I was fortunate enough to join the team at Venture North Funding & Development in October 2021. Since joining the team, I’ve come to realize just how little most individuals in the entrepreneurial ecosystem know about CDFIs and how we fit into the larger lending landscape.
So, let’s start there: what is a CDFI? A CDFI is a Community Development Financial Institution with emphasis on the word ‘community’; meaning we’re often very in-tune with the needs of the communities in which we’re meant to serve. There are more than 1,200 CDFIs across the nation who finance everything from affordable housing, small businesses, community facilities, health care centers, and other projects that spark growth. Each CDFI is a mission-driven institution with commercial financing services helping economically disadvantaged people in underserved communities.
Our focus at Venture North is specifically targeting small businesses and our mission is to unlock the potential of under-resourced business owners and entrepreneurs throughout the ten counties of Northwest Michigan. We do this by providing financing with competitive rates, flexible repayment terms, and providing our borrowers with business coaching services or helping to connect them to the right resources for their needs.
We know that every small business fits into the community in which it landed. Each of these business owners saw a need and (hopefully) developed a plan for how their small businesses would uniquely meet the needs of that community. Two of the top five reasons that businesses will fail include both a lack of planning and/or insufficient capital. And when a business is sidelined by a crisis (i.e., a family member getting sick, a road getting shut down for repairs, a pandemic, you name it), that lack of planning or cash becomes increasingly evident often leaving business owners with very little ways to turn for help.
That’s what makes a CDFI different from traditional lending institutions. While we want to get the needed capital into the hands of the business owner to ‘right the ship,’ we also have the capacity and resources to provide that individual the necessary coaching or connections as a means of creating a support network around them to ensure their long-term success. We want those existing businesses to stay in their respective communities, providing jobs, and ultimately getting out of and staying out of crisis-mode. And, we know that may mean taking a bit higher risk that another lender might not be comfortable taking or have the ability to finance the entire need – we may be able to provide a gap loan, if that’s the case.
But, what about start-ups? Yes, we love to work with and finance start-ups too. We always encourage new start-ups to work with their local banking institution first. However, maybe that entrepreneur is lacking the collateral needed to back the loan or that lender is willing to only finance a piece of the deal or maybe that new business fits within an industry that lender isn’t comfortable financing due to the higher risk. That’s where we can come in.
We’re often a very good fit for small business owners when they’re feeling “stuck” with their capital or other growing needs.
As our vision describes, we want to make certain that every under-resourced business has the tools to reach their full potential and contribute to the resilient, sustainable, and thriving communities across Northwest Michigan. If you’re interested in connecting with Venture North, you’re welcome to visit our website at www.venturenorthfunding.org or by calling us at 231-995-7115.