Testing New Methods of Flexible Credit Delivery for Entrepreneurs in Indianapolis

February 3, 2020 | By

Kaliah Ligon, Forward Cities Indianapolis Local Director

Editor’s note: This article is part of a larger series called Solution Stories, which aim to tell the story of the work Forward Cities is helping to guide in cities across the country.  For additional background on the specific approach taken in communities like Indianapolis, please visit the first article in the series here.


As part of a two year Community Entrepreneurship Accelerator aimed at strengthening the local Indianapolis equitable entrepreneurial ecosystem and facilitated by Forward Cities,the Indianapolis Innovation Council and its affiliated Working Group are creating an innovative 0% interest revolving loan fund for entrepreneurs in the Northeast corridor, Near Northwest, and Near West neighborhoods.

As we engaged with entrepreneurs from the three pre-selected focus neighborhoods at an Entrepreneur Assembly event in May 2019 and via a survey of entrepreneurs, we learned about the need for additional, short-term financing in June and July. This loan fund is innovative in that it will leverage Tax Increment Finance (TIF) dollars and seeks to address the challenges that microbusinesses and startups have covering pending receivables and mitigating cash flow issues. Based on entrepreneur input, we envision that this will be especially beneficial to catering/food businesses.

We anticipate that this loan fund will allow microbusinesses and small business startups to acquire more equipment and supplies and pay short-term laborers that help them increase sales or stabilize their business.

By focusing on small businesses and microbusinesses with under $100k in sales we will help provide the working capital that is often hard to come by for businesses of this size. By focusing on business owners who live or operate in one of the three focus neighborhoods, we will provide financial resources in places that have few financial institutions.

Funding has been secured from the TIF to provide a total of $60,000 in loans which we expect will be drawn down by numerous entrepreneurs. The loans will range from $500 to $10,000; while we anticipate that there may only be one or two $10,000 loans funded, there are likely to be dozens of loans in the $500 to $1,000 range. The Business Ownership Initiative (BOI) at the Indianapolis Chamber of Commerce is administering the loan fund and will be working with local stakeholders to underwrite these loans.

Although the financial resources businesses need are often one of the top needs mentioned, this program will also help the entrepreneurs build critical relationships. This program will foster relationships with BOI’s diverse and highly qualified team by leveraging their skill set in processing and delivery. These relationship ties are necessary so that the BOI team will hear the positive stories resulting from the program and have ample communication if entrepreneurs hit a snag and need to delay a payment or seek financial advice.

At Forward Cities we look forward to hearing and sharing stories of greater business stability and realized business opportunities that are all precursors to increased community wealth-building and job development.

Within the first two quarters of 2020, we hope to see a significant uptake of this opportunity by entrepreneurs in the neighborhoods as well as promising signs of early success precipitated by the loans. This will allow us to make a convincing case for this loan program to become a mainstay in our community, giving entrepreneurs a chance to increase their financial acumen and potentially build strong business credit.  If successful, this could lead to obtaining larger traditional bank loans and establish longer standing relationships with both BOI and the greater Chamber.