A $500,000 grant from Wells Fargo Bank will enable Northern Initiatives to put a larger focus on diversifying its lending.
Much of the funding will go to translate into Spanish the content on an online portal for small business coaching and training, broadening the reach for Northern Initiatives’ assistance to owners and entrepreneurs.
As Northern Initiatives began expanding across the state in early 2018, it started working to translate content on the portal. CEO Dennis West cites the sizeable Hispanic populations in Western and Southwestern Michigan that could benefit from the portal’s webinars and training articles.
“As we’ve done our further expansion in Western Michigan, we realized and began to take stock of where we were and where we were beginning to work, and it was important to do a lot more translation of our material,” West said. “The extent to which we can give more people knowledge-building tools and resources that are easy to understand, the more likely we are to really add more diversity, equity and inclusion through our work.”
Northern Initiatives has increased its lending diversity 61 percent over three years.
The Marquette-based Northern Initiatives provides small business loans and training to entrepreneurs in about 75 counties in Michigan, plus five counties in northeastern Wisconsin. The organization’s Initiate portal, launched in 2016 to deliver virtual training content, has allowed Northern Initiatives to grow the portion of its clients receiving ongoing technical assistance from 40 percent to more than 75 percent.
Northern Initiatives counselors perform a pre-assessment to identify the strengths and weaknesses of prospective borrowers seeking a loan. That assessment guides them to training content on the portal.
The Initiate portal has spread well beyond Michigan in the last two years. Nine other federally-designated community development financial institutions (CDFIs) that work with small businesses in 32 states now use Initiate under a license agreement with Northern Initiatives. The organization expects to sign license agreements soon with even more CDFIs, West said.
“It’s helping them raise the capacity of technical assistance delivery in many communities out of little Marquette,” he said. “It’s causing us to have more ability by using technology and people to reach more of our customers and customize the coaching content that we deliver to them.”
The Wells Fargo grant, made through the bank’s Diverse Community Capital program, also allows Northern Initiatives to further expand Initiate by adding more content and offering the portal to smaller organizations, West said.
Content on the platform focuses on money, marketing and management. Additional content will cover human resources and “ways to think about leaning up your operations,” West said.
Guillermo Cisneros, executive director of the West Michigan Hispanic Chamber of Commerce in Grand Rapids, welcomes the Northern Initiatives effort. Northern Initiatives has provided business loans to a few Hispanic Chamber members.
The Chamber also has an effort underway to translate entrepreneurial training materials in areas such as accounting, HR and customer service and ease a barrier for many business owners whose primary language is Spanish, Cisneros said.
“If these Latino business owners become productive and efficient within their businesses, the entire economy of the region will benefit,” he said.
In backing Northern Initiatives financially, Wells Fargo wants to support lending diversity and “help remove barriers and put more small businesses on a path to financial success,” said Charles Lott, commercial relationship manager at Wells Fargo in Grand Rapids.
“Northern Initiatives is deeply embedded in the community and has the skill to deliver personalized coaching and services to underserved small business owners,” Lott said. “Together we can help more diverse entrepreneurs reach their full potential and stimulate job creation in the process.”
So far in 2019, Northern Initiatives has provided 77 loans totaling $6.5 million to small businesses across the state. The collective dollar value of loans through mid-August exceeded loans made in all of 2018, when Northern Initiatives closed on 93 loans for $5.7 million, West said.
The organization has several credit requests in the pipeline that will push the 2019 loan volume similar to what it experienced in 2018 and add to the dollar value by another $8 million to $9 million. One-third of the loans go to startup businesses, West said.
Across West Michigan, Northern Initiatives through September approved two loans in Kent County for $933,000 and has two more pending. The organization approved six loans in Muskegon County for $353,000 and has one pending that will raise the collective dollar value to more than $1 million.
Northern Initiatives closed on its first loan earlier this year in Ottawa County and has three loans pending in Kalamazoo County.
Clients often are referred to Northern Initiatives by bankers who are unable to provide credit to the borrower because they lack adequate collateral, have a low personal credit score, or lack a track record in business, among other reasons.
“We do the loans that banks can’t do or shouldn’t do,” West said. “Our loans are really based on character and cash flow. We believe in the borrower.”
Northern Initiatives’ capital comes from the U.S. Small Business Administration, U.S. Department of Agriculture, and foundations across the state.