Big lender for small businesses Bank of America enters Baltimore with aggressive loan push

August 20, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

San Francisco's Bank of America has entered Baltimore with an aggressive push to generate small business loans.

Top executives of the bank said yesterday that they have begun offering business operators, who receive guarantees from the Small Business Administration, loans at the prime rate for one year, along with 100 percent financing and discounts on fees.

"We are here and we want to do business," said Donald A. Mullane, chairman of Bank of America Community Development Bank, who was in Baltimore yesterday. "We expect to have a major presence in this market. We have invested in it and we are ready to roll."

Mullane said Baltimore is a sizable small-business market with plenty of opportunity for the nation's third largest banking company, BankAmerica Corp., which has $238.8 billion in assets.

Bank of America's community development division will offer loans for equipment financing at 8.25 percent for one year. The rate will adjust to the prime rate plus one percentage point after that.

Most banks in the area charge 2.25 percentage points above the prime rate on SBA-guaranteed loans, said Allan Stephenson, district director of the SBA's Baltimore office. That currently would be 10.5 percent interest.

On a seven-year, $100,000 loan from Bank of America, the monthly payment would be about $1,571 at 8.25 percent interest, compared with $1,686 at 10.5 percent. The cut-rate pricing will be in effect through December and it is available in Baltimore, Washington and Virginia.

The community development arm will lend from $25,000 to about $10 million, Mullane said.

The program is "good because it is giving a business person access to capital at a reduced rate. That's a plus," Stephenson said.

Tom Tolan, the SBA's deputy district director in Baltimore, said Bank of America should win business here because many banks don't want to make loans for capital purchases without a 20 percent down payment.

Bank of America started its community development arm in 1990. It made more than $500 million in small business and housing loans in 1995.

In January, Bank of America opened a loan production office in Washington headed by Howie Hodges, the former assistant director for minority business development at the U.S. Department of Commerce.

Hodges said he has hired a loan officer to work in Baltimore.

Pub Date: 8/20/96

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