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LISC and State Farm today announced that LISC has received a $10 million low-interest loan through State Farm’s Good Neighbor Relief response to COVID-19 to help Chicago and Central Illinois small business owners and nonprofit organizations work through the economic fallout from the pandemic. With the loan, LISC will establish a Small Business Rescue Fund to distribute loans to small businesses and nonprofit social enterprises for urgent needs, including operational costs like paying employees, vendors and rent.
“The COVID-19 crisis has caused an unprecedented disruption to small businesses and nonprofits, and this fund will provide the assistance that many need to weather the storm,” said Meghan Harte, Executive Director of LISC Chicago. “Small businesses and nonprofits are the lifeblood of our most vulnerable communities, and we’re happy to partner with State Farm to ensure that these vital organizations remain in their communities and come out of this crisis ready to grow and thrive.”
As a result of the spread of COVID-19, social distancing has dramatically reduced the revenue of small businesses. Small businesses and those serving traditionally disinvested communities are less likely to have cash reserves, access to credit, funds to support paid leave, and the ability to work remotely.
The fund will target the following entities, which represent those most in need of capital infusion:
“State Farm’s commitment will allow LISC to provide reduced costs to borrowers associated with underwriting, closing and servicing loans,” said State Farm Area Vice President and LISC Chicago Board Member Amy Isuani. “This is important as the risk
profile is higher for small business loans, and given the interruption in the economy, underwriting requires a higher level of due diligence within a much shorter time period.”
In 2020, State Farm and LISC will celebrate the 20th anniversary as partners in support of community development. Since 2000, State Farm has provided more than $149 million in grants and investments, in addition to this loan.
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The program allows LISC to make loans similar to banks, but with more flexible credit standards to reach businesses that might not qualify for conventional bank financing.