Relieving the Cash Crunch (and Other Ways Venture North Helps Small Businesses)


By Ross Boissoneau

For Doyle Berg, the challenge was keeping pace with the well-drilling industry. For Hague Equipment’s Jerry Peal, it was maintaining cash flow, continuing to purchase equipment and meet payroll while awaiting payment on jobs the company had done.
In both cases, they turned to Venture North Funding & Development. Formed from the merger of the Traverse City Chamber Foundation and the Traverse Bay Economic Development Corporation, it serves as a nonprofit economic development organization. It provides business financing and other services for the 10-county region.
While Berg Well Drilling was well-known and respected for its steel wells, the industry was turning more and more to plastic wells. While the geology of surrounding states such as Minnesota and Wisconsin, as well as the U.P., demand the use of steel, in the northern lower peninsula the vast majority of new wells are made of plastic. They are less expensive, and Berg was steadily losing market share. But such a changeover brought with it demand for entirely new equipment.
“It’s a totally different drilling operation,” explained Berg.
While steel wells are simply driven into the ground, trying to do the same would only shatter the plastic. Instead, a hole is dug and the plastic pipe is inserted, while being surrounded by gravel and grout.
Berg said a banking friend recommended he contact Venture North.
“I made a call and Laura Galbraith (the executive director at Venture North) came over,” Berg said. “She was really good to work with.”
After explaining what the company wanted to do and what it would require, Galbraith and staff worked closely with Berg. The company closed a $105,000 loan with Venture North through its Grand Traverse County Community Development Block Grant (CDBG) loan fund to purchase a new well rig, large tanker truck, and grouter for this new product line. It also worked with Venture North on a $45,000 loan to assist Berg with short-term working capital to cover maintenance, via its USDA loan fund.
Jerry Peal faced a different dilemma. His Kalkaska-based company, Hague Equipment and Great Lakes Hydraulics, sells and services a variety of equipment, from instruments and pumps to compressors and transmissions, for a wide variety of industries. It also repairs and services such equipment and works with a wide variety of companies and utilities across the state and region.
The demand for large-scale and expensive equipment and services means the company is always working on the current job and chasing the next one, spending money while waiting for checks from the previous job to come in. That can make for a difficult cash-flow problem.
“We used it to extend our line of credit for larger jobs,” said Peal.
As an example, he noted a project with Detroit Edison.
“We had a big job and had to buy $150,000 (in equipment).”
The job took three months, but they had to pay for the equipment within 30 days, so there was a cash crunch. Where Peal used to be able to get a 90-day note from a bank to pay for the equipment, “they don’t do that anymore. There’s no such thing anymore.”
That’s where Venture North came in.
“If we had to buy (outright), it could take $300,000-$400,000 out of our cash flow. That makes it tough to pay,” Peal said.

No Company Left Behind
Berg Well Drilling and Hague Equipment and Great Lakes Hydraulics are among the dozens of companies that have benefited from Venture North’s funding efforts since it was established in 2015.
“We’ve helped about 65 different organizations in the past few years,” said Galbraith.
The companies represent multiple industries in numerous counties across the region. Some are established companies, such as those above, while other are startups.
“With startups, they are challenged to find capital,” said Galbraith. ” They are risky – there’s no performance history, so a bank is uncomfortable. We can begin with a small loan and partner them with mentors.”
Peal said the process was very straightforward.
“I’ve been in business for 40 years, with a net worth $8 or $9 million,” he said. “I have a lot of valuable assets.”
He was able to get the money he needed in less than 30 days. “I would recommend it to others. It worked out great for me.”

The Lowdown on Loans: Options for different funding priorities

Venture North administers existing loan funds of $5 million. They can be used for a variety of projects. The Energy Efficiency Loan Fund provided by Venture North and Traverse City Light & Power is available to TCL&P customers. It offers low-interest loans for businesses which are interested in investing in energy-savings projects. Community Development Block Grant loans are available to companies that will create jobs but need capital to finance real estate, inventory, equipment and other needs.
It also has a micro-loan program, a USDA rural development intermediary relending program and a loan program for businesses in Kalkaska County businesses in cooperation with the Kalkaska County Economic Development Corporation. Venture North works with numerous partners in the private and public sectors including Fifth Third Bank, the U.S. Department of Agriculture, Michigan Economic Development Corp., Northern Initiatives, Traverse City Light and Power Co. and others.
Through the first quarter of this year, Venture North has committed $395,000 locally. In addition to providing two loans totaling $150,000 to Berg Well Drilling and $200,000 for Hague Equipment, Venture North has also assisted Field Crafts of Honor, which secured a loan to finance an automatic screen printing press and an automatic shrink-wrapping machine. That loan was for $45,000. All told, it has a portfolio of close to $2 million already at work for some four dozen businesses in the region.
Galbraith said the single largest loan Venture North has made was for $490,000, to Creekside Clinic, with an additional loan to the health practice of $100,000. At the other extreme, it has made loans for as little as $2,500. For a complete list of the loans it has made, go to