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Grand Rapids staff propose $425,000 Third Ward revolving loan fund to seed microloans
Summary
City staff proposed transferring $425,000 from the Third Ward equity fund to an Economic Development Corporation-managed revolving loan fund aimed at microloans for Third Ward small businesses; staff and commissioners asked for further outreach to Community Development Financial Institutions and corridor partners before formal implementation.
City economic development staff presented a proposal to transfer $425,000 from the fiscal year 2025 Third Ward equity fund into a revolving loan fund managed by the city’s Economic Development Corporation (EDC) to provide low-interest microloans to Third Ward entrepreneurs and small businesses.
The proposal, described by the presenter as a source of “early stage capital,” would limit loans to business development uses and exclude real estate development; draft terms discussed included loan sizes up to $50,000 (with examples as small as $5,000 to $10,000), interest rates roughly 1%–3% and repayment terms of about 36 months. The city would aim to structure the fund so repaid principal and interest would revolve back into the program to finance additional loans.
City staff said the plan is still formative and that next steps include outreach to local Community Development Financial Institutions (CDFIs), the Small Business Development Center (SBDC), the Southtown Corridor Improvement Authority (CIA), and the EDC to confirm the fund would be complementary rather than duplicative of existing lending programs. Staff also said a formal agreement between the city and the EDC and a budget amendment to transfer the money would follow further design work.
Commissioners stressed coordination with existing programs. Commissioner Purdue and other members asked whether the proposed fund would compete with local CDFIs or county loan programs; staff replied they are exploring “buy-down” models and partnerships to keep rates low and avoid duplicating services. Commissioners also requested clarity on administration, vetting and prioritization of borrowers, and how quickly funds would be available; staff said they are aiming for broader engagements now and noted a target rollout in the second quarter of 2026, but emphasized additional analysis and partner conversations are needed before implementation.
No formal motion to establish the fund was made at the meeting. Instead, the body signaled support to continue socializing the concept with partners, return with more detailed implementation options and produce any required agreements or budget amendments once a model is finalized.
Staff identified potential administrative models that could rely on the EDC’s capacity or outside partners to underwrite and service loans; they will return with specifics on how applications would be vetted and what staff or contractor resources would administer the program.
The discussion closed with staff agreeing to convene further meetings with the EDC and with Southtown CIA representatives and to return to the Economic Development Project Team with a formal proposal after those consultations.
