Top state officials asked executives of Maryland's biggest banks yesterday to lend more money to small and minority businesses as Annapolis faces a budget crunch.
Lt. Gov. Michael S. Steele and Aris Melissaratos, secretary of the Maryland Department of Business and Economic Development, made their appeal to executives from 16 banks over a crab cake lunch at the Center Club in Baltimore.
"The bottom line is we need your help," Steele said. "We need your help by increasing access to small and minority businesses."
Melissaratos said his department's budget has been cut to $101 million this year from $165 million three years ago, leaving fewer resources to aid businesses.
"With limited incentive funds and grants funds we need more help from the banking community," Melissaratos said.
The state's plea comes as it prepares next week to release a plan to overhaul the way it assists minority businesses.
A draft report by the Commission for Minority Business Reform, appointed by Gov. Robert L. Ehrlich Jr. last year, recommends that state agencies offer smaller contracts that minority businesses can compete for. The report will also include recommendations for increasing financing options for smaller businesses - a goal that requires the help of local banks, Steele said.
"I think you will find, as a businessman or businesswoman, that this partnership will be good for your institutions," he said.
Small businesses account for 97 percent of all business in Maryland, and employ 52 percent of the state's work force. But small businesses are often seen as a higher risk to banks and may have a hard time securing financing, state officials said.
Steele told the story of a businessman who won a $4 million state contract but couldn't get a bank to approve a "bridge loan" to help begin the project.
The bankers weren't ready to commit to specific dollar amounts yesterday, but many said they'd be willing to lend more to small businesses.
"Mercantile is looking to grow its small business portfolio and this could be an opportunity to be able to do that," said Thomas W. Hodgins, a senior vice president at Mercantile-Safe Deposit and Trust Company.
"We're trying to do as much as we can and this will intensify our efforts," said William Couper, president of Bank of America Greater Washington.