Posted on July 10, 2009 - by boris

$1 million in micro loans is being offered to Michigan entrepreneurs…

Detroit Free Press posted:

Michigan is making $1 million in micro loans available to entrepreneurs in key industries in an effort to increase the number of successful start-up companies in the state.

The program, which is being overseen by the Ann Arbor SPARK economic development group, was quietly rolled out in May. So far, only two start-up firms have applied for the loans, but the money is expected to help 20 to 30 companies within the next two years, said Skip Simms, manager of the Michigan Pre-Seed Capital Fund and director of SPARK’s business acceleration services.

“There’s not been a program like this in Michigan,” Simms said. “We believe there’s a big need.”

The micro loans are designed to help the most risky of start-up firms, those in the midst of developing prototypes or that need to conduct additional research. These kinds of companies don’t qualify for bank loans, so their owners usually borrow money from friends and family and max out their credit cards.

Michigan’s micro-loan program is only for companies in four high-growth industries that the state wants to support: life sciences, alternative energy, homeland security and defense and advanced manufacturing and materials.

However, plans have tentatively been approved to provide an additional $275,000 in micro loans for start-ups in Ann Arbor and $225,000 for those in the Ypsilanti area, Simms said. This money isn’t limited to certain industries, but firms have to be at or near the commercialization stage.

To ensure that the program helps entrepreneurs that really need money, SPARK set the annual interest rate on the micro loans at 12%, which is still significantly below what many credit cards charge. The micro loans do not require monthly interest payments.

The money for the loans comes from the $6.8 million that the Michigan Pre-Seed Capital Fund received this year from the state’s 21st Century Jobs Fund, which draws its dollars from Michigan’s share of a multibillion legal settlement with the tobacco industry.

Source:http://www.freep.com/article/20090709/BUSINESS06/907090581/$1M+in+micro+loans+offered+to+Michigan+entrepreneurs