Small businesses are the backbone of the Illinois economy, and the Great Recession has been tough on them. Advantage Illinois, a new, federally-funded program to help grow the Illinois economy, will be a shot in the arm to our small businesses.
Advantage Illinois will accelerate investments and ease the credit crunch for small businesses, thanks to more than $78 million from the federal State Small Business Credit Initiative (SSBCI) of the Small Business Jobs Act of 2010. Advantage Illinois consists of three programs to spur institutional lending to small businesses with 750 or fewer employees and one program to leverage private venture capital in start-ups and high-growth businesses. The State of Illinois expects to generate a minimum “bang for the buck” of at least $10 in new private lending for every $1 of federal funding provided through this program—meaning at least $800 million in private dollars pumped into the economy to grow the small business sector.
The institutional lending piece will consist of three programs:
Capital Access Program (CAP)
- Reduces amount of capital lenders need to establish loan reserves
- Mitigates lender risk with minimal administrative/servicing burden
- Creates a pool that offsets shortfalls remaining after lenders liquidate individual loans
- Helps finance larger projects now that the maximum loan size has been increased to $1 million
- Helps borrowers qualify for loans for which they wouldn’t normally be eligible.
Participation Loan Program (PLP)
- Mitigates lender risk since DCEO (Illinois Department of Commerce and Economic Opportunity) purchases part of the loan and takes a subordinate position to lender
- Provides borrowers with a lower interest rate when lender and DCEO rates are combined
- Increases DCEO support per full-time employee to $25K to $65K
- Helps borrowers qualify for loans for which they wouldn’t normally be eligible.
Collateral Support Program
- Mitigates lender risk through additional cash collateral on deposit with lender
- Increases lender’s deposit base as DCEO provides funds under the same rates and terms as other normal bank clients
- Supplements borrower’s pledged collateral when its own is deemed insufficient by lender
- Helps borrowers qualify for loans for which they wouldn’t normally be eligible.
The venture capital piece consists of:
Invest Illinois Venture Fund (IIVF)
- Speeds commercialization of research discoveries in high-growth sectors
- Helps small business attract private investment
- Increases number of viable start-ups in Illinois
- Help businesses commercialize research discoveries faster.
The Invest Illinois Venture Fund program is a new venture capital fund to support young, innovative companies in our state that show high-growth potential. The IIVF is part of a suite of capital access and credit investment programs available through Advantage Illinois. The IIVF supports early-stage companies that hold promise for job creation, capacity for entrepreneurial talent and are supported by one or more qualified lead investors. The fund encourages the growth of private venture capital investment to increase the number of institutional investment-grade companies in Illinois.
For more information, visit ildceo.net/AdvantageIllinois or email anthony.rolando@illinois.gov.
