When 13 lenders said no, one credit union said yes to small business dreams
Lake Trust Credit Union's innovative microloan program has deployed nearly $5 million since 2019 by treating small business financing as personal loans, enabling approval in days rather than weeks. This approach has helped entrepreneurs launch and scale businesses while supporting community events like Brighton's Destination Stars Hollow festival.
Credit union microloan program demonstrates small business financing difference
Thirteen loan rejections couldn't stop one determined entrepreneur. When traditional lenders and even other micro-lenders turned away the aspiring business owner who needed end-stage financing to open her doors, Lake Trust Credit Union said yes. Six years later, she's expanded to two locations and launched an online business.
"She will tell you that Lake Trust was her last chance," said Nicole Paine, business development manager at Lake Trust Credit Union. "She was not expecting to get a yes, and we were able to approve her because we used her personal income and personal credit."
The difference came down to Lake Trust's unique approach: treating microloans as personal loans for business purposes. While traditional commercial lenders require detailed business plans and projections, Lake Trust evaluates entrepreneurs based on their personal income and credit history. This strategy enables the Brighton, Michigan-based credit union to approve loans in three to four business days instead of the typical eight to 12 weeks for commercial lending.
Breaking down barriers for micro businesses
Lake Trust's microloan program, established in 2019 alongside the credit union's Community Development Financial Institution designation, specifically targets businesses that often fall through the cracks of traditional lending. The program offers loans under $50,000 with remarkable flexibility, including line-of-credit options for businesses with fluctuating cash flow needs, secured loans for expensive equipment purchases, and vehicle financing for trades and food trucks.
"We heard the voices of those micro-businesses. The ones with one person to maybe five, six, seven, eight on staff," Paine explained. "Oftentimes, those businesses were left on the outside looking in, and they were getting it done, but it was creatively, and sometimes not in a very positive way, like leveraging credit cards or maybe getting high-interest personal debt."
The program's flexibility proved crucial during the pandemic for a Detroit clothing retailer who had initially used Lake Trust financing to transition from a home-based business to a storefront. When COVID-19 changed retail buying patterns, requiring larger inventory purchases at different timing, the owner returned to Lake Trust for a line of credit that allowed him to make market purchases and pay down the balance as merchandise sold.
Lake Trust has deployed nearly $5 million through its microloan program since 2019.
Community impact beyond individual businesses
For Lake Trust, it is about more than individual business lending.
This month, the credit union serves as title sponsor for Brighton's second annual Destination Stars Hollow event, expected to draw 50,000 Gilmore Girls fans to the area. Beyond their sponsorship, Lake Trust has approved microloans to help participating businesses stock inventory and manage cash flow for the massive visitor influx. Last year's inaugural event brought more than 40,000 people to downtown Brighton, quintupling the town's population and transforming local shops into beloved locations from the television series.
The heart of the event remains the same: celebrating community, supporting local shops, and inviting visitors to step into the cozy, quirky world of Stars Hollow. It serves as an economic catalyst, energizing the downtown area and creating job opportunities that build a stronger, more vibrant community. The credit union's involvement reflects its belief that small businesses are at the heart of thriving communities, with events like Destination Stars Hollow celebrating that philosophy while spotlighting local offerings and driving economic growth.
The credit union difference in action
"You have to meet your members where they are," Paine said, articulating the philosophy that drives Lake Trust's microloan approach. "I think overall the credit union message is that we want to make sure our members are financially well. Supporting something that creates cash flow, that creates a living wage, that creates other jobs, it's really important."
Rather than viewing early-stage entrepreneurs as high-risk prospects, Lake Trust recognizes them as community members deserving financial partnership. This approach creates alternatives to high-interest credit card debt and predatory lending while fostering local economic development.
The ripple effects extend far beyond loan approval statistics. When businesses thrive, they create jobs, generate living wages, and strengthen the economic fabric of their communities.
For credit unions nationwide considering similar programs, Paine emphasized the importance of flexible lending options and understanding that entrepreneurs often work multiple jobs while launching their ventures. Lake Trust's success proves that meeting historically marginalized business owners where they are—whether in a kitchen perfecting cupcake recipes or scaling from a home office to storefront—can yield substantial returns for both individual members and entire communities.
