With LEND, McCormick Students Give Local Entrepreneurs a Boost
When Sama Kadakia arrived at Northwestern in fall 2010, she knew she wanted to make a difference. The summer before, she’d stumbled upon the writings of Muhammad Yunus, a Nobel prize-winning economist from Bangladesh who developed the concept of microfinance, a movement that seeks to provide lending opportunities to people who might otherwise lack them.
“I was intrigued by the idea,” said Kadakia, a sophomore in biomedical engineering at the McCormick School of Engineering. “It seemed like such a sustainable way of fighting poverty, increasing people’s livelihoods, and making a difference in a way that doesn’t require a constant infusion of resources.”
Once at Northwestern, Kadakia found a place to apply these interests: LEND (Lending for Evanston and Northwestern Development), a student-run nonprofit organization that seeks to empower Evanston entrepreneurs by providing access to financial and business training services.
Unlike commercial lenders, LEND’s actions are altruistic. Evanston small business owners can apply to the group for a microloan ($1,500-$4,000), which carry an interest rate of 9 percent. If the borrower makes all of his or her payments on time, half of the interest is refunded. Much of the group’s mission is educational; entrepreneurs can sign up for help creating a business plan, and some loan recipients are required to attend workshops or discuss budgeting tactics.
Since its founding in 2010, LEND has distributed $4,500 in loans, enabling an Evanston barbershop owner to renovate her Dodge Avenue shop and providing a contractor funds to buy a new work vehicle. The group was also recognized with a 2011 Catalyst Award from the Evanston Chamber of Commerce.
When the group began, much of their outreach was done in classrooms. But with time, the students realized that if they really wanted to understand their clients’ needs, they needed to go to them. Sahil Mehta, a senior in industrial engineering and management sciences and LENDS’ director of internal strategy, worked one-on-one with barbershop owner Gigi Giles.
“Gigi’s father was a Marine and he was a bodyguard for Martin Luther King, Jr., when he visited Chicago in the ‘60s,” Mehta said. “Those kinds of things don’t come out when you’re sitting in a classroom. Those things come out when you’re really engaging with people. You have to go to them and learn the culture of their business.”
LEND is selective in its membership – this year, 60 students applied for just 12 spots – but having business savvy won’t necessarily get you in. In fact, diversity is key to the group’s success, Mehta says. LEND is comprised of undergraduates from engineering, business, philosophy, filmmaking, and other disciplines.
“We try to get diverse skills,” said Mehta, who heads the group’s recruiting process. “Business acumen can be picked up pretty quickly. I’d rather have a passionate person who knows nothing about business than a person who doesn’t care but is ready to go work at Goldman Sachs.”
The group hopes to expand – Mehta says they’d like to award eight loans this year – and also plans to start focusing on a new demographic: ex-convicts, a group that faces unique challenges finding work. But their mission will remain unchanged: taking small steps to effect change close to home.
“Problems start locally and they can be solved locally, right here in our community,” Mehta said.
Watch a video about LEND.