A microloan program for small businesses in Indianapolis has received a torrent of funding from the JPMorgan Chase Foundation—boosting the fund from $155,000 last fall to $2 million.
Business Ownership Initiative, a unit of the Indy Chamber, launched its microloan fund last September to help small business owners in Indianapolis. It has relied on grants from the Glick Fund, the Indiana Housing and Community Development Authority, and from the city.
“This new funding source for our microloan program can help us extend our reach even further,” BOI’s executive director, Julie Grice, said in a prepared statement.
The partnership with BOI and Chase expands the project beyond the core of Indianapolis and likely will reach businesses in untapped neighborhoods, said Dennis Bassett, chairman of Chase Indiana.
With the Chase funding, Indy Chamber now has the largest microloan plan in the country, officials said. Businesses must meet with a business coach to assist them in the loan application.
Microloan programs have been popular for years in developing countries, which don’t have traditional banking infrastructure.
But the financial crisis of 2008 crimped funding to U.S. small businesses and sparked interest in microlending. Traditional lenders typically prefer working with more established borrowers looking for bigger loans that are more profitable and sometimes less risky to the lender.
There are other microloan programs in the state, including one run through the Anderson-based Flagship Enterprise Center, which is tied to the U.S. Small Business Administration’s Microloan Program.
Flagship made 17 microloans in 2012.
Even some cities are getting into the act. Zionsville has a microloan program available to existing businesses in its tax-increment financing district. The program is seeded with TIF proceeds.
Most microlenders make loans in the range from $500 to $50,000, though the national average is $13,000.