loan in six to 12 months, and the repayment amounts can be very high. Another disadvantage is that you have to make repayments weekly rather than monthly, negatively impacting your cash flow.

If your turnover is less than $10,000 a month, or you haven’t been in business for more than six months, you won’t qualify for a loan with BlueVine. You also need to have a good credit score, with a minimum of 600. 

Additional Michigan Small Business Financial Resources 

Some states provide financial assistance to small businesses. You can access Michigan small business grants from a few sources.

1. Michigan Business Development Program

If your small business creates 25 jobs, you can apply for a Michigan small business grant from the Michigan Business Development Program. These grants do not work the same as loans since you don’t have to pay the money back. You can contact the Michigan Business Development Program directly to get more information and application forms. 

2. Accelerate Michigan Innovation Competition

Accelerate Michigan Innovation Competition is a program created by Invest Detroit with the goal of allowing entrepreneurs to showcase their business ideas in front of investors. In addition, the competition provides a valuable networking opportunity and allows young entrepreneurs to build meaningful connections.

The event features the brightest startup ideas and introduces them to venture capital firms and angel investors while awarding $1,000,000 in prizes and cash. As such, if you have a tech start-up or a high-growth company, you can compete for your share of $1 million. 

3. Motor City Restore

If you’re looking to expand your business premises, you will need to have plans drawn up by an architect or engineer. In that case, the Motor City Restore fund can help to offset some of the costs of the renovations with a grant. Not only will the program connect you with architecture experts and provide you with free conceptual design services, but it can even cover up to 50% of your total project costs. 

To qualify for the grant, you need to be running a Detroit-based business actively operating in a commercial storefront.

How to Prepare for a Michigan Small Business Loan

Some business loans don’t have many requirements, but the more traditional operators look at your credit record before granting you a loan. Here are some things you can do in preparation for a loan application to ensure that you’ll get a reasonable interest rate:

  • Ensure you have a good credit score.
  • Register your business as a Limited Liability Corporation.
  • Increase your business revenues.
  • Ensure you have an in-depth business plan.
  • Open a bank account for your business.

The Bottom Line

Naturally, starting your own business is not possible without certain difficulties. If you have ambitious business plans, but lack the financial resources necessary to turn your ideas into life, don’t despair: there are plenty of Michigan small business loan and grant opportunities available within the state. From traditional banks and online service providers, to state programs and initiatives, you will be sure to find the right financial product to meet your needs.