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Loans for the little guys

'Microlending' evokes programs to aid high-risk entrepreneurs abroad. Why it may show up on your street.

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"Because of Accion, I've been able to grow my company," she says. "Nobody ever had wanted to help me before. I started out small, and look what I've got now. I'm an example of what can be done."

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A start-up that's always in fashion

For as long as she can remember, Eve Wolk wanted to own a store.

With a degree in fashion merchandising and marketing from the Fashion Institute of Technology in New York, she felt confident as she cashed in some investments and opened a small boutique called "Chatchka's" on Chicago's north side in 1999.

"Here I am thinking I had everything figured out, and what I discovered is you don't really know anything until you're doing it," says Ms. Wolk.

Soon after launching her store, she discovered how difficult it was to get a business loan from a bank. "I had no credit whatsoever," she says. "I went from bank to bank to bank to bank. And no one would lend me any money."

Through a local women's business development center, she learned about Accion Chicago, and its microenterprise loan programs. With a business plan in hand and support from loan officer Alan Lane-Murcia, she received a $10,000 loan at 12 percent interest. That loan helped her establish a credit record, which in turn allowed her to go to her own bank and secure a $25,000 loan at a more competitive interest rate. She then paid off the Accion loan and had $15,000 left to build her business and inventory of accessories and clothing.

As Wolk's business expanded, doubling each year (annual sales now total just under $300,000), she continued to build her relationship with Accion. Not only does the organization make repeated loans to clients with good repayment records, it also helps them develop other business relationships. In Wolk's case, Accion stepped in as a second on another bank loan of $30,000 and provided the young entrepreneur with a $15,000 loan last fall to buy inventory for the holiday shopping season. She also has a close relationship with her loan officer, drawing regularly on his experience and insights.

"You can't get that at a bank," says Wolk. "You just can't get that kind of support anywhere else.... I'm not saying this isn't hard work, but it's more rewarding than anything I've ever done."

Meeting demand for day care

Back in 1996, social worker Reggie Hayes decided he had to do something after the day-care center at a local YMCA in New Haven, Conn., closed, leaving many low-income mothers in the lurch.

"I knew there was really a need here for affordable day care for mothers," he says. "I had always thought of opening a center, but when that crisis came along, I decided it was time."

Mr. Hayes found a good site in the basement of an apartment complex in a low-income neighborhood. Using several thousand dollars of his own money, he rehabbed the room and opened a center licensed by the state to care for 18 children. The center expanded gradually, becoming licensed for 25 children, and eventually grew so popular, says Hayes, that he knew, "I really needed to move."

Although he'd been turned down by several banks, on the grounds that his salary as a social worker wasn't enough to cover his own needs and to run a day-care center, Hayes says: "I just kept on plugging. I knew I'd get a loan somewhere."

Eventually, a bank connected him with the Connecticut Community Investment Corp., a nonprofit organization that works as the lender for a special state program which offers microloans to day-care providers - the first of its kind in the nation.

CCIC wound up giving Hayes a $25,000 loan in 2000. The money enabled him to lease and renovate an empty building, creating a bright, colorful space for 43 children. What's more, says Hayes, CCIC recently volunteered to help him buy the building so he can accommodate even more children.

"That kind of sent chills through me," says Hayes of CCIC's offer. "They came to me, and said, 'We want you to buy, and we're going to finance the purchase for you.' That isn't something that just happens in life every day."

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