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HomeMy WebLinkAboutResolutions - 2016.04.21 - 22312MISCELLANEOUS RESOLUTION #16097 April 21, 2016 BY: Planning and Building Committee, Commissioner Philip Weipert, Chairperson IN RE: ECONOMIC DEVELOPMENT & COMMUNITY AFFAIRS - RENEWAL OF OAKLAND COUNTY MICROLOAN PROGRAM To the Oakland County Board of Commissioners Chairperson, Ladies and Gentlemen: WHEREAS Start-up small businesses continue to have great difficulty in accessing capital, as do existing small businesses in acquiring loans to grow their businesses; and WHEREAS Center for Empowerment and Economic Development (CEED) Lending has managed Oakland County's Microloan program since 2010 in partnership with the Small Business Administration (SBA) that offers a number of other programs and services for small businesses; and WHEREAS the SBA has matched Oakland County's initial investment into the CEED Microloan program to leverage that $200,000 through the Economic Development Corporation Special Revenue Fund (#21180) into close to a $1 million available for Oakland County businesses; and WHEREAS Oakland County's CEED Microloan program makes very small loans to start-up, newly established, or growing small businesses; and WHEREAS This Microloan program makes loans available to eligible borrowers in amounts up to a maximum of $50,000, with loan repayment periods of up to five (5) years; and WHEREAS Oakland County's Microloan program has leveraged the initial $200,000 investment from the County to grant 41 loans to Oakland County small businesses totaling $923,300 and creating 115 new jobs and retaining another 126 jobs; and WHEREAS Oakland County Government recognizes the importance of small business success as vital to our growing economy and the important role that the Microloan program has made to the economic development success of the county. NOW THEREFORE BE IT RESOLVED that the Oakland County Board of Commissioners renews the Oakland County Microloan Program for FY 2016 and invests an additional $200,000 in to the Economic Development Corporation Special Revenue Fund (#21180) that will be leveraged by the SBA through CEED to make available $600,000 in new available loans to eligible Oakland County small businesses. BE IT FURTHER RESOLVED that the Oakland County Microloan Program will continue to reside in the Department of Economic Development & Community Affairs and monitored through the Economic Development Corporation, where these small businesses can also gain seamless access to our One Stop Shop Business Center resources and services. Chairperson, on behalf of the Planning and Building Committee, I move adoption of the foregoing resolution. PrI.AIVNING ?.143TUILDING COMMITTEE n41% PLANNING AND BUILDING COMMITTEE VOTE: Motion carried unanimously on a roll call vote. MIRA LEN DIN ,i4t4MNe cf17rej Coma CEED Lending Oakland County Request: $ 200,000 request for CEED Lending Oakland County Current Situation: CEED Lending Oakland County has completed the first round of loans utilizing $ 200,000 received from Oakland County. A total of 41 loans were made totaling $ 923,300. These loans created 115 jobs and retained another 126. There were $ 23,847 in loan charge-offs. There is currently a balance of $ 111453 in loan loss reserves which is securing the remaining outstanding loans in the portfolio. These funds will be available in approximately 24 months. Oakland County EDC provided the original funding in the following manner. In 2010, $ 100,000 was provided to CEED Lending Oakland County and then a second installment of $ 100,000 was provided in 2011. We are requesting that the additional funding be provided in the same manner. CEED Lending Oakland County is requesting $ 100,000 for 2016 and $ 100,000 for 2017. 2016-2018 Goal for Oakland County: provide $ 600,000 in small business microloans • Create/retain 200+ jobs in Oakland County • Extend the availability of credit to those who cannot obtain conventional financing • Graduate borrowers from microloan fund to conventional financing Work plan: Belinda Turner-DuBois will continue to work from the One Stop Shop in Waterford 2 — 3 days a. week. She will attend their weekly staff meetings and go on site visits with staff. Outreach to all county commissioners, bankers and business associations will continue. A Loan Ambassador breakfast for CEED Lending will be held on March 22 at the Auburn Hills Marriott Pontiac at Centerpoint and stakeholders will be invited. Monthly loan orientations will be held at the One Stop Shop as well as local chambers of commerce from time to time. CEED Lending Oakland County will also become involved in the partnership between Oakland County and Oakland University with a strategic focus on business start-ups supported by Oakland University School of Business. Involvement in the City of Pontiac's annual Small Business Conference will continue as well as continued support of the annual Oakland County CRA Breakfast for small businesses interested in financing. Belinda Turner-DuBois provides business counseling and referrals to existing loan clients as well as support to potential borrowers. Funding Strategy: Operations - Oakland County EDC $ 100,000 U.S. Small Business Administration $ 100,000 Loan Loss Reserve - Oakland County EDC - $ 100,000 Loan Capital - U.S. Small Business Administration $ 600,000 Borrowed by CEED Lending — 10 yr. note Total $ 200,000 $ 100,000 $ 600,000 $ 900,000 CEED Lending Oakland County is an initiative of the Great Lakes Women's Business Council, formerly known as the Center for Empowerment & Economic Development (CEED). CEED Lending Oakland County 20110 - 2015 Progress Report ENDING Art ifilis'irOe &es11. tokn; .60".9fnux:, Cavhcq Executive Summary A partnership was created between Oakland County Economic Development Corporation, CEED and the U.S. Small Business Administration to create a microloan program specifically for Oakland County businesses. The Oakland County Economic Development Corporation invested $200,000 in the microloan program with $135,000 being used for the required loan loss reserve and $65,000 being used for program operations. CEED borrowed $900,000 from the U.S. Small Business Admin- istration for the CEED Lending Oakland County fund. For every $15,000 in loan loss funds, GEED is able to borrow $100,000 in loan funds from the U. S. SBA. The program has met its goal by lending out all of the funds to Oakland County businesses. A total of 41 loans were made, generating the creation of 115 jobs and retaining another 126. Results Number of Loans Made Existing Businesses Start-Ups Loans Value Economic Impact Jobs Created 115 Jobs Retained 126 41 24 17 $923,300 Current Loan Portfolio Status Loans in Portfolio - $ 220,139 (23.8% of loans made) Loans in Repaid - $ 679,314 (73.6% of loans made) Charged Off Loans- $ 23,847 (2.6% of loans made) Loan Demographics Auburn Hills 1 Bloomfield Hills 3 Clarkston 4 Clawson 2 Farmington 5 Highland 1 Novi 2 Oxford 2 Pontiac 1 Southfield 10 Troy 4 Walled Lake 1 Waterford 3 West Bloomfield 1 Wixom 1 Total 41 Outreach Activities • A one-minute professionally produced television commercial was created for the CEED Lending Oakland County fund. Comcast provided airing sponsorship, along with the purchase of specif- ic airing times and channels to market the program. • Belinda Turner-DuBois Oakland County and City of Detroit Loan Officer appeared on local news and cable shows including WIDIV Channel 4, Farmington and Farmington Hills local cable shows, and Andy Meisner's Oakland Connection. • Monthly loan orientations are held at the Oakland County One Stop Shop as well as some of the local Chambers of Commerce. • Other outreach efforts include hosting the annual Oakland County CRA Association breakfast. For the past three years CEED Lending has brought together small business owners and finan- cial resources in this non-threatening teaching environment financial educational environment. • GEED Lending participates in the small business summits. For example, we participate in the City of Pontiac's annual Small Business Conferences by serving as a presenter and having a resource a table. • Belinda Turner-DuBois frequently presents to local Economic Development Corporations and Downtown Development Authorities in Oakland County. • She also participates in weekly staff meetings with One Stop staff to share and stay abreast of any activities that are related to small business owners. Lessons Learned Working closely with Oakland County economic and business development programs and their partners has been critical to the success of CEED Lending Oakland County. This has been a source of solid client referrals, coordinated services, and active involvement of all available resources. Joint outreach efforts and knocking on the doors of businesses has benefited several programs. Belinda Turner-DuBois maintains an office presence two days a week at the Oakland County Business Center. While we have achieved the results that we set as our goals, we could have accomplished them much faster if we had the resources to more fully staff and market the program. Success Stories: While many of our borrowers have created successful businesses, we have selected 5 stories to share with you that represent th range of businesses and types of assistance provided to the borrowers. Vasillios Papadopolous Kevin Maguire Karen Gara Lynn Drake Christine Ellis Power Wheels Pro Maverick Building Systems Robin's Song, dba Rebecca's Wigs Compass Commercial Facet Business Communications PowerWheels Pro LLC was started by Vassilios Papadopoulos in 2008. PowerWheels began importing and selling wheels for premium German and British cars and SUV's in their Wa- terford location. The automotive aftermarket accessory market was healthy, with purchasers looking to personalize their vehicles by upgrading wheels. Starting with one container of wheels which sold in 2 months to customers via EBay, the company bought more containers and began marketing to wholesale customers such as new and used car dealerships as well as auto repair facilities. Vassilios approached several banks with his business plan and request for funding and was promptly denied. He still proceeded with his own "bootstrapping" and eventually the hard work paid off. In 2011 CEED Lending was able to assist with a loan to purchase much needed inventory. Soon his products were recognized by Belle Tire. Due to the new relationship with Belle Tire and a growing consumer market, PowerWheels experienced an overwhelming product de- mand and was having to turn away customers due to lack of inventory. The business contin- ued to grow, expanding into the domestic car market including muscle cars such as Mustangs and Camaros. CEED Lending was able to help with yet another loan to satisfy the need for additional inventory. An engineer by trade, but also having a good understanding of his financials, Vassilios was able to strategically implement growth strategies that soon took the business to financial needs beyond CEED Lending. Due to the business growth and financial track record, Vassili- os was able to secure a credit line from a traditional lender which enabled him to pay off his CEED Lending loan (early) and continue managing his growth. In 2009, Kevin Maguire's bank called his commercial loan for Maverick Building Systems due. The economic downturn had started and even though he had been a good solid bank customer, his on time pay history nor relationship didn't stop the bank from freezing and eventually closing his credit line. He needed help to keep his construction supply company, located in Commerce Township open, but didn't know where to turn. Kevin sold the building that housed his busi- ness and leased it back from the new owner. He also had to lay off several employees and exhaust all of his personal resources to try to stay afloat. Maverick sells lumber to builders and while half of the competition didn't survive the reces- sion with the help of CEED Lending Kevin was able to purchase enough inventory to keep the business in business. He happened to see a notice in a local paper regarding the CEED Lending Oakland County and according to Kevin "CEED Lending was the only game in town willing to lend money to a small business." Maverick has since been able to upgrade equipment and bring laid-off em- ployees back to work. CEED Lending Success Story The Farmington studio has been a main stay in downtown for over 40 years. Karen Gara was an employee before purchasing the business when the previous owner retired. Karen wanted to expand the studio adding more wigs and creating a "spa like" atmosphere for her clients. While looking for funding avenues she came across information about CEED Lending. We were able to assist with a loan for working capital and wig inventory allowing Karen to expand into an adjoin- ing suite on Farmington Rd. The wig inventory provided Karen with the opportunity to work with a growing number of women experiencing hair loss due to radiation, chemo treatments or other illness. She worked wonders with ladies suffering not only from the various diseases but a loss of self-confidence due to an unwelcome change in physical appearance. Karen approached several of the oncology nurses and doctors at Botsford Hospital with an idea to open a small wig salon there in the hospital. Her proposal was well received because she had helped a number of their patients and the mental improvement was quite visible. Again, needing money for more expansion, Karen came back to CEED Lending for help. The second loan enabled Karen to open Rebecca's Wigs in another adjoining suite, providing a more extensive line of wigs and private fitting rooms for those needing more personal attention. Karen Gara was honored as the CEED Microloan Outstanding Achiever for her business manage- ment skills and the support and mentoring that she provides to other business owners. As a result of Karen's growth she has needed to hire eight new employees for a total of 10. Lynn Drake worked for 15 years in corporate real estate before becoming a commercial realtor in 2001. After years of working for someone else she decided to start her own firm. In 2010, using her savings and borrowed funds from family; she opened Compass Commercial. As her funds began to diminish, Lynn approached several banks for a business loan and received no help. Her business was not only a start-up (ignoring her years of experience in the field) but it was also affiliated with the real estate industry. Banks could not see her potential. CEED Lending helped with a loan for working capital and computers. Not long after that Compass Commercial grew from a home based business to needing more room. She opened an office in Troy and was able to add to her staff. Working diligently and strategically, Compass Commercial continued to grow and needed yet a larger space. Lynn came back to CEED Lending to help with working capital and office fur- nishings. In 2013 Compass Commercial applied to the State of Michigan and won the right to represent the state in real estate needs. This was a huge success, beating out the "who's who" in real estate. Thus far in her career, Lynn Drake has successfully completed more than 2,500 real estate transactions ranging from small business tenant office leases to the sale and purchase of indus- trial complexes. Lynn Drake received the CEED Microloan Outstanding Achiever award in 2014 for her business success and professionalism. She also served as a City of Troy Planning Commissioner. istine Ellis, President acet Business Communications Facet Business Communications started in 1988 and has a global base with 60% of its business directed towards the export of its marketing and trade show services. Company founder, Christine Ellis has received numerous awards from overseas governments for supporting large groups of international exhibitors attending major trade events. When Facet needed money for growth, traditional bank financing was not available. Christine used her funds to purchase a building for her business in Novi and CEED Lending was able to provide working capital to hire new employees and cover moving expenses. Over the last five years Facet has received several loans from CEED Lending as the company continues to expand. Resolution #16097 April 21, 2016 The Chairperson referred the resolution to the Finance committee. There were no Objections.