An incubator for Main Street: How one credit union supports small shops

Danielle Hastings

In downtown Lansing, Michigan, the Middle Village Micro Market is a key staging ground for launching new businesses. 

The market stems from a partnership between Lake Trust Credit Union in Brighton, Michigan, and the management agency Downtown Lansing Inc. The partners, which provide financial and educational aid to entrepreneurs, are now looking to diversify the scope of projects they can support.

The management agency debuted its physical Middle Village Micro Market incubator in early 2021 to address the decrease in customer activity during the COVID-19 pandemic. After years of shifting the business district to accommodate the daytime worker in conjunction with the nearby governmental region, store owners saw the majority of their customer base dry up as work shifted to a remote environment, explained Julie Reinhardt, director of downtown community development for Downtown Lansing.

Since its initial class of vendors, the program sponsored by the $2.6 billion-asset credit union has helped launch roughly 11 businesses — with all still in operation, and 80% with their own brick-and-mortar locations. The organization announced in April that it began construction on a new $4 million facility to support 16 restaurants and plans to open in March 2024.

Small business banking

Small businesses seeking to grow face tough credit market, surveys say

May 9, 2023 6:07 PM

"100 percent of our businesses have been women-owned or BIPOC-owned businesses and that's a big part of what we are creating downtown. … We want everyone to see themselves in our downtown," Reinhardt said.

Rising interest rates and inflation have financial institutions and entrepreneurs alike worried about the path forward, given the current state of the credit market and heightened regulatory scrutiny from agencies such as the Consumer Financial Protection Bureau.

In addition to the financial backing provided by Lake Trust, which is certified as a community development financial institution, the agency offers educational classes on structuring business accounts, social media marketing strategies and other techniques that can help the emerging business owners succeed, said Brandalynn Winchester-Middlebrook, executive vice president and chief people & purpose officer at Lake Trust.

"Small businesses play a critical role in our local communities [as] they help to create the environment, they help provide jobs and they create a sense of that community's culture," Winchester-Middlebrook said. "It's critically important that we ensure that they are successful, and have avenues to achieve that success."

Entrepreneurs say the Micro Market is a crucial venue for where they can fine-tune their financial and operational plans prior to opening their first independent locations.

Danielle Hastings, who founded her personal care product shop Sylvia's Sudsery in 2020, joined the program in March of last year to help develop her entrepreneurial skill set and align her branding with her customer base. The store was named in honor of her grandmother, who shared a similar passion for helping others.

"One of the things that really helped was connecting me to the community and creating a relationship with people in Lansing," Hastings said. "That helped tremendously as quite a few of my customers are return customers." 

After more than a year in the Micro Market, Hastings closed on a storefront of her own and is in the process of finalizing renovations before opening later this year.

"I didn't think it was possible for me to have my own storefront and I was originally planning on doing all this online until I ran into Middle Village. … Whether it's through moral support, giving continuous training on marketing, building your brand's story and helping business owners establish connections to help drive success, all of those things help Middle Village be what it is," Hastings said.

Recent data from the National Credit Union Administration for the first quarter of 2023 showed that commercial lending among credit unions increased by $26.1 billion, or roughly 22.2%, to $143.6 billion since the start of the year — supporting predictions of strong underwriting activity.

Despite banks occupying a larger share of the small-business lending market, experts with the National Association of Federally-Insured Credit Unions say that credit unions are still working to close the gap as bank lending cools.

"The credit union model is rooted in relationship lending, and that's kind of at the heart of small-business lending where local knowledge is paramount," said Curt Long, chief economist and vice president of research for NAFCU. "A big national lender just isn't going to have the kind of local knowledge that it takes to be successful in a lot of these areas."