Communities We Serve
Nearly everywhere in our service area experienced improvement in jobless rates for September. You can view the County breakdown in the 2018 Latest Data. Jobless rates nationally and in Michigan and Wisconsin were lower. Worker shortages are particularly acute in some places, but widespread. Decades ago, economists would say that 3% jobless rates signify full employment. In many places that rate has been surpassed..
View the Latest Data Sheet (Adobe PDF File).
How Northern Initiatives Fared
Northern Initiatives made its 750th loan in the UP, and we have provided over $42M in loans there. Our first thirteen years of lending were exclusively UP-focused. The 750th loan was made to Superior Culture, which has a storefront on 3rd Street in Marquette, producing Kombucha. The tap room has a nice atmosphere and owner Alex Rowland uses lots of local products in his alcoholic and non-alcoholic offerings. Staff recommend flights for a first timer to find what fits your palette. www.superiorculturemqt.com
Monthly Musings from President, Dennis West
My wife Kayla is a significant volunteer for the Marquette rotating homeless shelter, Room at the Inn, and I am an occasional volunteer. We were helping with intake the other night and there was a woman and her son, who were there for the first time. The woman was talking to my wife at one end of the table, while I was quietly sitting at the far end of the table. The woman suddenly looked at me and said, “even that guy has compassion.”
I was on a call Friday with a group, and the topic of the call was “online small business lending.” A participant was a small business owner with a rapidly growing business who needed cash for order fulfillment, and as a new business could not get additional bank financing. The interest rate he is paying is 6 figures! Some would say that this is how markets work, and where the “buyer beware” is appropriate. And, on the other side, when a small business cannot manage at these rates and under these conditions, the market failure and job losses are born in communities and neighborhoods, not on Wall Street, the source of the capital or Silicon Valley – the builder of the apps and algorithms.
We all know that there are very smart people who can use advanced algorithms. Those advancements allow us to look at risk and calculate remarkable rewards for taking that risk. Because the assumption is that we can expect to lose 9 or 10%, we are justified in incredibly high returns while also locking up all the small business’ collateral. This is, however a deficit view, in that investors should be rewarded because they are willing to take high losses.
Northern Initiatives and our Community Development Financial Institution colleagues understand this risk, and we manage it to losses of less than 3%, while charging rates less than 1/10Th and with longer terms than what the participant on the call was enduring. In fact, we take more risk because a third of our loans are start-ups, whereas the typical financial technology (fin tech) firm requires that a company be generating over $100,000 in revenue.
This brings us to an enormous challenge for our collective futures. Can the CDFI industry come closer to the speed and the efficiencies of fin-tech and have our “compassion” survive? Will the capital that funds this new risk and reward structure, find its direction into the “compassion” of an abundance view, of wanting to lift up and grow businesses bringing commerce and jobs to our neighborhoods and communities? This is a sobering challenge as clearly there is market needs for small businesses.
Opinion columnist for the NY Times, David Brooks recently wrote, “I don’t know what the next political paradigm will look like, but I bet it will be based on abundance, not deficits; gifts, not fear; hope, not hatred.”
Support Northern Initiatives
#Givingtuesday is coming up this Tuesday! We encourage you to consider a gift to Northern Initiatives this season. Your donation will go toward supporting the growth of small businesses and communities. Click on the image above to donate today!
Northern Initiatives wishes to thank our funders, investors and donors for their continued support. Northern Initiatives provides money and know how to start-ups and growing businesses. We invite you to join us to help more businesses start and grow.