For More Information: Dan Immergluck
Malcolm Bush
312/427-8070
TARGETED PROGRAMS FINANCE SMALL BUSINESSES IN
INNER CITY NEIGHBORHOODS
Small businesses play a vital role in the U.S. economy, yet
these small companies often have trouble getting access to
capital. A distributor of coffee, bottled water, and juices in
Camden, New Jersey faced this problem when Philadelphia and
New Jersey banks turned down his requests for financing.
Fortunately, the Cooperative Business Assistance Corporation
(CBAC), a nonprofit community development lender, stepped
in to provide him with the capital he needed to start his
business and create four new jobs.
CBAC and other targeted finance programs are profiled in two
new reports by the Woodstock Institute, Small Business Lending
for Economic Development Volume I and Volume II.
The research:
o Explains the role of small business lending in revitalizing
inner city neighborhoods.
o Demonstrates how the Community Reinvestment Act (CRA)
and economic development programs can be used to spur
increased lending.
o Offers a how-to guide for developing small business financing
strategies in targeted markets.
o Provides examples of model lenders including bank-
community partnerships, specialized bank units, multibank
efforts, government administered programs, and nonprofit
community development lenders.
For example:
o CBAC pools bank capital and community development funds
to share risk and make loans that otherwise would not get
made.
o The Bank of Boston has opened over 20 branches in central
city locations to serve targeted firms.
o The Southern Dallas Development Corporation, with four
different business financing programs, assists larger and
smaller firms at various stages of development.
"Small business lending is key for economically vibrant
communities, and there are a number of innovative programs
out there," said Daniel Immergluck of the Woodstock Institute.
One key lesson that came out of this research is the
importance of CRA to increasing small business lending in
these markets. "One observation echoed by each program we
interviewed was the importance of CRA in attracting and
retaining bank involvement," said Malcolm Bush, president of
the Woodstock Institute. For example, CRA advocacy has led
to community reinvestment agreements between banks and
community organizations. In addition, CRA has spurred banks
to create their own programs or to work with other financial
institutions and government in economic development efforts.
"The Community Reinvestment Act was the major impetus in
attracting bank dollars to these projects," said Adina
Abramowitz, director of CBAC. "But now that they recognize
the potential for economic activity, these banks are asking for
more business."
The Woodstock Institute is a 22-year-old nonprofit applied
research and technical assistance organization working to
promote community reinvestment and economic development
in lower-income neighborhoods.
The reports:
Small Business Lending for Economic Development
Volume I: Strategic Responses for Urban Communities
Volume II: Model Urban Programs
are available from Woodstock Institute. Single copies are $10
for non-profits and $20 for for-profit organizations. Review
copies are available to press upon request.
Contacts:
Adina Abramowitz, CBAC 609-966-8181
Jeffrey Zinsmeyer, Bank of Boston 617-434-1440
Jim Reid, Southern Dallas Development Corp 214-428-7332
Requests for publication are taken by snail mail only. Check
or money order must accompany request.