TRAVERSE CITY — Small business owner Jody Hayden needed a loan for an unusual purchase. Instead of buying a case of chocolate bars for her Empire store, she needed 27,000 pounds of the sweet confectionary from a trusted source in Ecuador – enough to fill an entire semi-truck.
“We weren’t really eligible for a traditional bank loan at that time because we didn’t have much collateral,” said Hayden, who owns Grocer’s Daughter Chocolate. “That’s why Venture North was so important to our growth. They took a chance on us and we’re eternally grateful.”
Based in Traverse City, Venture North is a non-profit organization that offers mini-grants, affordable loans and free professional consulting services to both startups and existing businesses in 10 northern Michigan counties.
Unlike most commercial banks, Venture North is a “mission lender” that seeks to help businesses that benefit local communities in some tangible way.
For example, that may mean helping a small business survive in a rural area with few banking services, filling “urgent needs” for capital.
In other cases, the nonprofit offers loans ranging from $5,000 to $350,000 so the businesses can secure much-needed equipment, inventory, working capital and facility space.
Larger social benefits also are considered.
Chocolate entrepreneur Hayden not only sells custom-made chocolate and gelato, she also builds direct relationships with cocoa growers in places like Ecuador, Ghana and Ivory Coast so they can earn more for their labor.
Since 2013, Hayden’s firm has led more than 30 group trips to chocolate-growing regions in Latin America and Africa.
“Our mission is to ‘lead with love,’ and make the world a better place,” she said. “We’re always concerned about the plight of the cocoa farmers, particularly with the onset of climate change. That change has wiped out about 60 percent of the supply coming out of Ghana and the Ivory Coast.”
Since its founding, Venture North has helped more than 125,000 small businesses in Northwest Michigan.
Unlike privately owned venture capital firms, it does not take an equity stake (ownership percentage) in its client companies. Most funding comes from a combination of foundation grants, gifts from financial institutions, individual donations and targeted government programs.
Today, the nonprofit has about a dozen staff members and volunteers, many with years of prior business experience. Officials said there are plans to expand operations to additional geographic areas in the future.
“Money is just one part of what we do,” said Venture North President Laura Galbraith. “We also offer a huge range of professional consulting services to help our clients succeed.”
“Small business owners have a lot on their plates every day,” she said. “They don’t always have expertise in key areas, such as marketing analysis, cash flow projections and inventory management. Our team has a deep well of experience and we’re happy to help.”
Venture North doesn’t compete with area financial institutions. Rather, many local banks and credit unions refer clients to the nonprofit, making it an ongoing win-win-win relationship.
A CLIENT IN BENZONIA
Chris Varenhorst, 43, is the president of Eclipse Communications based in Benzonia. The firm provides internet services, VOIP phone services, fiber optics connections and other IT infrastructure services in Northwest Michigan. It also partners with other firms to integrate security systems.
Benzie County selected Eclipse in 2019 to help provide internet and communications in “unserved and underserved” areas, including rural townships. Today, most of the firm’s customers are located in Antrim, Benzie, Grand Traverse and Manistee counties.
When Varenhorst went looking for a loan in 2017, he discovered that his firm didn’t meet the qualifications for most traditional lenders.
“Either you met their criteria or you didn’t – there was no middle ground,” he said. “We were looking to buy space in a 90,000-square-foot facility in Benzonia on M-115. I learned about Venture North through a friend, which was a huge breakthrough for us.”
To get the ball rolling, Varenhorst met with Galbraith and Tim Ervin of Venture North to discuss his needs and apply for the Community Development Block Grant program. Over the past two to three years, Eclipse has used the program for loans ranging from $30,000 to $70,000 for acquiring specialized equipment.
“CDBG loans are contingent on creating jobs and we’ve exceeded those job requirements,” he said. “Venture North has been a perfect fit for us. They are very accommodating and approachable people.
“You never hear ‘sorry, I can’t help you’ from them. I’m always learning from them and I can always call on them for knowledge and expertise.”
THE ORIGIN STORY
Venture North is an outgrowth of the Traverse City Area Chamber of Commerce. It was established during the 2008-09 financial crisis to help area businesses with urgent needs using “alternative financing methods” at a time when many lenders stopped lending to anyone except the biggest blue-chip corporations.
In 2020, the organization was spun off as as standalone 501©(3) nonprofit with its own board of directors. In 2017, it became a Community Development Financial Institution (CDFI), a program of the U.S. Treasury Department designed to generate economic growth and opportunity in underserved areas, including rural counties and underserved smaller communities.
According to a Treasury Department summary, “By offering tailored resources and innovative programs that invest federal dollars alongside private sector capital, the CDFI Fund serves mission-driven financial institutions that take a market-based approach to supporting economically disadvantaged communities.”
When the COVID pandemic hit in 2020, threatening many local businesses, Venture North saw an opportunity to help them survive.
Following the lead of CMS Energy Foundation, the nonprofit raised about $1.2 million from hundreds of individuals, foundations and philanthropic organizations.
“Our Regional Resiliency Program helped meet urgent needs in the small-business sector before the much bigger federal programs were available,” said Tim Ervin, communications director. “We’re still working with about 300 of those businesses today.”
Venture North also manages specialized government lending and grant programs for local governments. For example, Grand Traverse County recently approved a three-year extension for the nonprofit to administer the regional revolving loan fund of the county’s Community Development Block Grant Program.
The CDBG program provides “affordable lending options and free business coaching” to help create new jobs for low- to moderate-income people in the area.
It comes with some specific requirements for job growth that are not in Venture North’s other programs.
The impact of Venture North continues to grow. All told, the nonprofit has dispersed 175 loans, helping to create 525 new jobs and retain another 560 jobs in the 10-county area.
Clients come from a broad range of industries, from manufacturing and professional services to hospitality and agriculture.