Empowerment zone business loans planned for poor areas

February 17, 1996|By Eric Siegel | Eric Siegel,SUN STAFF

A million dollars in low-interest loans could be in the hands of new and existing businesses in some of Baltimore's most impoverished areas by the end of the year, courtesy of the city's empowerment zone.

Leslie C. Bender, a consultant to the multimillion-dollar federal revitalization effort, said yesterday that the money should generate another $4 million in private lending -- creating a kitty of $5 million for business investment in decayed areas of East, West and South Baltimore.

"It would be expected loans would be made consistent with creating jobs," Ms. Bender said.

The former banking official, who has been advising the corporation overseeing the city's empowerment zone programs, spoke at a pre-bid conference of prospective managers of a $1 million "high-risk capital fund." The fund comes from $100 million in federal grants given to the city as part of its designation as an empowerment zone, which also includes tax breaks for businesses that could be worth $225 million.

Proposals from banks, investment bankers, venture capitalists and others are due March 8. Selection of a manager is scheduled for early April, and the fund is expected to begin operations a month later.

Yesterday's conference came a day after Mayor Kurt L. Schmoke told the board overseeing the empowerment zone to "feel a real sense of urgency to produce results" to quiet critics of urban programs and help boost President Clinton's re-election efforts.

Private lenders already are providing financing to businesses. In December, for example, NationsBank invested $175,000 in Waterford Caseworks, a cabinetmaker in southwest Baltimore, through its Small Business Investment Corp.

The high-risk fund would encourage banks to make "riskier deals" in impoverished neighborhoods, Ms. Bender said, by shoring up business' financial statements. Empowerment zone officials expect the fund itself to have "some failures" in its loan portfolio, she said.

The $1 million is "not a lot of dollars for the need that's out there," she conceded.

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