Md., NationsBank unite to aid small contractors

July 30, 1993|By David Conn | David Conn,Staff Writer

NationsBank Corp. and the state of Maryland announced a new marketing program yesterday aimed at getting financing to small and minority contractors who do business with the state.

The program, tried in pilot form last month, is intended to direct small and minority businesses to a source of financing for contracts awarded by the state Department of General Services.

The program is available for any business with annual revenues up to $5 million that has been awarded a primary contract or subcontract from the department. The NationsBank loans would provide lines of credit for working capital and term loans for equipment financing.

"We have found that cash flow has been the primary reason that small and minority businesses are not awarded contracts," said Mitchell Smith, executive director of the Governor's Office of Minority Affairs, who negotiated the program with NationsBank.

"This program will reduce the cash flow problem and put small and minority contractors in a better position to submit competitive bids," he said.

The program also could help small companies establish a banking relationship, according to NationsBank.

"Many businesses may not qualify for a broader line of credit, but may be able to qualify for a loan for a single contract," said Barbara Greenwald, NationsBank's vice president for government-guaranteed lending programs in the Baltimore-Washington area. "That may open the door to a broader financial relationship."

Though NationsBank has no specific dollar goal, the bank said the program could generate up to $1 million in loans through the rest of the year. That would be part of an overall $30 million goal in the region for the company's newly created small-business lending group.

NationsBank representatives have been attending General Services bidding conferences for the last month and fielding questions from potential contractors. In the 1992 fiscal year, General Services awarded $156 million in procurement contracts. Of that amount, about $9.5 million went to minority businesses, according to Mr. Smith.

"Actually, what we're seeing here is a new marketing approach," he explained, adding that he's pursuing similar relationships with other state agencies and banks.

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