FreedomWand Goes International
Microloan program looks to expand
The problem was that her business was too small for investors and didn't have enough sales to qualify for a conventional bank loan. So Tacoma turned a year ago to Grand Rapids Opportunities for Women, a Grand Rapids organization that supports entrepreneurs and at the time was offering loans to small businesses under a pilot program that has since led to the formation of a permanent microloan fund.
"It's the only place that would listen and help," said Tacoma, who used a microloan for GROW to redesign the packaging and advertising for the Freedom Wand, a personal hygiene device for people with disabilities or injuries.
"They're the ones who put the air back in my wings," said Tacoma, whose company has grown sales an average of 30 percent annually since forming in 2008. "I'm in a position now to move to the next level and work on the foundation to do that."
Tacoma was one of five small business owners to receive a small loan under the GROW pilot, the success of which enabled the organization to qualify for additional U.S. Small Business Administration funding for a permanent microloan program.
Even as the first borrowers receive their loans under the new program, Microloan Program Manager Bill Hahn is already looking ahead at how to secure more SBA funding and expand. Hahn fully expects to return to the SBA yet this year to seek additional funding.
But first, and just as it did with the pilot, GROW needs to further demonstrate it's putting the SBA funding to good use through microloans to small business owners who are growing and repaying their debt. He hopes to re-approach the SBA as soon as possible.
"It's not so much a matter of waiting for a time to elapse as much as it is showing we are using the money we've been given," Hahn said.
After the successful pilot, GROW this year secured a subsequent $200,000 loan from the SBA. Hahn estimates the funding will initially support microloans for up to 15 small businesses. Loan payments will go back into the fund to use for future microloans.
The pilot effort allowed GROW to "formalize some processes" for loans and provided "the ability to work out the kinks" before starting a permanent program, Hahn said.
"We knew from the beginning this is something we wanted to carry forward," he said. "It allowed us to go to the SBA and say, 'We really can do this. We've been doing it already.'"
Under the new program, microloans of $1,000 to $50,000 are available to small business owners in Kent, Ottawa, Muskegon, Newaygo, Montcalm, Ionia, Barry, Allegan and Kalamazoo counties. Entrepreneurs can use the loan to buy equipment, machinery, furniture, fixtures and materials and for operating capital. They must repay the loan within six years.
GROW provides more than a loan through the program and matches loan borrowers with volunteers who serve as mentors. The program represents the first microloan fund available in the Grand Rapids area in seven years.
"This microloan program offers many opportunities in our entrepreneurial community. For the first time since 2005 there is a pool of microloan money for our community's start-up businesses to borrow from, and along with this opportunity, GROW is there with the strength it offers in trainings and resources to small businesses to ensure they have all the skills and tools to truly move their businesses forward," GROW CEO Bonnie Nawara said.
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