Microloans offered to small businesses in Detroit, Highland Park and Hamtramck
The Detroit Development Fund will get a loan of up to $1 million to distribute as microloans to small businesses in Detroit, Highland Park and Hamtramck that are reopening following shutdowns due to COVID-19.
The loan approved by the Michigan Strategic Fund Board on Tuesday will allow the nonprofit to provide what it anticipates will be 30 to 40 microloans to businesses that are unable to obtain bank financing. The microloans can range from $5,000 to $200,000.
Applications will be available for small businesses on July 6.
"We're very pleased that the MEDC allowed us to participate in this program," said Ray Waters, president of Detroit Development Fund. "We have noticed, because we are actively involved in the market, a lot of small businesses have really been hurt by this virus. We have several that we've already loaned money to using our other funds, but this fund gives us the flexibility to help some of these businesses weather this storm where they maybe have to pay their employees or rent. It gives us great flexibility to do that."
Waters said businesses that are in need of help include restaurants, clothing stores and small contractors.
As a condition of the state's loan to the Detroit Development Fund, at least 70% of the projects funded will be for small businesses in an economically disadvantaged area.
The requirements of the loans are:
- Proceeds be used for working capital, acquisition of machinery and equipment, inventory and real estate acquisition and improvement.
- Collateral is required in some form for all loans.
- All individuals holding at least 20% ownership in the business must make a personal guarantee on the loan.
- Loans will have an interest rate of not more than 7%.
Businesses interested in applying for a loan can visit https://www.detroitdevelopmentfund.com.