Boost Sought In Small Business Lending
By Paul Tuthill
Springfield, MA – The Massachusetts State Treasurer is preparing to move state deposits to local banks that agree to loan the money to small businesses. A new report says community banks in Massachusetts have steadily increased small business lending, but demand for loans remains weak .WAMC's Pioneer Valley Bureau Chief Paul Tuthill reports
Massachusetts State Treasurer Steven Grossman says he expects to begin moving money this week to community banks that have signed onto his economic development initiative called the Small Business Banking Partnership. It's a program that Grossman touted heavily during his campaign last year,a promise take a tiny slice of the billions of dollars Massachusetts has in deposits,most of it in large national banks,and spread it around .Five million dollars at a pop to local banks..
Grossman says his goal is to deposit 100 million dollars in participating banks by Memorial Day.
Grossman has been traveling across the state meeting with local bankers and elected officials to drum up support for the program. So far he says 25 of the state's roughly 200 community banks have signed up.
Banks that participate in the program will pay the state a very low interest rate on the taxpayers money . In turn, the bankers must agree to offer discounted interest rates to small business borrowers.
Grossman says special attention is to be paid to lending in the states' so-called Gateway Cities..which include Springfield, Holyoke, Chicopee, and Pittsfield and also to minority owned businesses.
Community banks in Massachusetts are among the healthiest in the country with low rates of loan defaults and none of the toxic real estate assets that froze credit at larger banks. The Massachusetts Bankers Association released a study this month that showed local banks those with under 10 billion dollars in deposits have increased the amount of money loaned to small businesses in each of the last three years.
Joseph Traczynski, the senior loan officer at Florence Savings Bank in Northampton, says banks have wrongly been portrayed as unwilling or unable to lend.
Carlos Gonzales, the head of the Massachusetts Latino Chamber of Commerce, believes the state treasurer's program will make hard to come by capital more available to minority owned businesses.
Gonzales says he believes the state treasurer's small business banking partnership can help put an end to some of the well documented discrimination minority owned businesses have faced when trying to obtain loans..