Traverse City Record-Eagle

December 30, 2012

TC Chamber, Northern Initiatives partner for business loan

TC Chamber, Northern Initiatives partner for business loan

By Kathy Gibbons

TRAVERSE CITY — Financing options weren't plentiful when Grand Traverse Analytical looked to refinance its building at 830 Robinwood Court last winter.

"We got it on a land contract and we had a balloon due coming up in July 2012, and it wasn't looking good, to tell you the truth," said Kirk Chase, co-owner of the environmental testing laboratory. "And the previous winter, a major competitor went out of business and we had a big increase in work."

Enter two resources: the Traverse City Chamber of Commerce Foundation Development Fund and Northern Initiatives. Each entity provided $90,200 in their first loan partnership, given to Grand Traverse Analytical, which obtained the money it needed to pay off the land contract.

"There's quite a significant savings in the payment," Chase said. "We have a 20-year mortgage so we can relax "¦ and I was able to hire a couple of (full-time) people."

Laura Galbraith, vice president of administration for the Traverse City Area Chamber of Commerce, said the deal came about after Grand Traverse Analytical began working with Northern Initiatives. An affiliate of Northern Michigan University, Northern Initiatives is a private, nonprofit community development corporation that provides access to capital for rural Michigan entrepreneurs ranging from startups to established businesses.

"They approached us because the amount they wanted to finance was a little bit too much for the funds they had," Galbraith said.

Meanwhile, the Chamber Foundation has about $1.5 million in economic development capital available to loan to companies in amounts between $25,000 and $250,000. In 2011, the Chamber fund loaned $50,000 to help Traverse City-based Altus Brands expand its product line; Altus is paying the money back over three years.

"Our criteria for being able to qualify for getting access to the funds — not that it's stringent — but you have to be a business that's been in business for at least five years and have to have so much in revenues and project needs to grow jobs in the community," Galbraith said. "Northern Initiatives, a lot of the deals they do, their sweet spot is between $11,000 and $70,000, and they have lots of opportunities for startups.

"They have access to funds from the USDA, MEDC, and they have some private funding, too. I think they just started finding opportunities in northern Lower Michigan."

The timing couldn't be better for Grand Traverse Analytical, which Galbraith said will repay the loan at prime plus 3.25 percent.

"Our rates are a little bit higher than you would find at a bank because a lot of times this is considered gap financing," Galbraith said. "Both the Development Fund and Northern Initiatives — we don't want to compete with area banks, we want to provide a supplement to area banks.

"That's why a lot of times, banks will give us opportunities because if a customer wants $100,000, but they don't have the 10 percent they need for their initial investment, they may come to us and say, 'Would you loan them that first 10 percent?'"

Northern Initiatives commercial lender and business consultant Chris Wendel said the Grand Traverse Analytical deal is an example of cooperation that he expects to result in more financing opportunities for businesses.

"We're seeing that there are a lot of deals nobody can do on their own," he said. "You're going to see a lot more of these different groups doing different pieces of a deal, and that's good, because the deals wouldn't get done otherwise."

And such deals, or access to capital, are essential, he added.

"Either a bank's not comfortable doing the whole thing, or a bank can't do the deal, or the company decides to not expand or do anything different and they get stagnant," Wendell said. "I've seen businesses fail because they weren't able to get the funding they need."