Maryland County Program Collaborates with Community Banks for Small Business Lending

July 2, 2012 at 4:26 pm

Montgomery County, MD announced a new program last week that would establish a collaboration between the county and local community banks to increase small business lending in the area. With the “Small Business Plus!” program, the county will invest $10 million into banks headquartered in Montgomery County, with the goal of lending $20 million to local small businesses, which will in turn create local jobs. In addition, the county would raise revenue by earning a return on their investment.

As we blogged about last Friday, the decline in community banks has had a significant impact on small business lending. Municipal deposits would do a lot to help sustain community banks and expand their lending capacity. Other counties, states, and local governments could learn and adapt from this model.

Taking it a step further, deposits into credit unions would also serve the goals of expanding access to capital and local job creation. Unfortunately, North Carolina does not allow credit unions to accept deposits from municipalities. Removing this limitation to allow for partnerships with local governments and community banks as well as credit unions, would significantly expand the availability of capital and the capacity of these institutions to serve their local communities.

Entry filed under: Banks, CDFI, Small Business. Tags: , , , .

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