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Growth & Expansion
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Home / Growth & Expansion / Additional Business Resources
Additional Business Resources
Service ProvidersBy popular demand, we've compiled a list of area service providers*
(315k pdf) who specialize in supporting early stage entrepreneurs and
start-up companies. For information on listing in the directory,
contact: Mary@AnnArborUSA.org.
*SPARK
provides this list as a community service. The information is provided
directly from the service provider. SPARK does not endorse or claim
responsibility for the accuracy of the information or the quality of
the work performed.
FinancingThe Ann Arbor Region has a wealth of venture capitalists and Angel investors.The mission of these private firms is to make equity investments inearly stage and emerging growth companies. Further info on venturecapitalists in Michigan can be obtained through the Michigan EconomicDevelopment Corporation.
medc.michigan.org
Below is a list of the venture capital firms in the region and their contact information.
Ann Arbor Angels
www.annarborangels.org Arboretum Ventures
334 E. Washington Street
Ann Arbor, MI 48104
734.998.3688
Fax 734.998.3689
www.arboretumv.com Beringea
32330 West Twelve Mile
Farmington Hills, MI 48334
(248) 489-9000
www.beringea.com BlueWater Angels Capital Community Angels
www.capitalcommunityangels.org
Chrysalis Ventures
737 Bolivar Rd. Suite 2500
Ann Arbor, MI 48104
(734) 864-0237
www.chrysalisventures.com EDF
425 North Main Street
Ann Arbor, Mich. 48104
734.663.3213
Fax 734.663.7358
www.edfvc.com Endurance Ventures
122 S. Main St., Ste 200
Ann Arbor, MI 48104
www.enduranceventures.com Frankel Fund
http://www.zli.bus.umich.edu/
vc_pe/frankel_fund.asp Grand Angels
www.grandangels.org Great Lakes Angels
www.glangels.org MacBeedon Partners
217 3rd Street
Ann Arbor, MI 48103
(734) 222-4655
www.macbeedon.com | North Coast Technology Investors
206 South Fifth Avenue, Suite 550
Ann Arbor, Mich. 48104
734.662.7667
www.northcoastvc.com Plymouth Venture Partners
3840 Packard Rd., Suite 110
Ann Arbor, Mich. 48108
734.747.9401
www.plymouthventurepartners.com RPM Ventures
320 North Main St., Suite 400
Ann Arbor, Mich. 48104
734.332.1700
www.rpmvc.com Seneca Partners
300 Park St., Suite 400
Birmingham, MI 48009
(248) 723-6650
www.senecapartners.com TGap Ventures
259 E. Michigan, Suite 208
Kalamazoo, MI 49007
(269) 217-1999
www.tgapventures.com Venture Investors
201 S. Main Street, Suite 900
Ann Arbor, MI 48104
(734) 274-2904
www.ventureinvestors.com Wolverine Fund
University of Michigan Business School
701 Tappan Street
Ann Arbor, Mich. 48901
734.936.3920
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The Great Lakes Entrepreneurs' Quest (GLEQ)is a non-profit program that awards prize money in an annual businessplan competition aimed at encouraging and educating entrepreneurs onthe creation, start-up, and early growth stages of high-growthbusinesses. Additional information is available at www.gleq.org
The Small Business Administration (SBA) is a great resource for start-ups. Between 35-40% of SBA loans are to start-up companies. Criteria include:
- Outstanding business plan
- Good management experience
- Concept/product has good potential to succeed
www.sba.gov/financing
SBA Export Expresscombines the SBA's small business lending assistance with its technicalassistance programs to help small businesses that have traditionallyhad difficulty in obtaining adequate export financing.
Industrial Development Revenue BondsThe Washtenaw County Economic Development Corporation (EDC)
TheEDC as established in 1980 under Act No. 338 of the Michigan PublicActs of 1974, as amended, the Economic Development Corporations Act, inorder to stimulate business capital investment, contribute to thearea’s employment, increase local tax base, and provide needed publicservices.
In order to achieve these goals and strengthen theCounty’s economy, the EDC was given the authority to acquire property,develop land, construct buildings, and finance equipment and machineryfor either commercial or manufacturing enterprises. The most importanttool available to the EDC to perform these activities is its abilitiesto issue tax-exempt revenue bonds.
Tax-Exempt Industrial Revenue Bonds (IRBs)
IRBsare bonds issued by the EDC to finance the acquisition, construction,installation or rehabilitation of “manufacturing” facilities (seedefinition below). The bonds are limited obligations of the EDC payablesolely from revenues or other funds provided by the manufacturingcompany. The interest paid on the bonds is tax-exempt because the EDCis a governmental entity (the interest on whose obligations is nottaxable under specific provisions of the Internal Revenue Code.)
Economic Benefit of IRBs
Theprincipal benefit of IRBs is their low rate of interest. Because theinterest on the bonds is not taxable, the interest rate will always belower than the rate on obligations of a comparable credit which is nottax-exempt. IRBs can also be structured in a variety of ways to fit thementality and economic situation of any borrower. For example, IRBs canbe issued as “lower floaters”, the interest rate on which is resetevery seven days and which can be prepaid at any time without premium.Alternatively, IRBs can be issued as fixed rate bonds with maturitiesas long as the useful life of the assets being financed. Lower floatersbear the lowest rate of interest.
What Can Be Financed With IRBs?
A.“Manufacturing” facilities, including land, buildings, site work andequipment, plus certain soft costs and fees related to the financing,can be financed with the proceeds if IRBs. “Manufacturing” includes anyfacility which is used (1) in the manufacturing or production oftangible personal property or (2) in a process which results in achange in the condition of such property. Typically, any process whichresults in a change in, or adds value to, raw materials or otherproducts can be considered a manufacturing process.
IRBs can be usedto finance the acquisition of land, new construction, expansions ofexisting manufacturing facilities and new equipment. Qualifying costs,financeable up to 100%, include all expenditures related to themanufacturing facility which are chargeable to capital account forfederal income tax purposes. No more than 25% of the proceeds of thebonds can be used to acquire land and other facilities which areancillary to the core manufacturing process.
The acquisition ofexisting (used) manufacturing facilities can be financed, but only ifsuch facilities are “rehabilitated” at a cost of rehabilitation equalto at least 15% of the cost of the existing facility which is financedwith bond proceeds. Used equipment can be financed with the acquisitionof an existing manufacturing facility, with the 15% rehabilitationrequirement being applied to the total cost of plan and equipmentfinanced.
B. Existing IRBs can be refinanced or “refunded” tolower the interest cost or extend maturities (within specifiedlimitations) or existing IRBs. The refunding also can be combined withan IRB financing of new construction or equipment under a single bondissue.
C. Up to 2% of the principal amount of the bonds can beused to pay issuance costs, viz., attorney, underwriter, trustee, EDC,and bank fees. In addition, fees payable to a bank for a letter ofcredit to secure the bonds are financeable above and beyond the 2%limit.
Selling IRBs
Today, most IRBs are sold publiclyor privately placed with institutional investors by an investmentbanking firm or placement agency, which is selected by the Company.Occasionally, financial institutions such as banks or insurancecompanies will purchase the bonds directly. In the typical caseinvolving a public sale or private placement, the Company retains aninvestment banking firm or placement agent to arrange for the sale ofthe bonds. Because the bonds are usually sold to more than oneinvestor, a trustee must be selected by the Company to act on behalf ofthe proposed bond purchasers.
“Credit Enhancement” (Letters Of Credit)
Toenhance the marketability of IRBs, and thereby lower the interest rate,investment bankers often recommend that the Company “enhance” the bondsby obtaining a letter of credit from a major financial institution tosecure the payment of debt service. The Company’s ability to obtainsuch a letter of credit, and terms upon which the letter is issued,will depend entirely upon the credit of the Company. Investment bankingfirms selected to underwrite or place bonds will often be able toassist in obtaining and negotiating a letter or credit.
Financing Structure
Inevery case, the Company will execute a loan agreement with the EDC,pursuant to which the EDC agrees to loan the proceeds of its bonds tothe Company and the Company agrees to repay the loan in accordance withthe payment terms of the bonds. The EDC executes a trust indenture withthe trustee for the bondholders, which provides the terms pursuant towhich the bonds are to be issued and repaid. Other documents, such asmortgage or guaranty, may be executed to secure either the bondsthemselves or the issuer of a letter of credit or other enhancement.
Uponthe sale and delivery of the Bonds, i.e., the closing of thetransaction, the bond proceeds are deposited with the trustee for loanto the Company. The Company generally requisitions bond proceeds fromthe trustee as needed to pay project costs. The Company retains fullownership of the financed facilities, subject only to such liens asalready exist or may be imposed as security in connection with issuanceof the bonds.
Although the bonds are issued by the EDC, only theCompany is responsible for their eventual repayment. The full faith andcredit of the local municipality Washtenaw County is not involved inany way.
Dollar Limitations ($10 Million)
The totalamount of funds that can be raised by IRBs for a single project (otherthan certain public projects and projects for charitable organizations)is limited to $10 million. This $10 million is reduced by the totalamount of “capital expenditures” paid or incurred by or for the benefitof the owner of the project (and any occupant of more than 10% of theproject) over a period of three years before and three years after thedate of issue of the bonds.
Washtenaw County EDC Fee Schedules
Thefollowing schedule of fees payable by the applicant to the EconomicDevelopment Corporation of Washtenaw County has been adopted.
Amount Payable
$500.00 Upon Application
$500.00 Upon Issuance of Resolution Inducement
$500.00 Upon Approval of the Project Plan
1/8% of the face amount of the bond issue At Bond Closing
All variable processing costs including
General counsel review and printing/
Publication charges incurred At Bond Closing
Bond Counsel Fee Schedule
Thefees of Axe & Eckland as Bond Counsel depend upon the size andcomplexity of the financing. For bond issues in excess of $1.5 million,which are secured by a letter of credit, the minimum fee is $12,000plus actual out-of-pocket expenses (such as photocopying, overnightmail, and facsimiles). Factors which may affect the fee are the type ofcredit enhancement, whether the issue will be rated by a nationalrating agency, whether the interest rate is fixed or floating (singleor multi-mode) and whether the business benefiting from the financingis manufacturing, solid waste disposal, or non-profit.
Educational ForumsThe Ann Arbor business community is strengthened by the numerousindustry groups and organizations in the region. They offer outstandingnetworking and educational opportunities, and an Ann Arbor SPARKprofessional can help you determine the best fit for you.
The New Enterprise Forumlinks entrepreneurs with management expertise, potential joint venturepartners and investors, and other professional services through amonthly presentation and networking environment.
www.nef.bizserve.com
The Michigan Small Business & Technology Development Centeris a statewide network providing a full range of services for smallbusinesses emerging and growing throughout Michigan, including newventure companies, existing small businesses, expanding businesses, newtechnology companies, and innovators.
616.331.7480
www.misbtdc.org
MichBiois a non-profit organization dedicated to driving the growth of thelife sciences industry in Michigan. The association serves a diversemembership, including new and established life sciences companies,academic and research institutions, as well as service providers andrelated organizations throughout the state.
Acting as a focalpoint for the life sciences community, MichBio provides networking andeducational events, offers a web portal to industry-specific state andnational information, addresses public policy, and is focusing on thehuman resource, funding and infrastructure issues affecting Michigan’sbiosciences industry.
MichBio is affiliated with BIO, thenational organization that represents biotechnology companies in theUnited States and in 33 other nations.
www.michbio.org
Export AssistanceYou can get information on loan programs, exporting, andinternational trade by contacting the office of the U.S. ExportAssistance Center. Operated in conjunction with the Business Schoolof Eastern Michigan University, the center provides personalizedassistance to regional businesses.
U.S. Export Assistance Center
300 West Michigan Avenue
Ypsilanti, MI
734.487.0259
www.sba.gov/oit
InternationalTrade Loans are for companies already engaged in international trade,or are adversely affected by competition from imports. The state alsoprovides assistance with exporting.
www.exportmichigan.com
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