Takis Karantonis knows a thing or two about microloans. He knows how they work, how much they cost (spoiler – not much at all), and especially how critical they can be to helping community small businesses survive and thrive.
In recent months, he has been working for the Enterprise Development Group, a microlending non-profit within the Ethiopian Community Development Council. He has helped extend its reach regionally and engage a more diverse client base.
So, as he contemplates policies that could help ease the ravages of the pandemic, providing micro-loans to struggling local businesses ranks high on his list.
“One of the most fascinating things I’ve learned in Arlington is the power, usefulness and efficiency of the revolving microloan, fueled with public money, capable of leveraging private money, not costing the taxpayer anything, but creating a lot of value,” he explained enthusiastically. As an example of Arlington’s successful implementation of such programs, he cites the Affordable Housing Investment Fund (AHIF). “Many people forget that AHIF is a a revolving fund that replenishes itself,” he added.
Any new microloan program for Covid relief, he said, would be tailored to Arlington businesses, with conditions that would require them to spend it locally and to create 100% of jobs locally.
Such a program, he said, would do three things:
First, help retail and small restaurant businesses, typically found in neighborhoods, recover their investment in the community. As an example of the kind of neighborhood business that might benefit from the program, Takis cites the Westover Beer Garden, which was knocked out by last year’s floods, and had no opportunity to recover financially before Covid hit.
Second, address the obstacles small businesses face in accessing capital markets. “Many small businesses are stuck in a survivalist mode,” he said.
And in our current moment of seeking solutions to racial inequality, Takis added, microloans can provide capital to black-owned businesses. “Black businesses have to be wildly successful before they have any access to capital markets,” he explained. “Systemic racism does not allow minority communities to accumulate enough assets to collateralize loans that they may need for commercial reasons. When they cannot borrow, they cannot invest, and when they cannot invest, they cannot grow or employ, which condemns them to economic decline.”
Finally, he said, revolving microloans incentivize the smallest businesses to become more formal, to have paid employees, and to create more jobs, rather than over-relying on family members.
He also feels that microloans could provide an important complement to Arlington County’s BizLaunch, a great small business technical assistance program. Takis says that “for people in the small business world, the impact of technical assistance can be greatly enhanced when it’s followed with a little bit of cash.”
Takis believes a microloan program could be launched with Board approval of between $3 and $5 million. Furthermore, it would leverage private money, he said. “For the buck, we would have more bucks,” he said, adding that “the good news is that it is a loan, and is only given to businesses that have proven to be viable and to employ people locally.” With such a locally managed program, he said, “we will create structures that will hold for the longer term.”
Growing and supporting local small businesses is also critical to Takis’s deep desire to maintain a diverse and vibrant Arlington. Takis, and his wife Lida, arrived in Arlington in 2007. “As a stranger, Arlington has been significantly better than anything my wife and I have experienced, very supportive and inviting,” he said. Nonetheless, as an immigrant, Takis is highly attuned to Arlington’s lack of affordable housing, high cost of living, and need for employment opportunities, and he worries about their impact to the diversity of the community.
“For many immigrant families, it is almost heroic to remain in Arlington. Their kids attend our excellent Arlington public schools, but we have to do better. When we lose diversity, we lose vitality and economic viability and dynamic and intellectual ability. We are self-impoverishing. Diversity is not just an empty concept,” he says. Takis should know, he is its personification.