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.
Business Loans
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.
Yes, owners of the business are asked to personally guarantee the loan for the business. It tells the lender that the business owner is serious about their business and about repaying their debts. A business owner should understand that he or she may even be responsible for the loan after the business has been dissolved. When you issue a personal guarantee, you are acting as a cosigner on the loan.
There is a strong correlation between the way people handle their personal debt obligations and the way they handle or will handle their business debt obligations. However, sometimes there are hardships in one’s life that result in a temporary inability to make all debt payments on time. Northern Initiatives will want to understand if there are extenuating circumstances for delinquent credit. In those situations, a written explanation describing why the payments were late or not paid will be required.
Collateral is typically required for a business loan from Northern Initiatives. If the loan request is to purchase business assets, those assets generally become collateral for the loan. Although cash flow from the business is the primary source of repayment for the loan, Lenders consider collateral to be the secondary source of repayment. Your loan officer will work with you to determine what collateral is appropriate for the type of business loan requested. Examples of collateral may include a general filing on assets of the business, equipment, vehicles, commercial real estate, residential real estate or vacant land.
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.
The term annual percentage rate of charge (APR), describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc.
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.
The process of approving a business loan will take more time than other loans such as consumer or residential mortgage loans. A customer that submits a complete loan application package, including the loan application, financial statements, and all other documents required is the best way to expedite the review and approval process. Loan officers review the application carefully with your future success in mind. For a small business loan less than $50,000, the customer could have the loan proceeds within 30 days. For loans over $50,000, it takes two and a half months on average (may be more or less depending on the complexity) from the date a completed loan application is submitted to the day the loan agreements are signed and the loan proceeds dispersed.
The first step is to connect with an advisor to develop a business plan. Based on your region contact your local SCORE chapter or Michigan Small Business Development Center which provide complimentary assistance for developing these documents. Once you have a plan outlined and are ready to request financing, complete our online application to get started. If you are in the U.P., we are in an economic development hub with several other organizations, including specialists in business plans and startups, all in the same location.
Credit Reporting
Northern Initiatives has joined Credit Builders Alliance, a nonprofit initiative to report your repayment history to the major credit bureaus. This enhancement allows the payments you’re already making to help build your credit history, which may open opportunities for other safe, affordable financing for yourself and your business.
This is a tremendous opportunity for you to establish or improve your national credit rating and score. Making your payments on schedule will positively impact your credit score, potentially helping you access additional financing options in the future.
As of June 2025, Northern Initiatives reports loan repayment history to the three major consumer credit bureaus (Experian, Equifax, and TransUnion). At this time, we do not report to commercial credit bureaus.
Credit reporting applies to everyone who is financially responsible for the loan, including the primary borrower, any co-borrowers or co-signers, and any individuals who provided personal guarantees.
How does credit reporting benefit me as a business owner?
Credit reporting provides you an opportunity to establish or improve your personal credit history, which can impact your business in several ways:
- Access more favorable business loan terms and interest rates
- Qualify for additional financing options with other lenders
- Reduce personal guarantees required for business contracts
- Build financial credibility that can benefit your business relationships
- Potentially lower insurance premiums
Why does Northern Initiatives report to credit bureaus?
Northern Initiatives reports loan payments to help our borrowers build consumer credit history. We currently report to consumer credit bureaus only, not commercial credit bureaus. We believe this provides significant value beyond just the loan itself, as it allows the payments you’re already making to work toward building your personal financial future.
How does Northern Initiatives report loan payments?
Northern Initiatives reports your loan repayment history to the three major consumer credit bureaus (Experian, Equifax, and TransUnion). At this time, we do not report to commercial credit bureaus.
Who is included in the credit reporting?
Credit reporting applies to everyone who is financially responsible for the loan. This includes:
- The primary borrower
- Any co-borrowers or co-signers
- Any individuals who provided personal guarantees
Each person’s personal credit report will reflect the payment history of the loan. On-time payments can help build positive credit for everyone connected to the loan, while late payments may negatively affect everyone’s credit scores.
How often is my credit information updated?
Northern Initiatives reports to all three major consumer credit bureaus (Experian, Equifax, and TransUnion) monthly. We typically submit our reports within the first 7 days of each month.
Once we submit the information, it may take 30-45 days before the updates appear on your credit report. This processing time varies by credit bureau and is outside our control.
In general, credit information is updated continuously as various lenders report their data. Most lenders, like Northern Initiatives, report to the credit bureaus monthly. However, not all lenders report to all three bureaus, which is why your credit scores might vary slightly between bureaus.
What factors influence my credit score?
Your personal credit score is determined by five main factors:
- Payment history (35%): Whether you make payments on time
- Credit utilization (30%): How much of your available credit you’re using
- Length of credit history (15%): How long you’ve been using credit
- Credit mix (10%): The variety of credit accounts you have
- New credit inquiries (10%): How often you apply for new credit
What is credit utilization and why is it important?
Credit utilization is the percentage of your available credit that you’re currently using. For example, if you have a credit card limit of $10,000 and a balance of $3,000, your utilization is 30%. It’s generally recommended to keep your utilization below 30% to maintain a good credit score.
How long does information stay on my credit report?
- Positive accounts in good standing: 10 years from the date of account closure
- Negative information (late payments, collections): 7 years from the date of first delinquency
- Bankruptcies: 7-10 years, depending on the type
How can I improve my credit score?
Here are simple, effective ways to improve your personal credit score:
- Make all payments on time (set up automatic payments if possible)
- Keep credit card balances low (utilization below 30%)
- Don’t close old credit accounts, even if unused
- Limit applications for new credit to when truly needed
- Check your credit report regularly for errors (get free reports at annualcreditreport.com)
What if I’m having trouble making my loan payments?
If you’re experiencing difficulty making a payment, please contact your Northern Initiatives lender before your payment is due. We may be able to offer payment arrangements or other options to help you maintain good standing.
How can I check my credit report?
You can request your free credit report from each of the three major credit bureaus at www.annualcreditreport.com.
What is considered a “past due” account?
An account is considered past due when it is 30 or more days past the due date. Late payments can significantly impact your credit score.
What’s the difference between “hard” and “soft” credit inquiries?
- Hard inquiries occur when a lender checks your credit report as part of a lending decision. These can temporarily lower your credit score and remain on your report for two years.
- Soft inquiries occur when you check your own credit, when a company checks your credit for account monitoring purposes, or for pre-approved offers. Soft inquiries don’t affect your credit score.
Will shopping around for a loan hurt my credit score?
Multiple credit inquiries for the same type of loan (like a mortgage or auto loan) within a short period (usually 14-45 days) are typically counted as a single inquiry by credit scoring models, minimizing the impact on your score.
What if I find incorrect information on my credit report?
If you find inaccurate information on your credit report, you have the right to dispute it.
For errors regarding your Northern Initiatives loan specifically:
- Contact your Northern Initiatives lender directly with questions
- File an official dispute either through the credit bureau directly OR in writing to Northern Initiatives
For general credit report errors, you can file a dispute:
- Online through the credit bureau’s website
- By mail with a dispute letter
- By phone
The credit bureau must investigate the dispute within 30 days and notify you of the results.
What information should I include in a dispute?
When filing a dispute, include:
- Your complete name and address
- The specific information you’re disputing
- Why you believe the information is inaccurate
- Copies (not originals) of documents supporting your position
- A request for correction or deletion of the information
For more information go to: https://www.consumerfinance.gov/ask-cfpb/how-do-i-dispute-an-error-on-my-credit-report-en-314/
Business Services
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 info@northerninitiatives.org 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.
Yes, NI often partners with banks as a subordinate lender. Bankers are also NI’s number one referral source. Northern Initiatives also can help banks accomplish their Community Reinvestment Act requirements by helping disadvantaged entrepreneurs start and grow a small business.
A donation to Northern Initiatives will go towards supporting the start and growth of a small business in your community. You can also designate your donation to support something specific like coaching assistance or an entrepreneur in a particular community.
