Northern Initiatives helped 10 Kent County businesses receive forgivable loans they otherwise could not get during the Paycheck Protection Program (PPP), and although the PPP is over, the Michigan-based lender is not done helping under-resourced small businesses.
Marquette-based Northern Initiatives (NI), a community development financial institution (CDFI), helped 87 small businesses in 36 Michigan counties get PPP loans in the first five months of 2021, 10 of which were from Kent County. The businesses ranged from restaurants to child care centers to recreation providers to clothing retailers to food trucks. Most of them were not existing loan customers of NI.
The PPP loan program created a lifeline for many during this pandemic, but it also frustrated microbusinesses, sole proprietors and farms — especially those owned by women, veterans and people of color, who did not have existing relationships with banks and needed smaller loan amounts.
The way the PPP program worked, lending institutions were given the opportunity to use their own capital to make loans to eligible businesses, and if the businesses qualified for loan forgiveness by using the funds in the required manner, the federal government then would reimburse the lender for the capital it used. The lenders also received loan fees and earned interest on whichever loans were not deemed forgivable.
NI President Elissa Sangalli said minority business owners, who often are left out of traditional lending opportunities, did not have relationships with the banks or credit unions doling out most PPP loans, and even when they did, most financial institutions did not have the appetite to issue smaller loan amounts, which provided less of a return on investment under the original fee structure of the PPP program.
According to the Center for Public Integrity, the largest eligible businesses got their PPP money first, while businesses trying to get loans under $50,000 had to wait weeks or months. Even before the pandemic, low-income communities had less access to financial products. During the pandemic, most PPP loans didn’t reach a large share of businesses in the lowest-income communities.
NI wanted to fix that disparity and reached out to colleagues, friends and partners to find businesses that were left behind. It received referrals from more than two dozen sources, including the West Michigan Hispanic Chamber of Commerce, Rende Progress Capital and Grand Rapids Opportunities for Women (GROW), with which NI has existing partnerships, and to a bunch of small banks across the state that serve farmers, sole proprietors and self-employed service providers.
Here are some of the stories of the West Michigan small business owners who received PPP loans:
Shannon Cohen, founder of Shannon Cohen Inc., who is an inspirational speaker and entrepreneur based in Grand Rapids, said she spent months fruitlessly applying for pandemic relief funds. She eventually decided that energy was better directed at growing her business.
“I just stopped applying. I was jaded. I saw the data that showed the inequities in lending,” she said.
But then, NI helped her get a PPP loan.
“It was a wonderful experience,” Cohen said. “It restored my faith.”
Jeff Smith owns South Shore Resort on Twin Lake, south of Muskegon. He and his daughter, Chloe, run the family business and had to use Smith’s retirement funds to keep it going during the dismal summer of 2020. They were applying for every loan and grant they could find, but they were either told to try elsewhere or got no response at all. NI reached out and helped Smith secure a PPP loan. He remembers getting the phone alert when the money was deposited — and the massive relief he felt.
“When you see your kids putting their heart and soul into something, with no pay, doing it for their dad, well, that’s tough,” Smith said.
Paola Mendivil said running a restaurant is like raising a baby: “You have to care for it, take care of it,” she said. She co-owns El Granjero Mexican Grill on the West Side of Grand Rapids with her mother, Mercedes Lopez Duran. There were times during the past year — with shutdowns, protocols, capacity changes and more — that Mendivil felt like throwing in the towel, but El Granjero is her baby.
She found out about NI and its PPP efforts through the Hispanic chamber, and El Granjero qualified for the largest loan amount of any NI PPP loan recipient in Michigan.
Rick Beisiegel is the owner and sole employee of Vital Signs and Graphics, a Newaygo-based business he started in 1982.
“I wanted to own my own business so I can be a family man,” he said.
When the River Country Chamber of Commerce of Newaygo County posted about NI’s willingness to help small business owners navigate the PPP journey, Beisiegel called.
“They were really knowledgeable and accessible,” he said. “When I called, I got a person and didn’t have to push buttons and numbers to connect to someone.”
Quazaa Mayberry’s business model is a bit unusual, but it works, he said. Mayberry is a Grand Rapids street vendor who sells at pop-up shops and flea markets. His shop, Quazaam’s, sells clothing, masks, bags and more. The pandemic hit him hard “financially, emotionally and mentally,” he said. He had no luck applying for federal relief, mostly because he’s “a one-man show.” But then a referral from Rende Progress Capital, a minority-led CDFI in Grand Rapids that NI has worked with regularly, connected him with Sangalli.
Sangalli said NI’s ability to help those who didn’t think they could qualify for help was truly rewarding.
“We did 87 PPP loans, and in my mind, that translates to at least 87 families that received support,” she said.
Although the PPP program has ended, Sangalli said it’s important for people to know that NI will continue its mission of making loans to entrepreneurs, startups and small businesses to cover anything from working capital to equipment to becoming part of the healthy food ecosystem. NI currently has no loan size minimum, but its loan amounts tend to run in the $50,000 to $500,000 range.
“Northern Initiatives does more small business loans than any other CDFI in the state, and we were really honored to be able to support this many small businesses (through the PPP),” she said.
BY THE NUMBERS
Since the beginning of 2021, Northern Initiatives has:
- Helped 87 small businesses get PPP loans
- Loaned $1,023,260 in PPP funds, with an average loan amount of $11,000
- Made 52% of its PPP loans to diverse borrowers
- Made loans in 36 counties in Michigan
Source: Northern Initiatives