In the spring of 2023, the Illinois Department of Commerce and Economic Opportunity will issue $8.75 million in state-backed loans for social-equity licensees in the cannabis business. Up to $500,000 is available to qualified businesses with $0 interest for 18 months.
Emily Bolton, a spokesperson for the Commerce Department, told the Sun-Times that businesses who receive the funds and use them to pay rent, salaries, energy bills, and some other obligations will not be required to repay the loan.
A maximum of $500,000 is available through the loan program for licenses wishing to launch artisan cultivation operations, $250,000 is available for infusion firms, and $50,000 is available for transportation licensees. Bolton has stated that the $8.75 million is sufficient to meet the maximum cost of the 37 enterprises that are planning to operate this spring, according to an article in Ganjapreneur.
Less than a week before the loan announcement, members of the state’s minority cannabis community had warned that as many as eight of ten social equity licensees could fail to open their businesses by the March deadline.
There are a few significant distinctions between the original “Social Equity Loan Program” and the current “Direct Forgivable Loan Program.”
In the prior program, approved licensees were “qualified, but not guaranteed money,” while in the new program, every participant who “completes the shortened documentation process and financial disbursement processes” will receive funding. The lender is now the State of Illinois.
The former program offered below-market interest rates with no accrual grace period. The revised scheme offers “4% after an 18-month grace period of no necessary payments and 0% interest; candidates can also seek forgiveness before interest accrues.”
With the new scheme, “loan principal is 100% forgiven upon producing documentation for qualified business expenses.”