LANSING—Legislation sponsored by Sen. Darwin Booher to create an organization of major financial institutions in Michigan to help deserving small businesses get a loan has been signed by the governor.
“Michigan has successful start-ups that businesses are looking to grow but cannot get the loans necessary to expand because of more stringent federal regulations – costing us jobs and hurting their ability to compete,” said Booher, R-Evart. “The state currently has a capital access program for smaller-sized loans to small businesses, and the new public-private partnership will extend loans to companies too large for the capital access program yet not large enough to access traditional capital.”
Public Act 358 of 2012 expands the Michigan Business and Industrial Development Company (BIDCO) Act to allow for a few, much larger organizations to become licensed and regulated.
The new Business Development Corporations must have a minimum net worth and firm financing commitments of not less than $25 million. Previously, participating businesses were limited to $10 million in net worth and could start with as little as $500,000 in financing.
Booher noted that the new law will give loans to companies with 750 employees or fewer, with the expected average loan size to be $1 million to $3 million.
“Private capital markets in Michigan are not usually willing to lend or invest until the need exceeds $8 million to $10 million per company,” said Booher, chair of the Senate Banking and Financial Institutions Committee. “This new law will help those businesses that fell into the gap between existing development corporations and the private capital markets. The result will be increased access to loans and investments to Michigan businesses looking to grow and hire more workers.”
The Business Development Corporations will be fully regulated by the Office of Financial and Insurance Regulation and the Michigan Strategic Fund Board.