Community Services

 PROGRAM DESCRIPTION

               Because they lack the ability to sell bonds, most small-businesses cannot obtain adequate fixed-rate financing.  Therefore, the ability of low-cost and accessible financing is critical to their success.  The State, in recognizing that small business enterprises are responsible for 80 percent of all new jobs, has pioneered innovative programs to help fill this capitalization need.  One of these programs is the Illinois Community Services Block Grant (CSBG) Loan Program.

                The Illinois Community Services Block Grant Loan Program is administered jointly by the Illinois Department of Commerce and Community Affairs and a statewide network of Community Action Agencies (CAAs).  The Program provides long-term, fixed rate financing to new or expanding companies in exchange for job creation and employment for low-income individuals.  It links federal, state, and private financing by using CSBG funds at low interest in combination with bank funds and equity.  By combining bank financing with low interest CSBG loans, the Program is able to offer below market interest rates for up to ten-year terms.

               Generally up to 49 percent of each loan consists of CSBG dollars from local community action agencies.  The publicly funded portion of the loan is made available at an interest rate not to exceed five percent; at least one job must created for and filled for a low-income person for each $10,000 of public investment (methods of exception to these general provisions are described herein).  The remaining portion of each loan is obtained from a local bank, owner’s equity or other sources.  The Small Business Administration may guarantee up to 90 percent of the bank’s portion of the loan through its 7(a) program.  The final overall “blended” interest rate to the borrower is well below the usual market rates available to the small business for fixed rate loans.

Check out the Guidelines