News and Events

Mayor Emanuel Announces Chicago Microlending Institute, $1M in City Funding

First in the Nation Institute - Partnership Between ACCION Chicago, CitiBank, and the City of Chicago - Will Train New Microlenders and Create Nearly 1,000 Small Business JObs

December 6, 2011

 

 

MAYOR EMANUEL ANNOUNCES FORMATION OF NON-PROFIT MICROLENDING INSTITUTE TO INVEST $1 MILLION IN THE CITY’S SMALL BUSINESSES
First in the nation institute will train new microlenders and spur more than $20 million in annual business revenue, create nearly 1000 small business jobs over next four years

 

Mayor Rahm Emanuel today announced the formation of the Chicago Microlending Institute (CMI), a first-in-the-nation institute that will train new lenders to make targeted loans to the City’s smallest businesses. The CMI will administer the Small Business Loan Fund, a $1 million pool of loan capital that is aimed at supporting the smallest businesses in Chicago with targeted microlending.

 

“Small businesses are the backbone of Chicago’s economy,” said Mayor Emanuel. “We must do everything we can to make sure our small businesses have the resources and opportunity they need to compete and grow. This program will build on ACCION’s proven model and bring two more top-tier microlenders into the market next year. By using the $1 million loan pool being made available by the City, the new lenders will provide capital to more than 250 small businesses so they can expand and fuel our economy.”

Once approved by the City Council, ACCION Chicago will be tapped to run the institute, which will administer a training program that will train up to two additional lenders each year. The training program, which will cost $245,000 to administer, will be funded by third-party grants. Once graduated, the new microlenders will receive funds from the loan pool as seed capital to lend to small businesses. In its first year, ACCION Chicago and two new graduated microlenders will begin lending – making loans to approximately 100 small businesses in its first year.

 

“Microlenders are key drivers of job creation across the city, especially in low- to moderate-income areas, Microlenders can facilitate job creation at extremely low rates of subsidy, ” said ACCION Executive Director Jonathan Brereton. “We are committed to creating a sustainable, efficient loan environment that meets the needs of qualified small businesses.”

 

“Ensuring the quality of financial services provided is of the upmost importance in any financial inclusion program,” said Bob Annibale, Global Head of Citi Microfinance and Citi Community Development, which is underwriting $100,000 of the cost to set up the institute. “Citi is proud to support the training component of CMI, which through ACCION Chicago will provide microlenders with the knowledge and tools to catalyze the sustainable growth of small businesses in Chicago.”

 

In Chicago, more than 20 percent of the City’s residents work for firms with five employees or less, and many of these businesses are located in low- to moderate-income neighborhoods. These businesses have real difficulty accessing capital from traditional lenders. The City’s estimates indicate that there’s an annual demand for nearly $28 million in microloans that is unfulfilled.

Mayor Emanuel has made the support and growth of the city’s small businesses a key priority of his administration. The CMI is another step in an ongoing series of efforts that the Mayor has initiated to support small business in Chicago.

Earlier this year, the Mayor announced two initiatives that focus on small and minority- and women-owned businesses: The Small Business Initiative, which levels the playing field so that small businesses can compete alongside large firms for City contracts, and the Diversity Business Initiative, which is designed to increase the use of minority and women-owned businesses in the private sector by providing participation credits toward City contracts. Additionally, Mayor Emanuel worked with Goldman Sachs to bring the 10,000 Small Businesses program to Chicago, which will infuse the city with $25 million in crucial resources and training for the city’s small businesses. The Mayor has also successfully rolled back half of the $4 “head tax” in his 2012 budget, and has pledged to eliminate the entire tax by the end of his term.

CONTACT:

Mayor’s Press Office

312.744.3334

press@cityofchicago.org

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ABOUT CHICAGO MICROLENDING INSTITUTE (CMI)

Chicago needs a citywide network of non-profit business lenders to jump-start economic revitalization and job growth. Small businesses with less than 5 employees employ over 20% of Chicago residents and many are concentrated in low-to-moderate income neighborhoods. These businesses have the potential to create thousands of jobs in the neighborhoods they serve but lack the financial resources to expand and create more jobs. Without a capital infusion, many of these small businesses will either fail or never grow to create jobs and reach their full potential.  ACCION’s existing micro lending activities are exceedingly efficient at creating jobs but are unable to reach all those needing their resources.  

In an effort to create a city-wide network of community based non-profit business lenders with the technical expertise and start up capital required to build lasting infrastructure, ACCION Chicago will join in partnership with the City of Chicago, Citibank, and others to create the first entity of its kind – the Chicago Microlending Institute, or “CMI.”  CMI will be a partnership of public, private, and not-for-profit organizations that will leverage ACCION Chicago’s microlending expertise. CMI will provide hands on training and start up capital to non-profit organizations that will begin microlending in CMI’s first year of operations.  CMI will also provide best practice consulting to other non-profit organizations to ready them to begin microlending, and/or improve their existing operations. 

Depending on an assessment of the quality of CMI’s impact in its first year of operations, CMI may continue its operations thereafter, training and providing start up capital to launch more microlenders in the ensuing years.  At a minimum, through the first 12 months CMI expects to launch two new microlenders, and provide a total of $1 Million in microloans to at least 100 different businesses. 

Utilizing this $1M investment from the City, and the training support of Citibank, the lenders will make a combined 280 business loans totaling $2.8 Million over the next 4 years.  The 280 loans will support 280 different businesses, creating or maintaining an estimated 850 jobs and providing $14 Million in payroll to those employees. 

 

ABOUT ACCION CHICAGO

ACCION Chicago is the region’s largest and most experienced microlender representing more than 90% of the microloan volume in the region.  ACCION is a nonprofit alternative lending organization dedicated to providing credit and other business services to small business owners who do not have access to traditional sources of financing. By encouraging the economic self-reliance of microentrepreneurs throughout the Chicagoland area, ACCION Chicago strives to help businesses and communities grow. Since 1994 ACCION Chicago has disbursed more than $17 million to over 2,300 clients. In 2010 alone, ACCION loans created or maintained nearly 700 jobs. ACCION Chicago business loans range from $500-$25,000. For more information about ACCION Chicago’s small business loan products, visit www.accionchicago.org.  ACCION Chicago is part of the ACCION U.S. Network, the largest microfinance network in the U.S., whose members have collectively lent $305 million to small business owners since inception in 1991.

 

ABOUT CITI COMMUNITY DEVELOPMENT

Citi Community Development (CCD) is leading Citi's commitment to achieve economic empowerment and growth for underserved individuals, families and communities by expanding access to financial products and services, and building sustainable business solutions and innovative partnerships. Our focus areas include: commercial and philanthropic funding; innovative financial products and services; and collaborations with institutions that expand access to financial products and services for low-income and underserved communities. For more information, please visit www.citicommunitydevelopment.com