When I was working with the Michigan Economic Development Corporation (MEDC) as the small business advocate for the State of Michigan, one of the real problems we ran into, especially for small business, was the lack of access to capital.

Small businesses couldn’t get the money they needed to grow, and in some cases, to fill orders waiting to go out. We conducted a study to find out what was happening in the banking community statewide—we wanted to be sure we were on the same entrepreneurial playing field as California, Massachusetts and South Carolina, places that were hotbeds of entrepreneurial activity. The irony of the study was, we found that in Michigan we were even more entrepreneurial, as we had more small business lending and loans available through our traditional lending structures. But then what happened? Regulators came on the scene, credit at banks tightened, while at the same time collateral on many loans was depreciating—the whole formula was a perfect storm.

As access to capital was tied up even tighter, where did small business go at that point?  Of our studies showed that owners were actually financing much of their growth through credit cards! Now, that’s not a logical circumstance, because credit card money is expensive, especially if not paid off in a timely fashion. So that certainly was not a long-range cure.

We then reached the point of a bailout coming from the second tier sector of capital, which included venture capitalists, angel investors and “bidcos” that were popular in the late ‘80s and early ‘90s. Of course, there is always that very special group of friends, relatives and foolish investors.

I’m pleased to say that as things are turning around now credit is loosening at banks. As a matter of fact, I am a member of a bank board now seeking small business loans in large numbers.

This issue of the magazine explores the fact that, though Michigan is designated a state that doesn’t have enough of the second tier or venture capital available, there are alternatives—especially for risk ventures, but also for current small business owners and start-ups. As you look through the magazine, you will see who those entities and people are and discover that we have a feeder system for entrepreneurs, innovators and those creating jobs.

Thanks to these folks and their companies for stepping out and realizing that they are a big part of the solution to the economic woes that have been slowing our business evolution.

Have a prosperous month,

		Chris Holman Publisher