Frequently Asked Questions
About Northern Initiatives
Northern Initiatives is a Community Development Financial Institution. Northern Initiatives provides loans and business services to small business owners and entrepreneurs who create jobs and enable their communities. We work in every county in Michigan.
Northern Initiatives does not offer banking products such as deposit accounts or home mortgages. Thus, Northern Initiatives is able to devote more time and attention to helping a small business owner succeed. A CDFI has a primary mission of community development, serves a target market, is a financing entity, provides development services, remains accountable to its community, and is a non-government entity.
Northern Initiatives provides business loans to existing and start-up companies. Loans range from $1,000 to $500,000. Terms range from 3 to 7 years for working capital and equipment loans to 10 to 25 years for loans related to renovation and purchase of commercial real estate.
The Community Business Loan Fund serves businesses that generally don’t qualify for traditional financing. Loans typically support training, equipment purchases, working capital, and leasehold improvements for new or existing businesses. For every $35,000 loaned, one full-time job must be created. Northern Initiatives administers these funds (formerly known as the Regional Revolving Loan Fund) for several communities throughout Michigan. Go to the Community Business Loan Fund page to learn more.
Yes, in fact more than two-thirds of loans Northern Initiatives made in 2021 went to startups! A business plan is required for start-up businesses as part of the application process. View the complete list of documents to prepare for you application.
Yes, a business plan and projections are required for start-up business loans. The Michigan Small Business Development Center provides complimentary assistance for developing these documents. Find your local MI-SBDC office.
Yes. If you are starting or purchasing a business, you will typically need to make an investment of cash from your own resources in addition to any loans you qualify for. The investment of cash may be from personal savings, equity in real estate or other assets or a gift from a relative. By using your own cash to invest in your business, you are sending the message to lenders and other investors that you believe in your ability to make the business a success and are willing to risk your own equity. The amount to invest will vary based on the situation, but generally 5% to 10% of the total cost of the project is required to come from the business owner. Plus, having enough of your own investment provides additional cushion when things don’t go as planned – and they rarely do. This provides a cushion for those bumps in the road that are hard to predict.
The interest rate will depend on the type of loan and risk associated with the loan. Northern Initiatives generally will charge a slightly higher interest rate than a bank (but less than financing with a credit card and online lenders) because Northern Initiatives is providing a business loan that a bank was unable to approve. Customers are encouraged to apply with their own bank first. If their bank is not able to provide all or a portion of the financing required for the business, Northern Initiatives may be able to help. Fees charged are comparable to other lenders. Your loan officer will provide you with an estimate of fees and interest rate based on your loan request.
Northern Initiatives does not receive funding to provide free money for business capital, although we often partner with other organizations to help administer grants. Grant opportunities are very limited, and we do our best to let customers know when there’s an opportunity for them. Grants.gov provides a list of available federal grants.
Business services including access to the Initiate online learning portal, coaching and trainings are available to all Northern Initiatives loan customers. We also offer pre-loan services and Entrepreneur Education programs.
You will receive an email within 1 week of your closing inviting you to take the Business Advancement Review, the first step to accessing your custom training plan, expert tools and resources. If you haven’t received your invite, contact email@example.com to get started.
Investing and Donating
Northern Initiatives partners with a variety of foundations to support the start and growth of small businesses. Through a Program Related Investment (PRI) a foundation can invest its own resources in a smart and tangible way. Often specific to a particular population or geography, these investments can range from a term of 8-15 years and with a variable interest rate determined by the foundation.