An economic development nonprofit on a mission to help create equitable opportunities for small businesses in West Michigan is celebrating the successful completion of one loan program geared toward COVID-19 recovery and working to launch another.
Grand Rapids Opportunities for Women (GROW) on Sept. 26 closed the second round of applications for ReStart Kent, a loan program designed to assist small businesses that are not currently borrowers of GROW with loan amounts ranging from $1,000 to $10,000.
The loans carried a 4% interest rate, no origination fee and the first six months of payments were covered by the Small Business Administration (SBA). They were designed to provide working capital for pieces of the financial picture that small business owners couldn’t at the time find funding for, such as utilities, lease payments, inventory, payroll, etc. The loan program was initially called the COVID-19 Working Capital Loan when it launched in April, but GROW over the summer renamed it ReStart Kent and updated the parameters so clients could use it for business reopening expenses, such as purchasing personal protective equipment (PPE), installing barriers and stocking up on hand sanitizer.
GROW initially set aside $300,000 for the program but as of Sept. 26 had issued 41 loans totaling $382,000. GROW was able to go over the initial budget because its Muskegon County Recovery Loan program secured funding from the Community Foundation for Muskegon County, so GROW moved some of the dollars initially allocated for the lakeshore back to Kent County.
ReStart Kent was housed under GROW’s microloan program, which made loans of $30,000 on average before COVID. The ReStart Kent loans were capped at $10,000 to get cash quickly into business owners’ hands via a shorter loan review process, according to Kelli Smith, director of lending at GROW. She spoke to the Business Journal on Sept. 17 about the loan program.
“(ReStart Kent) is supposed to be an instrument to help these folks. We don’t necessarily think that this is all they need; we know that there’s a much greater need out there,” Smith said. “We are trying to assist them in receiving some grant funds, as well, and the goal for this really is to give them a lifeline for right now, and we hope that it can get them (other) loan opportunities.”
She said SBA covering the first six months meant business owners — especially many of them who had never taken out a loan or whose credit score had taken a hit due to payment deferrals on other loans — could get six months of a positive repayment history under their belt, which could set them up for a bank loan in the future or more assistance from GROW or other organizations.
Smith said in round one, GROW was receiving applications faster than its staff of eight people could process them, as GROW’s COVID-19 loan program came out before the federal Paycheck Protection Program (PPP) and SBA Economic Injury Disaster Loan (EIDL) opportunities had been launched, and many of the businesses at that time had no cashflow. After the PPP and EIDL programs launched, the demand for ReStart Kent slowed to a level where GROW could more easily handle the number of requests coming in, although the pipeline was still very full right up until the Sept. 26 deadline.
Smith also noted GROW would not have been able to carry out ReStart Kent without its community loan review committee members, who not only approved loans, but provided feedback to applicants and in some cases, became business advisers to the loan clients.
GROW said it is proud of the positive impact its loan programs have had on the community during COVID-19. Over a period of six weeks this spring during the first round of funding, GROW closed on 29 loans in Grand Rapids and Muskegon, with $235,000 deployed. Eighty percent of those loans were deployed to women-owned businesses, and 47% were deployed to businesses of color, while 75% of borrowers were of low- to moderate-income, and “none of them had access to any other source of capital,” Smith said.
The organization shared some success stories from first-round recipients on its blog this month.
Cindy’s Chicken Coop
Lucinda Weaver, co-owner with her husband of Cindy’s Chicken Coop at 1936 Eastern Ave. SE in Grand Rapids, said when COVID-19 shut their doors for eight weeks, they faced the very real possibility of closing down their restaurant for good. Receiving the funds from GROW kept them afloat during the shutdown and helped equip the restaurant to safely reopen and welcome back customers. Weaver ended up referring several other business owners to GROW for support.
“To know I could rely on GROW in my time of need felt so wonderful,” she said. “I want other people to benefit. We can get through this by helping each other.”
The financial support from GROW allowed Weaver to partner with area churches to serve 263 meals to those in need. If a person in need walks into her restaurant, she said they will not leave hungry.
“It feels good to feed people with no strings attached,” she said. “It is awesome to be in the position to be able to do it.”
Consuelo Maxim-Sparrow received a first-round loan for her business, CMS Consulting in Muskegon, which offers organizational development, public administration, grant funding and financing, risk management, strategic planning, occupational health and safety, emergency management and strategic planning services to organizations.
When the pandemic caused the mandatory shutdown of businesses across the state, Maxim-Sparrow said she had already seen the writing on the wall. In 2009, she worked in pandemic planning for the state of Michigan, and she recognized the signs of an impending shutdown. In December, she shuttered her brick-and-mortar office and set up her team to work remotely. But even that did not insulate her from the impact of COVID-19, as her client base immediately dried up.
“I thought my business was done,” she said.
Maxim-Sparrow connected with GROW through a referral from the Muskegon Chamber of Commerce.
“Thank God for GROW,” she said. “GROW helped me build my bank account back up and honor my prior agreements.”
Her business now is thriving, as she has seen an increase in new startup clients, she said.
“A whole lot of entrepreneurs were born out of COVID,” Maxim-Sparrow said. “People are starting businesses right now. It’s amazing.”
El Globo Restaurant
Oswaldo Cordova and his wife, Evangelina Abundis, opened El Globo Restaurant , 2019 S. Division Ave. in Grand Rapids, in 2004, serving authentic dishes from Jalisco, a state boarding the Pacific Ocean in western Mexico. Their menu features items such as birria de chivo (homemade goat stew topped with lime, onions and cilantro), carne en su jugo (small pieces of steak cooked in their juices, mixed with Mayocoba beans, crispy bacon, tomatillo sauce, avocados, cilantro, onion and limes), lonche de pierna (Mexican pork leg torta, lettuce, tomato, onions, jalapenos, avocado and Mexican cheese) and more.
When restaurants shut down, Cordova and Abundis found themselves in crisis. They closed their doors for five weeks.
“It was pretty bad,” Cordova said. “Our bills kept coming and piling up, and we couldn’t pay our employees. But we just kept going.”
The couple connected with GROW and received a first-round ReStart Kent loan. As they prepared to reopen after five weeks, they spent twice as much money on cleaning supplies, and meat prices skyrocketed. El Globo implemented a to-go only system and equipped the customer-facing areas with plexiglass shields.
“Our customers kept coming back,” he said. “It’s picking up.”
Pampered Auto was initially a car detailing shop that opened in Ravenna in 2015. As they aged, husband and wife co-owners Vanessa and Tony Davis realized that they would no longer be able to meet the physical demands of the detailing work. In January, they transitioned to providing nonemergency medical transportation services, such as hospital intakes and discharge, doctor and dental appointments, physical therapy, nursing/adult day care facilities, lab work and dialysis. Additionally, they provide parcel deliveries, expeditor services, airport transportation, rides to work and more.
For nearly three months, they were fully booked. Then, COVID-19 hit. The stay-at-home order halted the vast majority of nonemergency medical appointments, and as a result, the Davises’ livelihood quickly dried up.
“It was very scary,” Vanessa Davis said. “It was as if the business stopped breathing.”
The Davises connected with the GROW Muskegon office and received a first-round loan. Vanessa Davis said it came just in time.
“Right around the time the funds came through, we had to fix our lift,” she said. “The funds really helped with that and helped us keep going.”
In addition to providing funding, GROW connected them with webinars, coaching sessions, seminars and ideas on how to be successful in the business moving forward.
“We are grateful to GROW for the funding and support,” Vanessa Davis said. “GROW gave us hope.”
Today, Pampered Auto is growing. It has contracted with a nonemergency medical transportation brokerage and is booking rides every day.
Smith said the Community Foundation for Muskegon County will continue to fund GROW’s Muskegon County Recovery Loan program “for the foreseeable future.” Any new loans issued under the Muskegon County Recovery Loan program going forward will have an interest rate of 4%, generous repayment terms, no prepayment penalty, no payment due for 90 days and no application fee. The SBA will no longer cover any payments for any portion of the loan because its CARES Act funding in support of that opportunity expired at the end of September.
GROW also is in the process of partnering with Comerica Bank on a new loan product that will be announced soon.
More information is at growbusiness.org.