Chicago boasts a world-class economy driven by over 250,000 businesses, the vast majority of which are small and locally owned. These businesses create vibrant commercial corridors that bring the city to life. When applications for business licenses fall, it raises a critical question: how do we cut burdensome red tape that prevents prospective small business owners from opening their doors and limits the growth of established businesses?
Illinois is one of the four most regulated states in the country, and that burden carries real costs. Every day a business is delayed from opening, the city, county, and state lose income and sales tax revenue. When a business closes, it often leaves behind a vacant storefront or empty space, which erodes property values and weakens local economies.
In Chicago, last year’s budget negotiations made it clear that the city is in dire fiscal straits, and politicians decided doubling and quadrupling licensing fees for small businesses was a good approach. It was not. Hitting small and local businesses, which are already facing unprecedented Chicago mandates, is not a viable way out of this crisis.
Chicago politicians must adopt a pro-growth strategy. They can begin by addressing the red tape that stops businesses from opening and growing. Reforming debt checks and special use permits is a great place to start.
Debt Checks
In Chicago, a $25 parking ticket can stop an aspiring entrepreneur from obtaining a permit, license, or contract. Property owners with outstanding debt can delay a small business from obtaining a license or permit. The process is flawed and hurts small businesses and local economies.
Chicago should limit debt checks to the applicant to streamline permitting, reduce delays, and ensure that no one is penalized for someone else’s debt. The city should also restrict its lookback period to five years rather than relying on decades-old and often inaccurate records.
Most importantly, the city should not delay permits, licenses, or contracts over debts under $5,000. Everyone should pay what they owe, but small debts should not hold up projects at the front end. Instead, those debts can be resolved before final inspection, license renewal, or payment on a city contract.
Special Use Permits
In Chicago, businesses must navigate complex zoning regulations and sometimes obtain a special use permit to open in certain areas. This process can take months and often costs applicants thousands in attorney fees. Do special use permits make sense? Sometimes, but not always. They should be reassessed and streamlined so small and local businesses aren’t unnecessarily precluded from opening.
More than 200 prospective business owners must go through the special use process each year, and countless more are deterred due to the upfront cost. Chicago should reevaluate its special use designations and transition many of these uses to by-right in certain zoning districts, while creating objective standards. Objective standards would provide a clear set of criteria for business owners, without causing delays and upfront costs.
Chicago has no shortage of entrepreneurs. What our city needs is a regulatory environment that supports small businesses as they open and grow. Cutting red tape will expand opportunity, revitalize commercial corridors, and strengthen the city’s revenue base.
By removing unnecessary barriers to entry, policymakers will help small businesses bring lasting economic growth to neighborhoods across the city.