News Release
For Immediate Release
April 28, 2025
Socially and economically disadvantaged Michigan-based entrepreneurs and small businesses to be hurt by federal cuts
Nearly $2 million cut from Northern Initiatives grant that provides assistance and tools to help access capital
Contact:
Jason Manshum, Senior Counsel
manshum@seyferthpr.com
800-435-9539
GRAND RAPIDS, Mich. – (April 28, 2025) – Northern Initiatives, a community development financial institution (CDFI), has been notified by the U.S. Department of Commerce Minority Business Development Agency (MBDA) that it has terminated a federal Capital Readiness Program grant, effective immediately. This jeopardizes small business owners and entrepreneurs because the grant helps close the entrepreneurship gap between socially and economically disadvantaged individuals by providing technical assistance for entrepreneurs starting or scaling their businesses who are seeking various forms of capital.
In its letter, the MBDA stated, “…MBDA has determined that your grant is unfortunately no longer consistent with the agency’s priorities and no longer serves the interest of the United States and the MBDA Program. MBDA is repurposing its funding allocations in a new direction in furtherance of the President’s agenda. Independently and secondly, the President’s March 14, 2025 executive order mandates that the MBDA eliminate all non-statutorily required activities and functions.”
The termination comes after Executive Order 14,238, “Continuing the Reduction of the Federal Bureaucracy.” It directed seven federal agencies, including the MBDA, to eliminate the non-statutory components and functions to the maximum extent consistent with applicable law, and to reduce the performance of the statutory functions and associated personnel to the minimum presence and function required by law.
The MBDA is the primary federal agency tasked to assist minority-owned business enterprises in overcoming the history of social and economic disadvantage that has limited their participation in America’s economy.
“CDFIs are the on-ramp for people to enter our economic system, and we have a really significant impact providing affordable and flexible capital throughout the state of Michigan to small businesses, to first-time homeowners, and for community projects that wouldn’t otherwise happen,” Elissa Sangalli, president Northern Initiatives and chair of the Michigan CDFI Coalition said. “CDFIs have often been a quiet part of the economy, but a very important part.”
In 2023, Northern Initiatives was one of 43 CDFIs across the country and the sole CDFI in Michigan to be awarded a four-year, $3 million grant under the MBDA Capital Readiness Program. The grant allows Northern Initiatives to provide technical assistance to entrepreneurs and small businesses it would not otherwise be able to serve, including to the more than 100 small businesses per year which receive services from Northern Initiatives supported by the MBDA Award.
From the $3 million grant, $1.875 million in funding is still scheduled to be received over the grant’s duration. Without the remaining funds from the MBDA grant, hundreds of socially and economically disadvantaged entrepreneurs and small businesses will not receive access to the technical assistance and financial tools that could help them access capital and succeed, negatively impacting the State of Michigan’s economic development efforts.
Amy Shindorf, owner and founder of Four Leaf Brewing in Clare, Michigan, is a recipient of a loan from Northern Initiatives. When she was opening her business, the initial startup loan helped her to make building improvements and buy brewing equipment.
“My relationship with Northern Initiatives has become so secure and established,” Shindorf said. “I initially went to two banks and didn’t have a positive experience. Now, I can’t imagine having to go to a traditional bank.”
Northern Initiatives’ annual budget relies on the MBDA grant funding, as it allocated resources, developed programs, and hired staff based on the anticipated receipt of its funding. The impact will likely cause a reduction its capital readiness programming, including the number of workshops and one-on-one technical assistance.
Northern Initiatives provided $9.4 million in small business loans to about 100 borrowers last year, about a third of which involved federal dollars. Over the last 30 years, Northern Initiatives has made more than $112 million in loans to small businesses.
“We’ve touched almost every main street, every community block with one of those loans,” Sangalli said. “Many of those businesses continue on to create jobs and wealth for their communities and are a really important part of their communities.”
CDFIs were created in the mid-1990s during the Clinton administration via the Riegle Community Development and Regulatory Improvement Act of 1994. Michigan is home to more than 55 certified CDFIs with 47 headquartered in Michigan, including 16 loan funds, 30 credit unions, and one CDFI bank Collectively. Together, they have deployed $5.6 billion across 59,000-plus unique loans over 17 years. This has led to more than 41,000 permanent jobs, 27 million square feet of real estate development, and 16,000 housing units created, with 72% of those deemed affordable. They also supported 25,000 small or microbusinesses. In fiscal year 2022 alone, Michigan CDFIs deployed more than $1.3 billion in funds to help create jobs, affordable housing, financial health, and opportunity for all. There are more than 1,430 CDFIs across the country.
About Northern Initiatives
Northern Initiatives is a Michigan nonprofit that support entrepreneurs and small businesses. It is the largest nonprofit Community Development Financial Institution (CDFI) in Michigan focused on small businesses and is a State Small Business Credit Initiative (SSBCI) capital provider. It provides capital readiness programs, trainings and workshops, technical assistance, funding source opportunities, and loans to new and small businesses.
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