The news: As unemployment rises, politicians from all levels of government are trying to create incentives for small-business owners.

Behind the news: Chicago’s effort to help small businesses improve may be helping established businesses in prosperous areas, rather than struggling entrepreneurs.Small Business Improvement Fund grants give up to $150,000 to small companies across the city to help with physical improvements to their businesses. But a Chicago Reporter analysis showed that the largest chunk of funding in the past 10 years went to businesses on the city’s North Side.

Thirty-seven percent of all the money went to the North Side, with the Northwest Side taking another 15 percent. In comparison, the South and Southwest sides of Chicago got only 12 percent and 5 percent, respectively.

A possible reason is because programs like the fund favor businesses that already have enough money to make repairs to their business, said Beth Milnikel, director of the Institute for Justice Clinic on Entrepreneurship at the University of Chicago Law School. Because the fund is a matching grant program and repays businesses for work already done, grants go to businesses that already have the money to expand, she added.

“It requires people to have capital to spend in order to get some of that money,” Milnikel said.
She said the city would better serve businesses by lowering the cost of starting a business and eliminating regulations that hurt new entrepreneurs.

“I have clients on the South Side who don’t have the money to pay a bonded sign erector or get permits to put up signs,” Milnikel said. “If the city wants businesses to get started, they shouldn’t be hiking up fees for simply painting your name on the window.”