by German Lopez
Cincinnati to work with SoMoLend in lending plan
The city of Cincinnati will be pairing up with a web-based
lending platform to help out small businesses and startups. With the approval of the
Small Business Advisory Committee, the city and SoMoLend will give up
to $400,000 in loans to stimulate economic
growth and job creation.
The partnership will aid small businesses and startups
through crowd funding, which connects multiple potential lenders so no
single investor, including the city government, is carrying the a bulk
of the burden. Since crowd funding gets more investors involved, it can
also raise more money for promising startups and small businesses.
Businesses will be picked through SoMoLend’s typical
application process, which emphasizes startups and small businesses.
Successful applicants usually have 15 or fewer employees, meet a few
standards regarding business and personal finances and prove they
actually need a commercial loan. In the past, businesses have raised as
much as $1 million in loans with SoMoLend.
Applicants will also have to go through the city’s
application process. The city government will look at how many jobs are
created, what’s the capital investment involved, how much the city will
give relative to private lenders and other similar metrics.
Even as the economy recovers, small businesses and
startups are having a tough time getting loans in comparison to bigger businesses. So the focus on small
businesses and startups is in part to bring beneficial fairness to the
system, says Meg Olberding, city spokesperson. “Access to capital at all
levels has to happen. And the city government feels like small
businesses are key to growth in our local economy.”
The partnership’s focus on startups is economically sound. Governments and politicians love to herald small businesses as the drivers of economic
growth, but studies suggest startups are more deserving of the praise. A paper from the National Bureau of Economic Research found that young small businesses, or startups, are the key drivers to economic and job growth.
As for why SoMoLend was picked over other platforms,
Olberding says location and history played a role: “It’s a local small
business, so it’s … demonstrating what we’re talking about. It’s also a
demonstrated success in terms of bringing viable businesses to the
The partnership is part of an ongoing effort to spur small
businesses and startups in Cincinnati. SBAC was created in 2012 to pave
a clearer, better path that encourages such businesses in the city.
SBAC reviewed, gave feedback and approved the new partnership earlier
today.Councilwoman Yvette Simpson, head of SBAC, praised the
partnership in a statement: “I am excited that the SBAC approved the city’s new partnership with SoMoLend today. By making city lending more
efficient and expanding the network of small businesses receiving city
assistance, this new partnership fits well into the SBAC’s goal of
making Cincinnati a better place for small business.”