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.

A community development financial institution (CDFI) is a financial institution that provides loans to small business owners, entrepreneurs, and community organizations that might not qualify for loans for banks for a variety of reasons. Northern Initiatives is a nonprofit CDFI. Many times, lending is focused on low-income, disadvantaged, and underserved communities. CDFIs are certified by the Community Development Financial Institutions Fund (CDFI Fund) at the U.S. Department of the Treasury, which provides funds to CDFIs through a variety of programs.

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. 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.

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.

Each one of our loans comes with access to a suite of practical trainings and tools on topics that matter to every business owner – startup, money, marketing, and management. The process starts with the Business Advancement Review which helps to determine what skills you may want to strengthen to help you reach your business goals. Upon completion of the review, you’ll have 24/7 access to a custom training plan which includes videos, presentations, hands-on tools and templates. Upon completion of the training plan you will have access to a coach to create a custom action plan to reach your goals.

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 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.