Chicago Announces $1 Million in Small Business Personal Loans
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UPDATED: Dec 7, 2011
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“Small businesses are the backbone of Chicago’s economy,” Chicago’s Mayor Rahm Emanuel said as he announced plans to create the Chicago Microlending Institute (CMI), an organization that will be granted $1 million of the mayor’s 2012 budget to issue small business personal loans.
This CMI will also be given the responsibility of training two new microlending organizations each year, so more microlenders can be established to administer personal loans to up-and-coming businesses.
Microlending began as a plan to stimulate the third-world economies. But, according to Emanuel, “Our best small business and job creation market is not around the world… it’s right here in our backyard in our own city.”
Emanuel feels the microlending industry is necessary for the growth of small businesses since large banks and credit unions often refuse to issue personal loans to aspiring business owners since they usually don’t have an established credit history.
“Families come together to raise $15,000 here, $20,000 there… But, it’s not enough to literally get the lights on, the doors open,” Emanuel explained. But according to the mayor, microlending takes the risks that banks and other personal loan issuers refuse to take, and grants personal loans to those who don’t necessarily have the credit history acquire one from a traditional bank.
After acquiring a loan from a microlender, the business owner can open his business and establish credit through paying back the personal loan he was granted. That way, when the business owner seeks to open another branch, he can then qualify for a loan from one of the larger banks.
The CMI will be run by established microlender ACCION, and the mayor expects the CMI to be able to administer up to 250 personal loans to small businesses.
An expected result from these loans is the creation of around 1,000 jobs.