The U.S. Small Business Administration this afternoon announced that it has approved a $750,000 revolving microloan fund for a new statewide organization to assist small entrepreneurs in starting, expanding or refinancing their businesses.

The Iowa Foundation for Microenterprise and Community Vitality (IFMCV) will work with community foundations and other nonprofit organizations across Iowa to provide loans of up to $35,000 to businesses with fewer than five employees. The IFMCV also announced today that it has received a $500,000 grant from the Greater Des Moines Community Foundation to establish the nonprofit organization.

“We’re awfully excited to get this off the ground,” said Mark Edelman, president of the 15-member IFMCV board, which he said could begin approving microenterprise loan requests within about three weeks. “We see the new organization expanding access to SBA microloan funds and other microenterprise funds in the rest of the state.” Edelman is also director of the Community Vitality Center in Ames, which provided technical assistance to the new microlending group.

The Greater Des Moines Community Foundation made its grant from a $1 million donor-advised fund established by the Northwest Area Foundation in 2000. The IFMCV initiative is intended to fill a gap by stimulating small businesses as a strategy for reducing poverty.

The IFMCV plans to coordinate its microlending efforts with an Iowa Department of Economic Development program that received $475,000 in funding earlier this year from the Legislature. That program calls for funding two metro-area and three non-metro-area microenterprise organizations.

The program’s goal is to provide gap funding for microenterprises that don’t qualify for conventional bank financing, but graduate them to be able to use local commercial lenders within four to six years as their bankability improves, said Craig Downs, IFMCV’s loan administrator.

With the tightening of commercial credit generally, the microloans may become an even more important source of entrepreneurial capital, Edelman said.

For more information, contact the Iowa Foundation for Microenterprise and Community Vitality at (515) 212-0182.

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