How financial institutions can support small businesses and drive community development in 2025

In Chicago and across Illinois, small businesses play an integral role in local communities by driving economic growth, creating jobs and fostering neighborhood development. However, fluctuating interest rates on borrowing, unpredictability in the market, and persistent inflation mean that small businesses often find themselves in search of capital to support growth and development, relying on a patchwork of financing sources to meet their needs.

Financial institutions, such as regional banks, credit unions, community development financial institutions (CDFIs), and insurance companies, play a crucial role in helping small businesses to grow and deepen their impact. The Federal Home Loan Bank of Chicago (FHLBank Chicago), as a leader in community development, strengthens these efforts by providing liquidity and funding to its membership, a cooperative of over 650 financial institutions chartered in Illinois and Wisconsin.

Support for small businesses takes many forms. In 2024, FHLBank Chicago, in partnership with its member financial institutions, awarded over $10 million in grants across Illinois and Wisconsin through its Community First^® Accelerate Grants for Small Business. This program provides small businesses up to $30,000 each to support their growth and community impact by using funds for property purchase or improvement, machinery, tools, equipment, workforce development or training and technology.

Approximately 20% of this year’s Accelerate Grants funding went to small businesses in the Chicago metropolitan area representing a wide range of industries, including arts and entertainment, community services, construction, education, healthcare, housing, retail, and agriculture. The program’s impact on the city’s local businesses is evident in the three years since its inception. For example, Bubbly Dynamics, a sustainable urban industrial developer and 2023 Accelerate Grant recipient, partnered with FHLBank Chicago member Amalgamated Bank of Chicago to access funds to convert a vacant meat packaging plant in the Back of the Yards neighborhood on Chicago’s south side into a multi-tenant business facility. Today the facility leases to over 20 small businesses, including start-ups specializing in innovative research techniques for organic food production, which provides jobs to low-and-moderate-income individuals. Bubbly Dynamics continues to put grant funds to use to develop sustainability-focused solutions like a stormwater catchment feature.

FHLBank Chicago’s members also offer discounted lending options to businesses across a wide range of industries, including commercial, service, retail and agricultural sectors, through the Community Small Business Advance. Thanks to this FHLBank Chicago program, small businesses can access affordable capital to support their continued growth and expansion, even in the face of unpredictable markets.

Earlier this year, First Eagle Bank utilized FHLBank Chicago’s Community Small Business Advance to provide permanent financing on a $3.2 million construction loan to Mapletree Properties LLC, a local developer dedicated to serving community housing needs. This funding will support a new 15-unit all-electric apartment building in Chicago’s Near West neighborhood and will feature Energy Star-rated windows, superior insulation and smart air ventilators. Located in a historically underserved Chicago Enterprise Zone, this property will serve as a catalyst for the neighborhood development.

These successes underscore the transformative power of investing in small businesses. This month, as we celebrate Small Business Saturday, we look back on the achievements of our communities and the support provided by financial institutions and look ahead to what is possible in 2025.

By continuing to provide resources and assistance, FHLBank Chicago and other financial institutions can empower small businesses to overcome market challenges and thrive. This is not only important in developing a strong, vibrant business community, but is needed to build a more inclusive and prosperous Chicago.

“Community First” is a registered trademark of the Federal Home Loan Bank of Chicago.