Northern Lights - Issue 28 - January 2024
A GODSEND AND DREAM CONTINUER: USDA Rural Development & Venture North Partnership for Small Businesses
by AMY LANE
Jinyoung Fekete runs the popular spot Owl Eye Coffee Roasters in Cadillac with husband Aaron.
At Owl Eye Coffee Roasters in downtown Cadillac, Aaron Fekete has a new roof protecting his young, growing business and future income potential.
It was a need that became pressing at the building housing not only the coffee shop that Fekete and his wife Jinyoung opened about four and a half years prior, but also upstairs space where Fekete has plans for Airbnb rentals.
Making New Roofs Possible
“All my income revenue is under that roof,” Fekete said. And making the new roof possible, were U.S. Department of Agriculture Rural Development funds lent through Venture North Funding & Development – two partners aiding small businesses along Main Streets and in communities throughout northwest Michigan.
For more than a decade, Rural Development and Venture North, a federally certified Community Development Financial Institution or CDFI, have worked together to achieve economic growth in the region, with Rural Development dollars supporting Venture North programs and lending.
“This is really economic development throughout northwest Michigan and throughout rural communities,” said Brandon Fewins, Rural Development’s Michigan director. “It’s been a longstanding partnership that has really blossomed over the years.”
A Marriage of Federal Support and Local Action
Rural Development support has funded Venture North’s mini grant program and technical assistance and it provides nearly a quarter – 24 percent – of Venture North’s lending capital. That includes nearly $1.7 million through the USDA Intermediary Relending Program that offers 1 percent, low-interest loans to local lenders or “intermediaries” like Venture North, who re-lend to businesses to improve economic conditions and create jobs in rural communities. Venture North’s most recent funding under that program came in 2023, when Rural Development awarded $1 million, the maximum available at a single time.
Venture North last year also received maximum awards from USDA’s Rural Microentrepreneur Assistance Program -- $500,000 as a loan for Venture North to help businesses with 10 or fewer employees with financing, and a $100,000 grant supporting Venture North’s free consulting that helps small businesses remove barriers to growth. In the past, Venture North also utilized a USDA Rural Business Development Grant program that provides grants to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging rural private businesses.
Fewins said Venture North’s use of funds, particularly for loans, fits with Rural Development aims in underserved or distressed communities. “Equity for our rural communities, our rural families, is really a priority of the current administration (of President Joe Biden),” Fewins said. “We see these relationships, with Venture North and other CDFIs, as critical to delivering on that promise.”
He said a key component of the relationship with Venture North is that “when we grant out or loan out dollars to Venture North, they’re making the decisions on how the money gets distributed in the community. It’s not USDA making the decision on who gets that micro loan, it’s Venture North. And they’re best suited, because they’re in that community, the region.”
Stewards of Taxpayer Dollars
Fewins said Venture North’s track record makes the partnership work well. Venture North President Laura Galbraith said Venture North has a low loan loss experience, has been timely on loan repayments to USDA, continues to revolve initial USDA loan funds it received in 2013 and 2016, and has been able to leverage USDA’s loan capital with more capital.
Since 2013, Venture North has deployed more than $1.6 million in USDA loan capital for $4.6 million in projects that have created 92 jobs and retained 127.
“Having that track record provides us with confidence, that they’re great stewards of taxpayer dollars. We have gotten to know the team, they know our team. The track record speaks for itself,” Fewins said. “When you look at that overall impact, over the years that we’ve been partnering together, it’s been dramatic. It is a significant impact to the region.”
That impact includes Main Streets where there are businesses like Owl Eye Coffee.
“A lot of these funds have been loaned out to downtown startup businesses. A downtown is the foundation of a community; it’s the heart of a community,” Fewins said. “We need strong and vibrant Main Streets.”
Achieving Childhood Dreams
Once a barista when he was growing up in the Cadillac area, Owl Eye was a childhood dream of Fekete, who opened it in March 2019 initially as a coffee wholesaler with limited hours for the public to buy beans. It’s grown into a sit-down café serving food and drinks and Fekete said since the café space opened in November 2022, annual revenue has more than doubled. He hired his first employees last year and has five part-time workers with hopes of adding more.
This past December was the best in the history of the business, with sales nearly double those of the previous December. Fekete hopes this year to renovate back rooms to provide more space for packaging and wholesale operations and he’d like to acquire a second roasting machine that would reduce his time spent roasting, provide backup for his current machine and allow for growth. He supplies coffee wholesale in nearby communities and would like to probe new territories and business opportunities with a coffee-serving food truck that’s a long-term goal.
“I feel like we’re getting some good momentum right now, and I want to continue to keep that. The demand for us to grow, is there,” Fekete said.
He said his $10,000 loan, to which he added his own money to cover the $12,000 cost of the roof installed in November, wasn’t something he planned on and he’s grateful. Having the support from USDA Rural Development and Venture North “gave us a good boost” and “took a load of stress off, and worry. I can’t overstate how valuable it is,” Fekete said.
“Places like Venture North are really a godsend and a dream-continuer for people like me.”
Since its inception 15 years ago, Venture North has lent more than $10 million to small businesses in its 10-county region. The 170 loans have resulted in the creation of 518 jobs and retention of 559, and the loans have leveraged nearly $38 million from other sources, bringing total project investments to $48 million. Venture North has also awarded more than 350 small grants totaling $1.2 million and provided 1,500 businesses with no-cost business consulting.
Galbraith said USDA’s capital is low-cost – at loan terms of 1 percent interest for 30 years or 2 percent interest for 20 years, depending on the program – and flexible, available for use throughout the 10-county region and for startups, businesses that are growing, and most industries. It is lending capital that “is crucial to Venture North achieving its mission of serving small businesses in areas of economic distress,” she said.
“Plus, USDA has been able to help Venture North with its operating expenses via grant funding. We have utilized USDA grants to hire more contractors that provide no-cost business consulting and to improve our outreach into communities of economic distress.”
From Start Up to 2,000 Meals in 17 Weeks
Such consulting helped entrepreneur Dana Winowiecki debut her new meal planning and personal training business, In It To Win It. A Venture North mini grant, joined by money from a related source, went toward an attorney who helped Winowiecki select the correct corporate structure for her Traverse City business, confirm her chosen name, and prepare articles of incorporation and other items.
And now, with the help of a $7,500 Venture North loan supported by USDA Rural Development funding, Winowiecki, a Leelanau County native who for years has been a personal trainer and meal consultant, is about four months into operating her meal preparation service offering healthy, well-balanced meals featuring local and organic produce and products.
Going into the venture, Winowiecki saw a demand for accessible, healthy meals available for pickup or delivery, and she said since launching mid-September, the service has been well-received.
In her first 17 weeks, she had over 300 orders and prepared over 2,000 meals. She’s working to build consistency from week to week and reach a goal of 300 meals weekly. A loyalty program and subscription options are in the works and she’s looking to expand her footprint – both in terms of delivery radius and pickup locations, as well as one-on-one relationships with farmers in the region.
“I’m trying to support local and organic as much as possible,” Winowiecki said.
Currently renting kitchen space in Goodwill Northern Michigan’s Traverse City kitchen, Winowiecki hopes someday to have her own kitchen and her own studio to do personal training, pursuing all in one location.
Dana Winowiecki’s In It to Win It meal planning and personal training business got an early boost from USDA Rural Development funding.
A Recipe for Success
“Personal training and cooking is my passion. I absolutely love both of them,” she said.
With the Venture North loan, Winowiecki and her husband were able to recoup personal funds they had put into starting the business, for expenses like pots and pans, utensils, mixers, blenders, scales, food and containers, printer and labels and other essentials.
“It is hard to start up something on your own,” Winowiecki said. “The loan provided…a little stability. It gives me a cushion…financial peace of mind.”
And she’s looking upwards and ahead.
Continually adjusting her offerings and developing recipes, Winowiecki said she’s “learning something every week” and striving to improve and fine-tune her business. “I want to be better, and I want to be successful,” she said. “I think the biggest thing for me is just that I want to grow.”
Amy Lane is a veteran Michigan business reporter whose background includes work with Crain Communications Inc., Crain’s Detroit Business and serving as Capitol correspondent for nearly 25 years. Now a freelance reporter and journalist, Lane’s work has appeared in many publications including Traverse City Business News.
