City's 2 percent loan program for small businesses reaches milestone
Mayor R.T. Rybak was joined by Robert Stephens, founder of the Geek Squad, and small-business owners and elected officials on Thursday, Sept. 30 to celebrate the thousandth 2 percent loan that the City of Minneapolis has made to a small business. The recipient of this loan - The Blackbird Caf relocated to their new home at 3800 Nicollet Ave., since a Feb. 18, 2010 fire destroyed their previous location and several other small businesses at W. 50th St. and Bryant Ave. S.
Since the start of the City's 2 percent loan program in 1988, the thousand loans have generated a total $28 million in investment in Minneapolis’ small-business community — and that investment has leveraged $87 million more in private investment. Those 1,000 loans, which average around $25,000 have helped create more than 2,000 jobs and retain more than 9,300 jobs. In addition, the loans have a remarkable success rate: since 1988, over 97 percent have been fully repaid with interest.
The 2 percent program was created as a way to provide funds to small Minneapolis businesses through a partnership with local banks. The City provides its funds at a 2 percent interest rate for a 10-year term, matched by the private lender’s providing half the loan at a market rate of interest. Since the program is revolving, loan payments are then used for financing other small businesses.
Minneapolis was a pioneer among large cities in supporting small businesses with low-interest loans when it launched the revolving 2 percent loan program in 1988. Since then, a variety of cities have emulated Minneapolis’ success.
The 2 percent loan program is one of 15 different finance tools that the City of Minneapolis uses to support Minneapolis diverse small-business community. For more information on other City programs and assistance for small business, see Business Assistance.
Published Oct 1, 2010