The Small Business Administration District Director for the State of Michigan, Gerald Moore, was recently in Boyne City to meet with community leaders, and business owners who have utilized loans through the Small Business Administration.
“We think we have one of the most relevant and impactful missions, and that is to help Americans start and grow their businesses,” said Moore. “When you tend to think about small businesses you might think about two people, three people, we’ve heard some of those numbers hear but our agency helps fund firms that employ 500 people—it depends on the industry that you’re in.”
Moore’s duties include delivering Small Business Administration programs and services in Michigan including the SBA loan program, the government contracting and minority enterprise development programs and oversight of the Michigan Small Business Development Center, SCORE, Women’s Business Centers and Veterans Business Outreach Center.
“Our job really is about helping small businesses throughout this country … grow and hopefully helping them hire and hopefully helping them create those jobs,” Moore said.
Moore said, over the last three years, he has visited every one of Michigan’s 83 counties.
“Boyne City ranks up there,” he said. “You have a wonderful, beautiful community—don’t take it for granted.”
Moore said his agency is working to connect small businesses to the tools and resources they need to grow.
“Whether it’s what we call ‘pre-ventures’ start-up businesses looking at what it takes to start a business, develop a business plan, potentially gain access to capital, finding ways to tap into those new markets, we do all of those things,” he said. “So, whether you’re a small business that’s been around for 15 or 20 years and you’ve got 250 employees or whether you’re thinking about starting your business next week or in the near future, let the Small Business Administration assist you.”
Moore said the SBA’s services are already paid for by tax dollars, and most of the services the agency offers are free of charge.
“A lot of you are looking to expand to either grow the business physically by expanding it or looking to get locations and satellite offices in different locations, and that’s what we do,” he said. “We can help you with those loans to help you grow and expand in the way you need to.”
Moore added, “This is not your granddaddy’s or your grandma’s SBA. We have done a lot over the years to streamline our services to become more efficient and to use technology to better assist you.”
Moore said one of the biggest issues he sees among small businesses is their ability to diversify.
“One of the ways that you do that is working with the federal government or working with the state government or your local municipality,” he said. “What we do at the SBA is we help connect small businesses to those entities so they can diversify their portfolio.”
Moore added, “The federal government buys everything from soup to nuts. People think, ‘Well, I don’t make tanks, I don’t make machine guns, how could I possibly service the federal government?’ Well, if you’re an accountant or you’re a CPA, you can do business with the federal government. If you do snow removal or landscaping, you can do business with the federal government.”
One of the services the SBA offers is guaranteeing percentages of loans obtained through traditional lenders. And, the guarantee is not funded by tax dollars but by the fees paid by SBA borrowers.
Moore said the default rate on SBA loans is similar to that of traditional lenders.
Boyne City Manager Michael Cain asked Moore about a business owner he knows who cannot seem to get a line of credit.
“Are there any tools or suggestions for somebody like?” Cain said.
Moore said it sounds like permanent working capital would be right for such a situation.
“Most small businesses need permanent working capital,” he said. “They know that if they’re making 10,000 widgets a day, the moment they get that order for 100,000 widgets they are sunk, because how do they procure the inventory and finance that inventory to be able to fulfill that order?”
Moore added, “So, what we do is work very closely with our small businesses to help them with things like a line of credit.”
Moore said the lending institutions are the ones who make the final determination and they do so based on the five Cs: character, credit score, capacity, collateral, and cash-flow.
“What they have to be able to do is use that underlying data to be able to support that loan,” Moore said… “Can cash-flow from the business service the debt? If it can’t, you’re not going to get the loan.”
Moore said the SBA would work with the business owner’s past performance and future projections.
“Good deals get done—period. End of story,” he said. “The State of Michigan, as a district … has been either one or two in the entire nation. We do, volume-wise, more SBA guaranteed loans than 66 other districts across the nation. So, we know that our small businesses in Michigan are getting access to the capital that they need to grow. And that’s a good news story. That’s a testament to resource partners, economic development professionals, and certainly the lending community.”
Moore then presented the District Director’s Award to Northern Initiatives.
“They have done a phenomenal job of working with the small business community and the communities they serve,” Moore said. “We really can’t do what we do as an agency if they’re not out there doing what they do.”
Northern Initiatives President Dennis J. West said his group is a creation of Northern Michigan University.
“We were created because, when we started, the Upper Peninsula had an unemployment rate of 15 percent,” he said… “They set us up to create a more diverse and resilient set of economies in the Upper Peninsula, and that’s where we focused our attention from 1994 to 2007.”
He added, “As a non-profit, we’re doing the deals that lenders can’t do, won’t do or shouldn’t do, and the fact of the matter is that we’re in a world where a lot of people have blemishes and so, consequently, we try to help overcome some of those blemishes to make sure that people actually have access to capital to start and grow a business.”
Approximately one-third of Northern Initiatives’ loans go to start-ups—40 percent go to women-owned businesses. One-third go to manufacturers.
Northern Initiatives has given nearly 750 loans totaling nearly $43 million. Northern Initiatives partnered with the SBA on 450 of those loans.
And, this is the third year where Northern Initiatives is writing more loans in lower Michigan than in the U.P. Go to SBA.gov for more info.