Mayor Rahm Emanuel partners with Accion and Citibank to form the Chicago Microlending Institute, which will administer a $1 million fund to distribute micro-loans to micro-businesses.
With a microloan of $15,000, Francisco Flores was able to open Mr. Taco on West Chicago. In eight months, the family run restaurant has continued to grow adding two new employees to work beside Francisco's mother, wife and children.
Even though he had grown up in the food service industry, working as a chef and caterer for others, Flores says banks weren’t lending money to startups like his. The process of saving and looking for funding caused Flores to fall behind on his house.
"We could have lost everything," he said. The cash injection from Accion Chicago helped the Flores family open the doors to Mr. Taco. Now he says the not-for-profit is helping him with business advice and one thing almost as important.
"That's great too." 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.
“Small businesses are the backbone of Chicago’s economy,” Emanuel said. “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.”
According to the mayor’s office, more than 20 percent of Chicagoans work for companies with five employees or less -- businesses ignored by banks. City Hall estimates an unfulfilled demand for $28 million in microloans every year.