The Michigan Microloan Fund Program got its start two years ago loaning seed capital to start-ups, and the first of those loans are starting to come due. One has even been paid back early.
"We have $400,000 in loans that are due between now and the end of the year," says Skip Simms, a senior vice president of Ann Arbor SPARK
and manager of the Michigan Microloan Fund Program
The $1.5 million fund got its start in the wake of the financial crisis and the frozen commercial credit lines that followed. The fund makes five-figure loans to local start-ups in dire need of capital to accelerate growth. These loans run two years before a balloon payment is due for the full amount plus 12 percent interest. That money is reinvested into the fund to make more loans in the future. Ann Arbor SPARK has made 34 loans worth $1.2 million.
, makers of the Protech Dent mouth guard, is the first start-up to repay the loan. The Ann Arbor-based firm repaid its $15,000 microloan in 15 months, nine months before it was due. On the other end of that spectrum, the Michigan Microloan Fund Program has had to write off two loans and might have to work out payment plans with a penalty for a few more.
"They're high-risk," Simms says. "We anticipate that some of these entrepreneurs won't make it." He adds that a majority of the loans will be repaid in full and that the repayment number will "exceed expectations."
Source: Skip Simms, a senior vice president of Ann Arbor SPARK
Writer: Jon Zemke
Read more about Metro Detroit's growing entrepreneurial ecosystem at SEMichiganStartup.com.