Two Black business owners on Chicago's South Side struggled to secure bank loans to complete their community investment projects after receiving city grants created to address decades-long disinvestment in Black and brown neighborhoods.
Although Donnell Digby was able to use his own funds to cover the bulk of his $780,000 project, making the newly opened project myself RESTAURANT TO LIFE Inside the South Shore Cultural Center, James Dougherty and business partner Corey Gilkey are still struggling to find a lender to complete construction of their mixed-use project Policy Kings in Washington Park after receiving more than $2 million in city funding.
Both say banks see no value in investing in resource-poor areas.
“It's hard to get loans and lending for new businesses. This has been our uphill battle to try to find a place to go,” Digby said of Psychedelic, the first black-owned restaurant located inside the South Shore Cultural Center and offering lake views in the previously “whites-only” country. Money because it's good business.” club. The restaurant is named after the Swahili word for “soul.”
“(If) you don't have the financial resources, you don't have the history, and the banks aren't really keen on financing projects as brand new,” Digby continued.
Myself officially opened on October 9 with the help of a $250,000 Chicago Recovery Plan (CRP) grant awarded to Digby in 2022.
However, he said banks were reluctant to make a loan, even with CRP grant money, despite his 20-year history in real estate and running other businesses such as Woodlawn At 1200 A. 79th Street
Digby said it was the knowledge he gained over the years in real estate that helped him persevere.
“The CRP has helped us with our capital expenditures with our pocket money,” Digby said. The tribe.
Politics kingsnamed after a numbers game played by black Chicagoans in the early 1900s, has begun renovations on the building at 353-63 E. 51st Street 2 years ago. Through the development, the owners are seeking to tap local black-owned vendors to “revitalize” the neighborhood. The building will include new retail, dining and apartment options in the corridor.
James Dougherty, co-founder of Policy Kings, and his business partner, Corey Gilkey, have been approved for $2.3 million from the city's large Neighborhood Opportunity Fund (NOF) grant in 2021. The estimated cost of the total project is more than $6 million.
According to the city's website, the project has been approved to receive Tax Increment Financing (TIF) support in 2022. Dougherty said the money was transferred from the NOF grant to TIF funds without a clear indication as to why.
“The city of Chicago is interesting in the way the grant is structured, and those are some of the hurdles we have to overcome,” Dougherty said.
These city grant programs are helpful, but because they are compensation rather than upfront funds, business owners sometimes can't access the funds because banks are reluctant to provide loans for such projects, according to Cecilia Cuff, CEO of business development firm Nascent Group. . She works with both Daughrity and Digby and has worked with several small businesses in Chicago that have received such grants.
“Even though we get millions of dollars from the city, we can't get that without a lender. There are no lenders to lend to us because the company, as they say, doesn't value what it's going to be,” Cuff said of the Policy Kings project.
The repayment component of the grant made traditional banks such as JPMorgan Chase, Bank of America and Wintrust not agree to a loan, Dougherty said.
“Instead of considering that we have this grant, they want us to still be able to cover the entire project,” Dougherty said. “And they say, if something happens and the money doesn't come in, how will this project (finish)?”
The past three municipal administrations have had a variety of programs focusing on developments on the south and west sides of the city.
In 2016, the Rahm Emanuel administration implemented Neighborhood Opportunity Fund (NOF)a grant to the city that seeks to prioritize funding for developments on the south and west sides where disinvestment has historically occurred. The fund uses taxes from downtown zoning districts.
Former Mayor Lori Lightfoot created the three-year plan Invest in the South/West The initiative for such investments was supported by “public financing” and targeted 10 axes for public and private investments.
Now, Mayor Brandon Johnson recently crafted his “Road to Recovery Plan” initiative, which includes the Chicago Recovery Plan, and provides… Community development grants From the recently announced 2024 Housing and Development Bond. The bond plan is funded through existing financing sources such as expired TIFs and low-income housing tax credits.
“Many City of Chicago financial programs and initiatives have been launched over the past decade to address 75 years of systemic disinvestment across the West and South Sides,” Peter Strazzabusko, deputy commissioner of the Chicago Department of Planning and Development, said in a written statement. to The tribe.
