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Thursday, July 15, 2010 05:22 pm

Many want micro loans

Helping ideas to get off the ground

Having a great idea does not an entrepreneur make. Turning an idea into profit takes business acumen and quite often a little bit of start-up cash.

That’s the idea behind a micro loan program administered by the Springfield Black Chamber of Commerce with the Quantum Growth Partnership, The Springfield Project, The Springfield Chamber of Commerce, Illinois Ventures for Equity and the Illinois Small Business Development Center.

Emphasizing minority participation, the Black Chamber has awarded 20 loans in amounts ranging from $1,000 to $3,000 to those it says might not otherwise qualify. The terms range from 12 to 36 months with interest rates between 2 and 4 percent. As the borrowers pay back the loans, they make the next year’s loans possible.

“A lot of folks have an idea but don’t have the resources or the backing to get it up and running. So we’ve tried to provide that gap,” says Tim Rowles, the micro loan administrator with the SBCC.

Now in year two of the loan program, Rowles says the borrowers – 20 so far – are mostly in good standing. Two have defaulted and one is working to stay on track while the remaining 17 loans are on schedule.

Rowles says that nearly 50 businesses applied for the last set of loans, which have totaled $20,000 each year. He says he hopes to administer another set of loans in a third round this year.

Businesses that have received the micro loans have included automotive services, hair care, retail and catering.

As a part of the loan program, start-up businesses must attend a workshop at the Illinois Small Business Development Center at Lincoln Land Community College.

“Our role is to help prepare people for the business they’re about to get into,” says Kevin Lust, director of the development center. “That usually means helping people understand the business side of it in addition to the activity side.”

While Rowles says it can be difficult for start-up entrepreneurs to obtain such small loans, micro loan recipient Julio Barrenzuela says his only formal attempt to borrow money was through the Chamber’s program.

“There’s a lot of young people out there that have great ideas but don’t have the confidence to approach big banks or to ask for help from venture capitalists and things like that,” Barrenzuela says.

The Latin American dancer’s business, Salsa 29 Productions, aims to build communities by combining dance lessons with motivational speaking and entertainment. He used the loan, awarded last summer, to pay six months’ rent on an office in Springfield so that he could stop conducting all of his work meetings in casual restaurants.
“I was having a hard enough time trying to define my business, let alone get an office,” he says.

When his loan ran out, Barrenzuela went back to working out of his home and holding meetings in more business-friendly eateries, but he says the experience was worth the $80-some per month loan bill he’s still paying.

“Having learned what it’s like to maintain an office with that initial loan, I decided I could probably go without.” He says the amount of travel he does means his office is really in his car. He says that as his business grows, he may reconsider establishing a physical presence and if he does, he’ll know what he’s getting into.

Contact Rachel Wells at rwells@illinoistimes.com.
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