Small loans with big impact: Microcredit powers a wide range of businesses
Caribou native Taylor Nadeau was in his mid-twenties, working a 9-to-5 routine.
“I was a bit annoyed by that,” he says. “I thought there had to be more to life when it came to work.”
He had the idea of starting a car detailing business.
“It’s really gratifying to see a car arrive dirty and leave like new,” he says.
He checked the Caribou Northern Maine Development Commission website and spoke with commercial credit officer Josh Nadeau (no relation), whose work includes helping micro-enterprises. Josh helped Taylor secure a $24,000 microloan through the United States Department of Agriculture’s Rural Microentrepreneur Assistance Program, or RMAP, to pay for equipment and other start-up costs.
Taylor started TGN Detailing in May 2018. The small business has flourished, with one to two employees handling around 500 cars a year and other cosmetic service projects like vinyl wraps.
In 2020, Josh proactively reached out to Taylor and explained the Paycheck Protection Program to her.
“You can call a credit card company and you have to go through a bunch of people,” Taylor observes. “What is good in this organization is that it is the neighbour, the handshake, knowing that I have a problem and that there is no intermediary. It’s individual connection and willingness to help.
An easy loan
Willingness to help is a big part of the story of the Rural Microentrepreneurs Support Program, seen as essential for starting and expanding small businesses in rural areas.
“We have clients who come to us and say, ‘I went to the bank and asked for $25,000 and they wanted 20% down payment. And I don’t have a 20% down payment, but I could use that money,” says Josh Nadeau. “For us, $25,000 is an easy loan. The RMAP corresponds to a niche that many other financings do not have.
Congress established RMAP in 2008 to provide loan capital and grants to nonprofit organizations, community financial institutions, and local economic development councils. The organizations provide technical services and fixed-rate microloans of up to $50,000 with a maximum tenor of 10 years to rural microentrepreneurs, those with 10 or fewer employees.
In the NMDC’s service region of Aroostook and Washington counties, “microenterprise activity has been quite active, even in the midst of the pandemic,” Nadeau says.
In addition to RMAP, several federal stimulus packages have helped many microbusinesses survive the pandemic and even provided some with additional capital for repairs or equipment they may have postponed.
Squeak and resolution
Lee Umphrey, president and CEO of Eastern Maine Development Corp. in Bangor, says that in some ways the pandemic has rebuilt and refocused microenterprise efforts.
“Companies have been rewarded for their courage and determination,” says Umphrey. “Small construction, carpentry and other trades have flourished along with food trucks and emerging sectors of the fishing industry like oysters and seaweed.”
Photo / Courtesy of Eastern Maine Development Corp.
Lee UmphreyPresident and CEO of Eastern Maine Development Corporationsays his organization helps adapt business plans.
EMDC works with microenterprises from the outset to ensure they are ready to start.
“We provide technical assistance, loans, labor and government contracting services,” he says. “Because we are a community-based organization providing these services, we help tailor business plans that reflect the needs and demands of their community with an eye on how to grow that business beyond.”
The Androscoggin Valley Council of Governments in Auburn has seen new interest in RMAP, says executive director Amy Landry. A recent client was looking to buy a bed and breakfast.
“They came to Maine recently and bought an inn and wanted to make some improvements,” she says. “We provided them with technical assistance and funding.”
RMAP lenders have more flexibility than banks in deciding whether to grant a loan, she says.
“We provide subordinated debt to small businesses, which may not have been able to obtain bank financing.”
Photo / Courtesy of Council of Androscoggin Valley Governments
Amy Landry is executive director of Androscoggin Valley Council of Governments.
She continues: “We are not here to compete with the banks. We are here to support micro-enterprises that are not ready for bank financing and can eventually become bankable. We also have instances where a bank is willing to do financing but is not willing to take on all the risk and partner with AVCOG to provide follow-on financing.
Chris Morton opened KMH Music in Près Isle in 2012 to offer instrument rental, sales, repair and accessories. Eventually, he turned two storage rooms into studios and began offering private lessons. Today, there are three employees and two contract teachers. Revenues for 2021 were the highest since opening.
“I first contacted the NMDC in the spring of 2020 when the governor ordered non-essential businesses like ours to close,” Morton says. “As a sole proprietor, I fell into a weird niche where I was not entitled to unemployment, but I was also unable to run my business.”
Photo / Courtesy of KMH Music
Chris Mortonco-owner with his wife Jordyn of KMH Music in Près Isle, says Northern Maine Development Commission help was essential to stay in business during the pandemic.
David Spooner, a loan officer with the Northern Maine Development Commission, helped him apply for and receive a $5,000 grant to pay business expenses and stay afloat until the U.S. Department of Labor implement an unemployment program for sole proprietors. Spooner helped him apply for two installments of this latest grant program. The various grants totaled approximately $33,000.
“These monies saved our store at a time when circumstances had cut short our normal sources of income,” Morton said.
Additionally, NMDC facilitated a loan for a new furnace to replace a 40-year-old heavy fuel consumer, saving hundreds of dollars per month.
NMDC also offered technical assistance for things like website design.
“Without the exceptional efforts of David Spooner and NMDC, I’m not sure our store would still be running,” says Morton. “Our shelves would be empty, we would have an incredibly depressing debt piled up, and our heating oil bills would be prohibitively high to the point that I’m not sure we could justify staying in business.”
At the Bliss Farm Inn in Durham, David and Mary McLellan appealed to the Androscoggin Valley Council of Governments for help.
The couple moved to Maine in 2021 after various career endeavors. David was a museum director in Alabama when the pandemic hit. They decided the time was right to fast-track their plans to get into the hostel and founded Bliss Farm.
The property – a historic house dating from 1772 and other buildings – required major work, including the installation of sprinkler systems and smoke detectors.
The couple considered bank loans.
Photo / Courtesy of Bliss Farm Inn
David and Mary McLellan drawn from Androscoggin Valley Council of Governments obtain a microcredit to buy Happiness Farm Inn in Durham.
“We were in a unique position as this business hadn’t been fully operational for three years,” says David McLellan. “So while we were able to buy the turnkey property, with the existing infrastructure, the banks weren’t willing to consider it an existing business.”
Finding AVCOG through an internet search, they were granted a $50,000 microloan – with repayment over six years, 6% interest and payments of $966 per month.
The McLellans say microenterprises are more about communities than individual businesses.
“When we came in, it wasn’t just a conversation about getting to code,” says McLellan. “It was a cultural conversation. AVCOG was ready to support us not only from a financial point of view, but also for the community.
Josh Nadeau notes, “Microenterprises are the backbone of small businesses in our community. They provide employment opportunities for local contractors and workers, while supporting our local economy, most of the time by moving money within our neighborhoods and local communities, rather than outside of our region.
In 2013, Dana Cook decided to open her own automotive store in Poland. The niche business, Dana’s heavy road service, would primarily service tractor-trailers, diesel trucks, and specialty vehicles such as motorcycles and snowmobiles. The garage would include road service.
His wife, Jessica Hamm, approached AVCOG.
“They helped us through the application and business plan process,” she says. “Interest rates were great, comparable to and maybe even better than most banks.”
The initial loan of $40,000 to $60,000 went towards start-up costs, including a service truck.
“It was nice to have all of this in one call,” she says.
The small business flourished, attracting national and local trucking companies.
Additional loans have been granted by AVCOG for a new waste oil furnace. Then the garage they were renting was suddenly put up for sale.
“We had planned to move, but not then, so we would have had to either close the business or buy it,” says Hamm. “At that time, we had no money set aside for closing costs or a down payment.”
Photo / Courtesy of Dana’s Heavy Duty Roadside Service
Jessica HammOwner of Dana Intensive Road Servicesaid to work through Androscoggin Valley Council of Governments financial and technical assistance combined in a single source.
AVCOG worked with them on a loan for closing costs and down payment, partnering with a local bank who provided a mortgage.
When Cook passed away in 2020, AVCOG continued to provide support, Hamm says. “They delayed the payments for about six months so that I could decide whether or not to continue the activity. They knew him and they knew what had happened,” she says.
Hamm decided to sue the company. AVCOG has once again reached out to help with pandemic-related assistance programs.
“They know who I am when I go there,” she says. “I personally go there to deposit my payment and say hello.”
Taylor Nadeau also bears witness to this touch of good neighborliness.
“I went to the NMDC website to see what they could offer and emailed Josh, just asking him some basic questions,” he recalls. “We ended up talking. He basically wanted to know everything – what I was going to do, where I had seen myself for so many years. The most important thing I take away from them is that it’s a business, but it’s very personal.