Cedar Rapids launches microloan program for small businesses

CEDAR RAPIDS - Microloans as small as $1,000 can provide a footing to help turn a business idea into a business, city officials said Tuesday.

With that in mind, the City Council voted to steer $50,000 from its existing Business Assistance Revolving Loan Fund for use by businesses seeking loans between $1,000 and $10,000.

An additional $25,000 from private sources will make $75,000 available for the new microloan program.

Jasmine Almoayed, economic development liaison in the city manager's office, said the microloans will target businesses owned by racial minorities, low-income residents and women who don't have a lot of resources to start a business.

A microloan, for example, might help a business purchase a cash register, Almoayed said.

The Cedar Rapids Public Library is providing support to the program, and librarian Nancy Geiger told the City Council that food businesses, day cares and small accounting businesses are the kind of companies that are apt to apply for microloans.

Les Garner, president and chief executive officer of the Greater Cedar Rapids Community Foundation who has helped in the development of the microloan program, said that loans of $10,000 or less in other cities have been important in creating opportunities in core neighborhoods.

The Cedar Rapids program will provide business support from the East Central Iowa Chapter of SCORE, the Small Business Development Center and the East Central Iowa Council of Governments as well as the library, Garner said.

Council member Kris Gulick said he understood that other microloan programs have seen high repayment rates. He called it a 'great economic development tool.”

'People want to go to places where new businesses are starting,” Gulick said.

Recipients of microloans will pay 4 percent interest and must repay the loan in three years.

The Business Assistance Revolving Loan Fund started in December 2013 with $500,000 in community disaster grant money. The fund, which provides loans for up to $50,000 per business, was designed to go to businesses in flood-hit areas of the city or to businesses owned by flood victims.

To date, the revolving loan fund has provided loans totaling $123,000 to five businesses: Revolution Realty; Grateful Crepe; Sauce Bar and Bistro; Dumpling Darling; and Pub 217.