Small businesses are engines of economic growth in local communities and are facing challenges with growing or enhancing their operations due to surging borrowing costs in a high-interest rate environment. The Federal Home Loan Bank of Chicago (FHLBank Chicago) responds with a two-pronged approach, announcing expanded discounted lending and grants:
• 0% interest-rate subsidy increased to $10 million from $2 million through year-end with the Community Small Business Advance. FHLBank Chicago member financial institutions can provide significantly below-market rate loans to business owners in low- and moderate-income communities. Eligible small businesses qualify by either annual receipts or number of employees, based on U.S. Small Business Administration (SBA) regulations.
• Grants of up to $25,000 per small business to be awarded for a second year through Community First® Accelerate Grants for Small Business to support a variety of purposes, including purchase or improvement of property, equipment, workforce development, and technology. FHLBank Chicago members may submit grant applications on behalf of eligible small businesses with which they have had a business relationship for at least 12 months through competitive funding round open now through September 22, 2023.
“Small businesses provide much needed jobs, services, and resources that drive growth in rural, urban, and small town communities,” said Carolyn Jaw, Executive Vice President, Group Head, Sales, Strategy, and Solutions, FHLBank Chicago. “Local businesses in our members’ communities have worked hard to rebound from difficult years with strong economic headwinds. This combination of solutions offers unique and timely capital support, not just to sustain their businesses but to grow, especially in times of rising interest rates.”
Fayco Enterprises, Inc. (Fayco), a Community Integrated Living Arrangement (CILA) provider in Greenville, Illinois, recently received a low-cost loan from Bradford National Bank that was made possible by the Community Small Business Advance. This zero-rate advance positioned Bradford National Bank to, in turn, extend a favorable interest rate to Fayco for the construction of a 6-bedroom, service-enriched, group home for developmentally disabled individuals in Greeneville. This project, which operates with support through the Department of Human Services’ Division of Developmental Disabilities, will provide residents with stable, supportive housing that facilitates well-being and independence.
“Fayco serves an incredible purpose in society and is a huge asset to our region. This is going to be a place to call home for many individuals for years and years to come. We were honored to be able to assist Fayco with this project, and grateful for the partnership with FHLBank Chicago,” said Chris Barth, Assistant Vice President, Bradford National Bank. “Having an option like the Community Small Business Advance available in our community means that residential support businesses like Fayco have a low-cost source of funding available locally.”
In addition to the increased and ongoing low-cost loan support for small businesses, grants also prove instrumental for business owners seeking to grow or enhance their operations but lacking access to the capital needed to do so. Deerfield Coffeehouse in Dane County, Wisconsin, owned by Teresa Pelletier, received a Community First Accelerate Grant for Small Business in 2022 to support improvements to her building to make it more inviting to customers. The coffee shop serves as a gathering place for families, but when she started hearing from new customers that the building was tough to find due to its appearance and signage, she knew she needed help.
Pelletier’s local banker, Ben Mlsna, Senior Vice President, Bank of Deerfield, connected her to the funding opportunity and she received a $25,000 grant for building upgrades, and a 5% match from Bank of Deerfield. “It’s very important to have money invested in small businesses because they are the backbone of a small community like ours,” said Mlsna. “Keeping small businesses downtown on your main street really just strengthens the community as a whole.”
About the Federal Home Loan Bank of Chicago
FHLBank Chicago is a regional bank in the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to ensure access to low-cost funding for their member financial institutions, with a focus on providing solutions that support the housing and community development needs of members’ customers. FHLBank Chicago is a self-capitalizing cooperative, owned by its Illinois and Wisconsin members, including commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions.