Detroit – Detroit entrepreneur Willie Brake said it was far harder to raise money for his home and office computer repair business than many people might imagine.
Some lenders said his idea would never make a lot of money or his business was too small for a loan. He even ran into dead ends after he tried to work with people who specialized in lending money to start ups.
“I actually got to the point where I got discouraged,” said Brake, 41, who runs All About Technology Inc. But he was convinced that he could serve an important niche in neighborhoods in Detroit and build a bridge to close a digital divide.
Then he heard about a program called LaunchDETROIT, which offers money and mentoring to entrepreneurs who live and work in Detroit. He applied and qualified for a $2,500 one-year loan. As part of the program, he was able to network with area business leaders and take some business-related classes.
“The loan came in right on time,” he said. “That $2,500, it was just a matter of lighting that match and getting a fire started.”
He repaid that loan and then applied for a second micro-loan earlier this year to open a storefront location at 6450 Michigan Ave., near Livernois, in southwest Detroit. He hired a technician from the community.
LaunchDETROIT is one of those lifelines that has popped up in Detroit to turn big ideas into small businesses that ultimately hire workers.
The micro-loan program was developed by the Rotary District 6400, which includes Rotary Clubs in Detroit, Windsor, Taylor, Grosse Pointe, Dearborn, Plymouth and other communities. The program also has received more than $11,000 in funding from the Presbytery of Detroit. It also has support from Baker College in Allen Park.
Online applications are being taken now for the LaunchDETROIT program. The deadline for applying is Aug. 21. The micro loans are from $1,000 to $2,500. See LaunchDETROIT.org.
The first micro loans were awarded in 2014.
There are no credit checks but applicants will be interviewed as part of the selection process. Only applicants from Detroit can qualify.
“Right now, it’s strictly Detroit,” said Lawrence Wright, president of the non-profit LaunchDetroit initiative.
What does it take to be selected?
“They have to have a good idea,” Wright said.
The idea could be selling pies, homemade baby clothes, herbal teas. But the business needs the potential to keep running year round and to eventually grow so the it’s not just a one-person operation.
The program is targeted to people with vision but not much else in terms of financing.
“We are looking for people who are say ‘unbankable.'” Wright said.
But Wright quickly says he doesn’t like the word ‘unbankable,’ the often used jargon for people who have a hard time getting a loan at a traditional bank. He prefers the word underserved.
“It’s not a grant. It’s a loan,” Wright said.
The micro loan is at 5% annual interest for one year. But if successful, the entrepreneurs could apply for another similar loan at the same terms.
“A lot of people rely on credit cards for their financing and if you look at credit cards, 18% and up is typical.”
Wright said LaunchDETROIT’s mission is to work with women entrepreneurs but it is open to lending to men, as well. The program has an agreement with the Michigan Women’s Foundation to possibly help entrepreneurs as the small businesses grow out of the micro loan program and need more guidance.
Baker College in Allen Park is providing eight classes to the entrepreneurs as part of the program. The business training classes begin in October and end in November with business plan presentations.
After completing the classes, the LaunchDETROIT selection committee will interview candidates for micro-loans to be awarded in January 2016.
Latricia Wright, 44, who is Willie Brake’s sister, said the business training was instrumental for her wellness-related business called Olive Seed. She benefited from workshops on grassroots marketing in particular.
She said her mentor owns a company that manufactures glass products and has helped her figure out how to market her products in other countries.
She used her $2,500 loan to buy inventory, such as herbs and spices for custom loose tea blends, local raw honey for her herbal honey and labels and packaging for products. Her business has three employees.
Before receiving the loan, she said, she was using her American Express card. She paid that off each month. But she never applied for a bank loan because she realized her business was small and probably wouldn’t qualify for a loan.
“Since LaunchDetroit, I have increased my product offerings, expanded my wellness services to corporations and currently am leading a 32-week community walking program in Palmer Park,” she said.
No doubt, a loan of $1,000 or $2,500 can be a help to a business that’s operating on a shoestring. But those who back the LaunchDETROIT program say the interaction with people who understand how to run a small business is not to be downplayed, either.
The education, mentoring and networking are even more important than the loan to many just-starting businesses, said Lawrence Wright, who started his own landscaping business 39 years ago.
“These are fresh, new, small, small businesses,” Wright said. “The money becomes almost secondary.”
Contact Susan Tompor: 313-222-8876 or email@example.com. Follow her on Twitter @tompor.