400 in 40: MDC lends more than a hand
From the pages of In Business magazine.
Firmly ensconced at the garden level of what is actually a 27-unit apartment building on West Washington Avenue is Madison Development Corp., an entity that has spackled lending cracks since 1977. Its current president, Lorrie Keating Heinemann, jokes about the rushing water she hears in basement pipes when building residents return home at 5 p.m., and that her predecessor, the retired Frank Staniszewski, used the same desk for 30 years.
Don’t get the impression that modest surroundings translate into modest results. In 40 years, Madison Development Corp. has lent money to more than 400 startup businesses. Their names are familiar — among the first to secure a loan in the early years were Union Cab, Madison Athletic Club, and Red Caboose Day Care Center. More recent borrowers are PerBlue and TrafficCast International.
These are not high-stakes players, even though the average loan of $50,000 often is a big deal to borrowers, whether they need it for working capital, inventory, or equipment. MDC can lend up to $200,000 to qualifying businesses — i.e., those that cannot meet the underwriting standards of private commercial lenders — who pledge to increase their workforces by one full-time job for every $35,000 in loan funds received.
“Our business mission is basically quality, affordable housing in the Greater Madison area, as well as to finance hard-to-finance businesses,” notes Heinemann, a former secretary of the state Department of Financial Institutions. “These are businesses that aren’t bankable yet.”
Past loan recipients often have gone on to become bankable. Thanks to a combination of city and bank financing, RP’s Pasta is on the move again. In 2010, RP’s received an MDC loan to accommodate its move to Main Street, and will move to a larger, refurbished facility on Progress Road as part of the new food-processing entity named Tribe 9 Foods. It will occupy the space with Ona Treats, formerly of Colorado, and Madison’s Yumbutter.
Madison startups have been supported through traditional business loan funds and MDC’s venture debt fund, which provides debt financing for high-tech firms. On the affordable housing front, Heinemann was happy to show off the one- and two-bedroom efficiencies in the newly minted Mifflander.
“The exciting part,” says Heinemann, “is that seeds were planted 40 years ago for small business loans that led to companies that created jobs in great industries.”
Forty years later, the MDC is still planting seeds.
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