Small businesses located in Michigan will be among the first ones in the entire country eligible to have access to a new public-private loan program that is directed at encouraging investment in clean energy or economically distressed areas, according to a statement from officials.
U.S. Small Business Administration head Karen Mills, along with Governor of Michigan Rick Snyder, Dow Chemical Co. Chief Andrew Liveris and others, announced the $130 million impact investment program. These private and public funds will be available over five years and will be a part of a broader effort to make $1 billion available across the nation.
The initiative will work with private institutional investors in order to help identify and provide money to private equity fund managers who invest in the targeted companies. Dow is chipping in $15 million with state retirement and Natural Resources Trust finds investing $35 million. The remaining $80 million will come from the SBA with absolutely no cost to taxpayers.
Liveris stated that the Start-Up America initiative is a way to make sure the customers of Dow as well as Dow’s suppliers have access to capital in order for them to grow. It is also a great investment for the company. “We’re starting something in Michigan that’s a national initiative,” Liveris said. “We’re actually going to get good returns on this.”
However, the program is not aimed at start-up companies that need venture capital but rather at already established businesses that are having trouble getting loans to expand or do more research and development, according to Head of Credit Suisse’s Customized Fund Investment Group.
This money will only be distributed to companies that are headquartered, have a signified presence in and/or plan to expand or relocate in Michigan. The loans do have to be repaid with an additional 4% interest and some additional fees. Each eligible company will have the opportunity to receive anywhere from $5 million to $15 million.
According to Mills, “Many of the high-growth firms in Michigan simply need more capital to grow, scale up and hire. Through this new public-private partnership . . . we will leverage even more money into Michigan small businesses.” Mills went on to say that many states are under consideration for participation in the loan program, though a decision has not been made on which state will be next.
Governor Rick Snyder (R-MI) is welcoming the chance for Michigan to be the first state to participate in the program launched as a part of Obama’s initiative to spur high-growth entrepreneurship and create more jobs. Though it seems hard to create more jobs when the Obama Administration is shutting down 800 data centers nationwide at the expense of tens of thousands of jobs.
“With all the engineers and the R&D that happens in Michigan, we have a lot of growing companies, and access to capital is a key ingredient in growing them,” stated Andy Dillon, Michigan’s State Treasurer. “We have a chance to reassert ourselves as the entrepreneurial leaders in the country.”
Source: Bloomberg Businessweek – SBA, others announce Michigan small business loans