Betting on Small Business: What Boston and Chicago Can Teach Us About Cross-Sector Collaborations
Native Bostonian Carlene O’Garro’s dream to open her first storefront isn’t too dissimilar from the hopes of entrepreneurs in the Windy City looking to start and expand a small business. Her inability to access financing from a bank is an all-too-familiar story fueling the rise of unregulated, online merchant cash advance companies selling entrepreneurs access to easy, high cost capital – and some have ensnared small businesses in Chicago and put their viability at risk.
So what’s connecting these dots? In both cities, private, nonprofit, and government partners are coming together to create new ways for small businesses to succeed. Creatively connecting business owners with holistic and innovative interventions that address their needs, these collaborations are building a supportive environment for small businesses through one unifying philosophy: supporting small business is good business.
In Chicago, Mayor Rahm Emanuel announced a campaign last month to help business owners avoid taking on loans they cannot afford, including cash advances where effective Annual Percentage Rates range from 30 percent to as high as 200 percent. It’s one piece of a larger effort to create a positive lending environment for small businesses and accelerate economic growth, including projects like Seed Chicago, the Chicago Microlending Institute, and the public-private partnership World Business Chicago that puts jobs and small business at the center of the city’s economic agenda.
And it doesn’t stop there. Illinois’ Ridgestone Bank is helping Accion Chicago increase its maximum loan size to $100,000 through the SBA Community Advantage Program. With the ability to make these larger dollar loans available, Accion and Ridgestone are helping to fill the lending gap with transparent, responsible loan products.
In Boston, Carlene’s bakery is the latest new small business to open among many on Centre St. in West Roxbury over the last year. These businesses are driving revitalization of the area, and her grand opening on January 30th featured a diverse cohort of partners and supporters, including Samuel Adams, Accion, the Boston Mayor’s Office, and West Roxbury Main Streets.
For eight years, Carlene’s journey from a business idea to a kitchen incubator to a new storefront was in part made possible by her strong relationships with loan officers who guided her business forward, her participation in speed coaching events that helped her make key managerial decisions, and her work with the City and local advocates to access the permits she needed to open.
If we want to understand how best to support small businesses in neighborhood and cities across the country, these two examples provide rich case studies. Cross-sector collaborations that put small businesses at its center are a bold approach to economic development policy. They’re networks for economic change, and local officials, corporate partners, and nonprofits are wagering that their respective investments in small business is good for everyone’s business.