The Loan That Builds Your Business, Without The Bank

Before Craft Brewing was a thriving industry in Michigan, it was a risky, untested idea that banks and many others were hesitant to invest in. 10 years later, it’s a major part of Michigan’s economy. When new ideas like this come along, all they need is an organization to believe in their idea and be…

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Before Craft Brewing was a thriving industry in Michigan, it was a risky, untested idea that banks and many others were hesitant to invest in. 10 years later, it’s a major part of Michigan’s economy.

When new ideas like this come along, all they need is an organization to believe in their idea and be ready and able to provide the funds that can get them off the ground.

Mark Davis’ main job is to finance growth, create strong companies and create jobs in Michigan.

He helps unproven business ideas, like craft beer, grow using funds from the SBA 504 Loan Program and the Economic Development Foundation.

Craft Beer is only one example of an industry or company that took off using funds from the 504 Loan Program. 1-800 Flowers also used their funding and they work in countless industries including (but not limited to) software, coffee, hotels, gas stations, beauty salons, non-profits and more.

“If companies like Founders, Arcadia or Latitude 42, had turned to traditional methods of lending,” says Mark, “We might not be talking about the industry the way we are now.”

These loans are meant for new ideas and new concepts that need initial financing.

When turning to these loans or assistance, you have two options:

The 504 Loan- specializes in lending money so businesses can buy real estate or equipment.

The 7-A Loan- is meant for general purposes and inventory associated with a business.

The Perks:

So, what makes these loans so much more appropriate for new businesses than a regular bank loan?

For new businesses, the most important aspect of cash flow is stability. Though, it’s something they don’t often have.

The SBA offers a 20 year, fixed interest rate that you can’t get anywhere else. Constant raises in rates can really throw a buisness off. “Steady rates help the business remain more stable in their cash flow,” says Mark. “They will be able to continue to grow and employ people.”

“It’s also good for businesses to know this loan is not new or untested,” adds Mark. The 504 Loans have been around since 1986 and Mark has been working with them since 1998. Also, since the money does not come from the government, “A company can start a project today and be confident that the money will be there.”

New businesses have the choice to lease, but what if the building sells, could be faced with moving. Owning gives more certainty

When To Reach Out:

When should a business start thinking about a 504 Loan? “Early,” says Mark, “Very early.”

Even before reaching out to traditional banks, calling Mark and the SBA can be a great first step in finding funding. “One thing we can do with our contacts and experience is to evaluate what you should do, answer your questions, and let you know how much you might need.”

By starting with Mark, businesses can find out whether certain banks would be right for them and save a number of phone calls. “We are a one-stop-shop.”

Who Can Apply:

Just about anyone is eligible for these types of loans. From students, to those with outstanding debt. The best way to find out if you qualify, is to call.

“We are also looking to help women, minorities, those in business districts that are trying to revitalize, rural areas and veterans,” says Mark. “Veterans are not using it enough.”

Whether businesses are outgrowing the building they currently occupy, or have the option to buy a building they are leasing, these loans can get them the funds they need to grow.

*It’s important to note that the SBA cannot give a loan to someone who has defaulted on a previous loan*

How To Apply:

According to Mark, getting the ball rolling is easy.

To get started, you’ll need:

  • Your last tax return (personal and business)
  • Estimated project costs
  • Your credit score
  • Proof you can provide a down payment
  • A good business plan or track record

While there is much more to these loans than we can cover here, Mark says it all comes down to an idea. “An idea and a little capital is all you need. The talent and ideas are intense in Michigan, it’s primed.”

But, if Mark had to break down the information on the loans, here are the top 3 things startups should know about them:

Top 3 Things Startups Should Know:

    1. Fixed Interest Rate = cash flow stability. New businesses already face enough uncertainty on a daily basis, their interest rate shouldn’t contribute to that.  Would want as little uncertainty as possible. There’s a;ready enough uncertainty.
    2. Lower Down Payment– A 15% down payment is required though businesses 2 yrs old or older can get 10%. If you want to buy the building your leasing you can put down 10% instead of a typical 20%. “That savings represents working capital you need to grow,” says Mark. “We want you to keep as much money in the business as possible.”
    3. It’s a job creation program- The more money a business keeps, the more grow and the more people they need to hire.


What Now?


If you’re a startup that will eventually need a loan (an almost inevitable possibility), call.

If you have a far-fetched idea that you can’t get off the ground because no one believes enough to give you funding, call.

If your business is outgrowing its current building or looking to own the space that you lease, call.   

“Even if it’s the weirdest, oddest idea, we can tell them where they can go, or we can tell them it probably won’t work.”

Calling and asking is better than wondering, “What if…?”

So, get in touch with Mark or the SBA today, and put an answer to your “What if..”

Who knows, your business might be the next Craft Beer industry.   


Is your startup looking for funding? Find resources right here in Lansing to get you funded, faster.

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