Grow Michigan Fund II is joining forces with First Independence Bank, among other financial institutions, to assist in the economic needs of minority businesses in Detroit and throughout the state with capital — and advice where it counts.
Through Bloomfield Hills-based Grow Michigan, LLC, the organization, founded in 2012, is on a mission to offer their funding to small and middle-market businesses, especially in the state and to level the playing field.
Grow Michigan II, LLC is capitalized by members of Michigan’s banking community and the Michigan Strategic Fund, according to a press release. It offers growth capital in the form of subordinated/mezzanine debt to the Michigan small business community. Grow Michigan Fund II recently announced that half of its $200 million Grow Michigan Fund II will be directed to minority-owned businesses in the city of Detroit and across the state, according to a press release.
Derron Sanders, board member of First Independence Bank and Grow Michigan chief development officer, said that Grow Michigan has something extraordinarily more to offer in addition to their funding: sought after advice.
“As an African American business owner myself, in addition to capital, what is also missing a lot is the advice part,” Sanders said. “One of the things I am really excited about with Grow Michigan is that we will have a number of seasoned business owners, entrepreneurs that will serve as advisors to those African American or minority [business] owners that will be part of Grow Michigan II.”
Sanders said part of the gap that exists in the Black community is not always having a close relative or someone who could take the business owner through examples in real-time of what it is like for a business to navigate rough economical waters and survive, like during a recession.
“I’m really excited that we have that as an element; that will really assist minority businesses in the future,” he said of the advice component.
Grow Michigan was launched in 2012 with the mission to grow Michigan businesses and jobs by providing growth capital to Michigan business owners who do not have the necessary capital to grow their business, according to Grow Michigan’s website. The original Grow Michigan fund (Fund I) came to an end this year after creating over 3,200 Michigan jobs.
Sanders said that the minority business community will be equally excited.
“We plan to work really, really hard to introduce ourselves to the minority community, which I happen to be a part of, and bridging the gap,” he said.
According to the press release, the fund for this second phase is working with Detroit-based First Independence Bank, one of the country’s largest African American owned banks, a consortium of other top area lenders, and the Michigan Strategic Fund.
Grow Michigan Fund II will actively identify opportunities to provide access to capital to qualified businesses, including minority-owned businesses, and assist lenders on how best to use the funds toward business growth and long-term sustainability, the release added.
“We are looking forward to fostering inclusion and wealth creation and to providing opportunities like never before for a sector that has traditionally and historically been underfunded and underserved,” Kenneth Kelly, Chairman, and CEO, First Independence Bank and chairman of Grow Michigan Fund II, said in the press release. “This fund represents one practical manner where we can positively affect change to support our economy and impact lives.”
Grow Michigan Fund II extends the capabilities of senior debt providers by offering a highly efficient, cost-effective, and complementary capital structure for growing Michigan small businesses in a broad range of industries – including manufacturing, distribution, transportation, life sciences, and enabling technologies. To date, through Fund I, Grow Michigan has invested $61.7 million in transactions involving a total leveraged capital investment of $320.1 million while facilitating nearly 3,200 jobs.
“During my time on the First Independence Bank board I saw first-hand their commitment to the Detroit community,” said Pat O’Keefe, one of the founders and CEO of Grow Michigan Fund II and the initiator of the revised business plan in collaboration with the bank. “They, along with other financial institutions who have embraced our concept, will serve as perfect partners for achieving our objective of providing access to real capital for minority business enterprises.”
“The need is there and the Grow Michigan formula – almost unlike anything else in the country – has proved itself,” added Kelly. “We want to lead the charge in assisting business growth and minority-owned companies formation through mergers and acquisitions in the middle market; providing the knowledge, relationships, and financial boost needed for success.”
Leon Richardson, founder and president of minority-owned Chemico Group in Southfield, is among the companies provided mezzanine financing by the first Grow Michigan fund. “We would never have reached our current level (nearly $200 million in annual sales) without their support,” he said.
Grow Michigan aims to lend to companies that have a:
- Profitable small businesses with strong management teams
- Established relationships with senior lenders
- Typical loan size between $500,000 and $5 million
- Revenue from $3 million to $50 million and positive earnings before interest, taxes, depreciation, and amortization [EBITDA]
- Capital will lead to increased employment in Michigan
For more information, visit: growmichiganfund.com
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