Loans will help low-income entrepreneurs Program to begin soon with $75,000 to lend in Baltimore County

November 05, 1997|By Larry Carson | Larry Carson,SUN STAFF

In a bid to help poor but ambitious entrepreneurs, Baltimore County is preparing to start a "micro-loan" program designed to provide capital for small businesses.

The program, which the county Department of Social Services will begin this month, will have $75,000 to lend. Using money provided mainly by a Roman Catholic charity, it will lend amounts under $5,000 to welfare recipients and other low-income county residents who have the ideas and the drive, but not the capital, to start a business.

"This is sort of a dream of ours," said Richard M. Aarons, manager of the small-business council for the county Chamber of Commerce. "We saw many people who, if they had a little push, a little help, they could be successful."

One woman sought county help to expand a home business transcribing medical records. With several children to support, she could not obtain a bank loan to buy a more powerful computer, said Richard Lee, the county's minority business enterprise officer.

LaFrance K. Muldrow, the county's deputy director of social services, expects loan applications for such things as office machines, computers, landscaping equipment and vehicles.

Programs for micro-loans have spread rapidly in the United States in recent years, especially as talk of welfare reform became more serious.

There are 328 micro-enterprise programs in the United States, up from 195 in 1994, said Amy J. Kays, assistant director of economic opportunity programs of the Aspen Institute in Washington. The programs have lent $126 million, and just over half of the programs work with welfare recipients.

The Baltimore area has one such program, the Center for Women Entrepreneurs on East Ostend Street in Baltimore. Director Amanda Crook-Zinn said loan applicants there operate in groups, with each member responsible for every other member's loan repayment.

The Baltimore County program would not work that way.

Applicants will be screened by the Chamber of Commerce and a Social Services Department committee. A social services worker will determine in an interview whether the applicant has the experience and skills to make a business work. Then the applicant will submit a resume and letter explaining the idea.

The chamber will work with qualified applicants to prepare business plans for the loan committee.

If the loan is approved, NationsBank, which is administering the fund, will issue a check and the borrower will be assigned a volunteer mentor for three months by the chamber.

Catholic Health Initiatives, formerly known as Sisters of St. Francis, proposed the program and supplied most of the money for the loan pool.

Catholic Health Initiatives developed the program as a way to "invest in the community," said Sharon Dorn, executive director of the St. Joseph Medical Center Foundation. She broached the idea to her friend Camille Wheeler, the county social services director, who was enthusiastic.

"We presented the county with a challenge," Dorn said, explaining that the $75,000 is a loan, not a grant. NationsBank is contributing $25,000, and the county Economic Development Commission is putting in $12,500. Neither of those sums has to be repaid, Muldrow said.

With money from the bank and the county, the loan pool can be maintained at $75,000 while half of the money from the Catholic charity is held in reserve to ensure that the fund isn't overextended.

The loans will be for three years, repayable at the prime rate, which is 8.5 percent.

Pub Date: 11/05/97

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