Running a small business is always difficult, but entrepreneurs in low-income communities face a daunting challenge: the private market is failing to lend to borrowers in the most economically at-risk areas. That’s why LISC is partnering with the Small Business Administration's Community Advantage program to provide loans of up to $250,000 to small businesses working and growing in low-income neighborhoods. "These loans are much smaller than our traditional financing packages," says Kevin Boes, president of the New Markets Support Company, a Chicago-Based LISC affiliate, "but they are like oxygen for small businesses looking to grow and hire."
LISC boosts commercial activity, creates jobs in distressed areas with new financing product for small businesses
NEW YORK (February 5, 2014)—The Local Initiatives Support Corporation (LISC) is filling a gaping hole in the financial market with a new line of small business loans designed to give much-needed support to entrepreneurs who set up shop in low-income communities.
Working with the Small Business Administration (SBA) and its Community Advantage program, LISC will provide loans under $250,000 to small businesses that put down roots in troubled neighborhoods or those looking to expand to meet growing need. LISC, which has worked to revitalize low-income communities for more than three decades, is only the third organization approved to make such loans on a national scale with the federal government’s backing.
“There is really no private market solution for this kind of financing,” said Michael Rubinger, LISC president and CEO. “Loans of this size are hard to come by for any business owner. For those operating in low-income areas, they are almost nonexistent,” he said.
LISC will use Community Advantage loans to fuel commerce and create jobs in its 30 urban program areas as well as rural communities across the country where it works. Loans can be used to finance working capital, inventory, equipment, business acquisitions, real estate development and tenant improvements that help small businesses thrive.
“If we are to make low-income neighborhoods safer, more prosperous places to live, we need to support businesses that are the backbone of local economies,” said Kevin Boes, president of New Markets Support Company (NMSC), the Chicago-based LISC affiliate focused on commercial lending and investing in high-poverty neighborhoods. “These loans are much smaller than our traditional financing packages, but they are like oxygen for small businesses looking to hire and grow.”
The loans complement LISC’s existing work to revitalize storefronts, clean up industrial parks, launch manufacturing facilities, build arts and entertainment centers and support other commercial and community facilities in disadvantaged areas. In addition to Community Advantage, NMSC also provides SBA 504 loans and leverages New Markets Tax Credits to support these efforts.
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has invested $12.9 billion to build or rehab 298,300 affordable homes and apartments and develop 49 million square feet of retail, community and educational space. For more, visit www.lisc.org