Background
Identifying Business and Community Needs
Since 1989, Baltimore Community Lending, Inc. has been supporting the revitalization and strengthening of underserved Baltimore neighborhoods through innovative and flexible financing designed to promote community development. BCL has successfully provided loan capital for affordable housing, community facilities and mixed-use developments. BCL recognized, however, that to revitalize Baltimore’s stressed neighborhoods and economically empower its residents, particularly minority residents, a small business economic development strategy is a necessary compliment to efforts to rebuild and rehabilitate the housing stock and commercial real estate. A neighborhood must have local amenities to ensure its vitality and stability. It is also critical that, while housing is being rehabbed and stabilized, there is a growth of jobs at a scale that ensures potential occupants can sustain their housing and support their families.
Accordingly, in concert with the Calvert Foundation, the Opportunity Finance Network (OFN), and the Baltimore CDFI Roundtable sponsored by the Baltimore branch of the Federal Reserve Bank, BCL assumed a leadership role in identifying impediments to financial access for small businesses in Baltimore. BCL brought together close to forty small business advocates from banks, CDFIs, and area foundations to identify gaps and create solutions in order to provide access to capital for small businesses in Baltimore’s challenged neighborhoods.
The primary gaps identified were applicable to small businesses with revenues of under $1 million, primarily startups and emerging small businesses, as large banks have become more risk averse and community banks have closed or been consolidated. Nearly all bank loans require significant collateral. Insufficient collateral is the primary reason for denial and is often the reason for the decision not to apply in the first place. As a result, small businesses are failing for lack of access to capital or are resorting to predatory online lenders to make ends meet. It is this need that Baltimore Business Lending was created to address.
The end result of this effort was the creation of Baltimore Business Lending, LLC, and its new small business loan program, which focuses on production and cost efficiencies, technical assistance, and flexible financing.