Building from Scratch: A New Ecosystem for Chicago's Small Businesses

Nearly five years ago, the City of Chicago launched the Chicago Microlending Institute (CMI), a program established to train new lenders to make targeted loans to small businesses. For the first time, a city took action to directly invest in the creation of a more robust microfinance ecosystem that could deliver the financing needed by entrepreneurs to spur small business growth.

After estimating an unfulfilled demand for nearly $28 million in microloans annually -- a funding gap that threatened jobs and economic stability in already vulnerable areas – CMI's goal was to increase the capital access needed for small businesses to create jobs in communities that needed them most: the low-and-moderate income and communities of color on the south and west sides of Chicago.

Since its establishment, more than 250 businesses have received loans from the CMI, for a total of $2.6 million, creating or preserving more than 1,000 jobs. Nearly 70 percent of those loans have gone to communities that have historically seen below- average lending activity. Just as importantly, more than 90 percent of those loans supported women and minority entrepreneurs.

Regardless of the size of the loan (loan sizes range from as low as $500 to $25,000), the impact on the business is often real and immediate. For example, after Tigist Reda opened the Ethiopian restaurant Demera with her husband, she secured a $20,000 loan from CMI, with financing provided by Accion. Equipped with the capital needed to build out the space and order supplies, sales doubled. The restaurant now employs 18 people.

Tigist's story is being replicated across a new micro-industry of micro-lenders in Chicago.

I'm proud of what we've achieved with CMI, but am also grateful for the leadership and vision of our partners, including Citi Community Development, which in addition to the Chicago Community Trust and the City of Chicago provided the financial support critical to underwriting the cost of setting up the CMI. Without that seed capital, the organization I lead, Accion Chicago, would not have been able to successfully launch and sustain CMI over the past five years.

But Citi also provided more than financial resources. George Wright, Regional Director of Citi Community Development in Chicago, and his team brainstormed with us and helped to advance the idea before it enjoyed a broad base of public support. George was appointed by the mayor to sit on the CMI advisory council, and met monthly with potential business participants and stakeholders. We are proud to have collaborated with Citi, our other funders and the City to promote the growth of small businesses in Chicago. Armed with access to capital and generous technical assistance, a burgeoning entrepreneurial ecosystem is now helping to revitalize our LMI and communities of color across Chicago.

About the Inclusive Cities Series
Citi Community Development collaborates with America's most prominent local public officials, civil rights leaders and community organizations to expand financial access and build more inclusive cities. Through these innovative collaborations, we harness Citi's expertise, products, services and investments to ensure all residents and families have access to opportunity. Inclusive Cities is a new guest blog series where Citi's leading community partners bring to life, through stories of leadership and ingenuity, how their partnership with Citi is driving real urban progress in communities around the U.S.