$10 Million by 2020: Venture North Funding & Development increases its capital lending base goals

In the more than two and a half years since its creation, Venture North Funding & Development has built a lending portfolio and name assisting small businesses.

It’s now looking to go broader and deeper into the 10 counties it serves, tapping new partnerships and sources of capital beyond what had been a $5 million lending base and honing in on low- to moderate-income communities as part of its recent federal certification as a Community Development Financial Institution, or CDFI.

“Ultimately, we are trying to promote community development,” said Venture North Executive Director Laura Galbraith. “Our board, they had been able to see the kind of impact that we made with $5 million, and they wanted to see us continue to make that kind of impact.”

Venture North’s track record includes more than $4 million in loans made to more than 70 businesses, with no defaults. And lending goals incrementally increase each year, “with the intent of continuing to help retain and create jobs in the region,” Galbraith said.

As part of its CDFI business-lending plans, Venture North will be putting more focus on its region’s biggest low- to moderate- income areas: Benzie, Kalkaska, Manistee, Wexford and Missaukee counties. Efforts will include outreach, cultivating relationships, and with partners like the Michigan Small Business Development Center (SBDC), “going into communities; sharing what all of us can bring to the table,” Galbraith said.

For example, when Galbraith had an opportunity to speak to the Missaukee County Commission last summer, “she made it a point that we were invited to go along as well,” said Annie Olds, the SBDC’s Traverse City-based northwest regional director. “She has an eye out for us, and vice versa.”

Galbraith said helping areas in need of investment helps the region.

“If these communities are stronger, we feel like the region is stronger,” she said.

As a CDFI, Venture North can partner with other banks and other financial institutions on projects qualifying as investments under the federal Community Reinvestment Act. That 1977 law encourages depository institutions to help meet credit needs of communities where they operate, including investing in low- and moderate-income areas.

Venture North could also form partnerships with nonprofits and community foundations looking at ways to make an impact in the region, and sees the CDFI certification as making Venture North more visible to organizations and financial institutions.

“It kind of opens the doors for us,” Galbraith said. “It’s a whole new world, a whole new network of nonprofits that can become peer to peer (resources) … a whole new market of capital. It really did give us a lot more opportunity.”

Venture North wants to increase its capital lending base to $10 million by 2020, and a $1 million boost toward that goal came in early November from Rotary Charities of Traverse City and Chicago-based financial holding company Northern Trust Corp. Each is lending $500,000 to Venture North, building its assets to $6 million.

The commitments are a significant new source of capital and could be a potential catalyst for other nonprofit alliances and banking-sector interest,  Galbraith said.

She hopes the Northern Trust investment could lead to additional investment from out-of-state banks and help put Venture North “on the radar, that there is work happening in northern Michigan that they may like to be a part of.”

The SBDC’s Olds said that increased funds for Venture North to lend benefits small businesses, particularly those that may have difficulty qualifying for financing from a traditional lender.

“The more financing options that Venture North can bring to the table … it only makes it better for people like us helping them put loan packages together,” she said.

Venture North has and will continue to focus on start-up to second-stage companies; many times the businesses are also clients of the SBDC and its business consulting, training and research services. The SBDC has a contract to provide technical assistance – such as loan preparedness, financial analysis, business plan development, and strategic and succession planning – to Venture North’s loan clients.

Galbraith said Venture North will continue to lend to a wide variety of small businesses. And as a business-focused CDFI in the region, it joins long-established Northern Initiatives, which provides loans and business services to small businesses and entrepreneurs.

The Marquette-based CDFI has worked with Venture North on loans – each bringing a piece of the deal structure – as well as helped Venture North with underwriting and provided other support.
Galbraith said Northern Initiatives has “been a great partner – akin to a big sister.”

The two CDFIs have access to different funding sources and technical assistance, and one may fund a project that the other may not. There’s ample room, and need, in the region for both, said Galbraith and Northern Initiatives President Dennis West.

“If communities are going to be able to have their maximum entrepreneurial potential,” West said, “you need alternative lenders like Venture North and Northern Initiatives.”

Amy Lane is a freelance journalist and former reporter for Crain’s Detroit Business, where she covered business, state government, energy and utilities for nearly 25 years.