Last updated on August 1st, 2022 at 04:10 pm
The City of Racine has expanded its micro-enterprise loan program, which provides disadvantaged business owners with a $15,000 loan at a low interest rate.
Now in its second year, the “Micro Fund” is dedicating $100,000 in loans to Racine-based owner-operated businesses with five or fewer employees – up from $62,000 offered through the program in 2019.
The goal of the Micro Fund is to foster business growth and address lending disparities experienced by under-represented business owners in the city, said Cory Mason, Racine mayor.
“This is really meant to give a shot in the arm of capital for emerging businesses that are looking to go into that second stage so they can expand and grow their businesses,” Mason said.
While Racine is known for its established legacy companies, small businesses with 10 or fewer employees compose nearly half of Racine-based businesses, Mason said.
“It’s sometimes forgotten what an important role small business play in our employment base and we want to create opportunities for those firms to grow as well,” Mason said.
Five businesses were selected as finalist for the City’s first ever micro-fund loan program in 2019. The program’s winners included Valid Kixx, Yogi’s Pud’n, I Love Tamales, 2SwiftSuits and Audreyanna’s.
This year’s program funds, administered through the Department of City Development, will be available in 2020 through federal funding from the Federal Department of Housing and Urban Development’s Community Development Block Grant Program.
HUD funds are designated to support lower or moderate-income households, which is calculated at 80% of the area median income, said Ben Lehner, Racine Community Development Program Specialist. A household of four would qualify, for example, if the combined income of the household was $57,000 or less.
The 5-year loan has an interest rate of 1%. However, loan recipients will only pay interest the first two years of the loan, paying the full amount the remaining three years, Lehner said.
Eligible businesses must have 5 or fewer employees, including the owners and be in operation between 6 months and 3 years. The City of Racine’s Neighborhood Services Division is accepting applications through March 2, 2020. Applications will be reviewed on a competitive basis, based in-part upon the scoring matric included in the application materials, according to a press release.