African Development Center & the City of Minneapolis Launch a new business financing program

Mall business owners, city officials and other invited guests came together to witness the launching of a new alternative financing program by African Development Center and the City of Minneapolis in April. Both organizations announced late last month their partnership in this new program for the city’s small business owners. “Today a new generation of immigrants are sustaining small business in the inner city,” said Mayor RT Rybak. “The community developers representing these new Minnesotans have designed some amazing financing tools to help them invest in business. The City is getting involved in these programs because, for the public sector as well, it’s a very cost-effective investment in the future of Minneapolis neighborhoods.”

The program’s first loan recipient, Shukri Gedi, who has owned a clothing and accessories store in the Karmel Mall in south Minneapolis for more than six years went to African Development Center for assistance to secure financing that will help improve her retail business with the goal of expansion & doubling sales. The ADC, utilizing this new program, packaged a loan from the new city funding and its own profit-based micro-loan program.

So how does it work for the lenders to receive their money? Under the plan, investment repayment is based on a profit model rather than interest. “This type of financing opens doors for the city’s growing number of Muslim business owners whose religious beliefs restrict them from receiving traditional interest-based financing,” said Hussein Samater, Executive Director of African Development Center.

“This program is very good for Muslims and immigrants,” said Mrs. Gedi, who started her business on savings and operated entirely on revenues before receiving her loan in February. “It will help us grow faster and compete alongside other American businesses.” The program is available to all small business owners who may not be able to get commercial loans through banks. The loan is designed to assist small businesses such as retail, service, or light manufacturing with financing to purchase equipment and/or make building improvements. A private lender like ADC provides half of the investment at its rate of return, and the City provides the rest, up to $50,000, at a two-percent rate of return. The loan term (up to 10 years) and rate are set by the lender.

Amina Jama of Bloomington who came to the event seeking more information said, “Someone told me last night and I am sure, I will apply for it.” In offering the Alternative Financing Loan Program, the City of Minneapolis has partnered with the African Development Center (ADC), Neighborhood Development Center (NDC), Minneapolis Consortium of Community Developers (MCCD) and individual contributors.