Empower Baltimore Management Corp., the nonprofit company overseeing the city's three empowerment zones, has won a $1.5 million federal grant to create a unique community-based loan agency to aid new businesses and provide an investment opportunity for local residents.
The grant, which will be supplemented with a $1.5 million allotment from the city's Department of Housing and Community Development, will provide loans ranging from $1,000 to $500,000, according to Empower Baltimore spokesman Michael Preston.
The key element of the new community loan agency, Preston said yesterday, will be the ability of local residents to invest their own money in the venture and help decide who may borrow the money.
Though details have yet to be worked out, shares in the new agency are expected to be offered for as little as $25.
An additional $1 million is expected to be raised through the stock offering, bringing the total start-up fund to $4 million.
Voting shares in the new bank will be offered to residents of the empowerment zones, while nonvoting stock will be offered to businesses and individuals borrowing from the bank.
Housing Commissioner Daniel P. Henson III said the grant will give the city another "vital tool" to enhance development within the city's three empowerment zones.
Diane L. Bell, president of Empower Baltimore, said the new bank will give zone residents "a unique opportunity to participate directly in a financial institution dedicated to developing the communities in which they live."
Baltimore one of 3 winners
Baltimore was one of only three applicants to get a grant from the U.S. Department of Housing and Urban Development to start up a community-based bank. The other winners were the First Bank of Washington and the Mississippi Delta Empowerment Zone. Preston said Baltimore received the amount it asked for in its application, which was submitted about two months ago.
Preston said loans from the new agency would be targeted primarily at start-up company that do not qualify for traditional financing or the other programs offered in the empowerment zones.
For instance, he said, the new agency, unlike traditional lending institutions, could make a loan for the entire amount needed to purchase a piece of equipment.
Details to evolve next month
"It's going to help micro- and small businesses," he said.
The spokesman said the management boards for Empower Baltimore would discuss details of how the bank will be set up at meetings scheduled for next month. He said the agency also will solicit proposals for a private fund manager to oversee the program.
The community bank is the second lending program to be announced by Empower Baltimore recently. A program called 80/20 will provide gap financing for companies locating in the empowerment zones and making a commitment to create jobs.
That program is being administered by Milestone Associates and Baltimore Development Corp.
Pub Date: 12/28/96