Today, Mayor Rahm Emanuel and City Treasurer Stephanie Neely announced a partnership to invest an additional $1 million to expand the City’s successful microlending initiative by providing critical loans to help support roughly 300 new small businesses by 2016. The investment has the potential to create hundreds of new jobs in Chicago.
“Small businesses are the engines of growth in our neighborhoods and the backbone of our economy, yet too many entrepreneurs report difficulty in obtaining the financing they need to start up or expand,” said Mayor Rahm Emanuel. “By partnering with City Treasurer Stephanie Neely we are expanding the market for small dollar loans and building upon the great success we’ve seen with our microlending initiative to create more opportunity and grow jobs.”
The Chicago Microlending Institute (CMI) was launched by the City in May 2012 to train and develop microlenders to expand small business financing in Chicago. To date, more than 110 small business owners have received over $900,000 in loans, creating or preserving approximately 500 jobs.
“Coming from a family of entrepreneurs, I know how important affordable capital is to a growing business,” said City Treasurer Stephanie Neely. “Our experience with microlending has been an unqualified success and I am happy to partner with Mayor Emanuel to expand this much needed initiative."
The loans were made by Accion Chicago, the City’s partner in establishing the CMI, and the two new microlenders trained through the program: the Women’s Business Development Center and Chicago Neighborhood Initiatives (CNI). The Chicago Department of Business Affairs and Consumer Protection (BACP) anticipates that the remaining funds will be loaned out by December 1, 2013. Beneficiaries of the program represent the diversity of Chicago’s neighborhoods and business owners: 75% of borrowers were minorities, 57% were women-owned, and 59% had low-to-moderate incomes.
The City of Chicago launched the initiative by providing $1,000,000 in loan capital while Citibank and the Searle Funds at The Chicago Community Trust with Accion Chicago to establish the CMI and train new microlenders. Microloans are smaller loans not offered by traditional financial institutions that serve as crucial financing tools for small business expansion and survival.
The loans provided through this program are sized to provide small businesses with small but critical funding to support their growth, with 37% of loans falling below $5,000 and 67% below $10,000. Borrowers in the program report that the microloans have made it possible for their businesses to expand to second locations, fund new projects, and maintain or create jobs.
The Mayor and the Treasurer announced this partnership during the small business budget round table at the Industrial Council of Nearwest Chicago (ICNC). The ICNC mission is to strengthen companies in the Kinzie Industrial Corridor and to facilitate economic and community development.