By Anna Lothson
It's a program many Oak Parkers may not know exists, but for the small business owners it benefits, the small commercial loan program ran through the village and Oak Park Development Corporation is an important one.
Sara Faust, president of OPDC, addressed the village board earlier this month about the importance of the program. It helps small businesses, primarily startups, get necessary funding for capital, inventory, property investments and equipment, Faust said.
Formerly called the micro loan program, the board gave the approval needed at the July 1 meeting to ratify the details of the program. Because it was revised earlier this year, it was necessary for the board to OK loans previously approved. One of those loans, however, was in default.
The village board reviewed the loan program last year when it was realized that two loans above the $20,000 limit were authorized despite being above the limit. This necessitated a review of the program. The resolutions approved by the board this month allowed the village to ratify the execution of those loans.
The board undertook a review and determined the program to be valuable to the community. They also updated the agreement with OPDC and participating banks that includes a maximum loan of $50,000 with a 50 percent village guarantee.
Faust explained that the micro loan program, as established in the '90s, was an economic development tool where local banks provide qualified small business operators with a loan. Faust explained that the village's guarantee is an incentive for local banks to provide loans to small business where they otherwise might not take the risk.
Since its launch in1995, the program has provided $1.13 million to small businesses in Oak Park, according to Faust. An overwhelming majority, she said, were women or minority owned. There have been four defaults in the program, but the village was only asked to provide a guarantee for one, which cost amounted to roughly $22,000.
Oak Park provides a 50 percent guarantee for any uncovered contingent reliability and the remaining money is subsidized from Oak Park financial institutions.
"These are loans that are difficult to make in the private market" Faust said. "We are not by any means a lender of last resort, but rather we work in cooperation with businesses, primarily startups that in most instances have not established a business credit rating."