For nearly 30 years, Ron Van Straten, a grant specialist with GRAEF in Green Bay, has worked with businesses to find ways to finance their dreams by tapping into state and federal grant programs as well as commercial lenders. He sat down to talk with Insight contributor MaryBeth Matzek to discuss how using grant programs is now more important than ever for businesses.
A lot of people have great ideas for businesses, but it all comes down to funding. If you can’t secure it, your idea is going nowhere.
For more than 28 years, I have helped businesses find financing for projects just getting off the ground or helping existing businesses expand. It’s all about coordination – working with commercial lenders and then the state and federal programs, plus any local dollars available – and coming up with the best package possible for a business.
One of the projects I enjoyed most was working with the employees of TEAM Industries in Kaukauna. Their owner went bankrupt, but the employees thought that if they could buy the business, they could turn it around. They had the knowledge and the expertise. I was able to work with them and pulled together some other players, like the City of Kaukauna and some grants through the Small Business Administration, along with a commercial lender. The gamble paid off and they are now a very successful company.
But when it comes to business financing, the whole world changed in 2008 when the bottom fell out of the financial industry. Lending dried up and the whole banking industry changed. That shift made state and federal funding programs more important than ever as the main means to move projects forward. There’s no denying that things have really slowed down since then.
Deals are still getting done, but it takes more creativity in how you bring together the state and federal grants with traditional financing options. I think people who are hoping things will go back to the way they were before the crash will be disappointed. We need to move forward in this new world order and understand there are still opportunities to be had. The key is to find them.
Another big change I’ve noticed during the last few years is how it’s just as important to retain jobs as to add them. Many times, tax credits are awarded for each new job created, but we’re simply not seeing the big numbers we were seeing years ago. Now, a company may want to expand by putting in a $10 million piece of equipment, but that won’t really create very many jobs – maybe a couple – but it helps insure that the other 55 people employed there will still have jobs because the company will be more competitive.
Communities are playing a larger role than ever before when it comes to economic development. Whether it’s through tax incremental financing (TIF) districts or revolving loan programs, there are things to be done to encourage new economic development. Some communities in the region are on the ball and great with this and some aren’t. Some communities shy away from TIFs and make it way more complicated than it need be. The key is that you’re encouraging new taxable development and you’re going to use that new revenue to pay for infrastructure projects.
Some business owners say there’s a lot of bureaucratic hassle when it comes to federal and state grants and there is a lot of paperwork, but it pays off in the end because you are leaving yourself with more options. I know many business owners just try to finance the whole thing themselves and they get in such a deep hole and they can’t get out of it. Or, they finance it and are doing well – so well they may need to expand, but it’s difficult to get additional financing because there’s no track record or relationship with a lender.
Business plans are a key element in the grant application process. You’re telling a story about your business and what you hope it to be. Helping businesses get off the ground or expand is very rewarding since you can see how you’re helping the economy grow.