Via a new $20 million fund, a New Haven bank is offering loans of up to $150,000 to encourage businesses to create jobs in certain commercial districts in Stamford, Norwalk and seven other cities in Connecticut and Massachusetts.
“We expect that this infusion of funding at below-market rates, and auxiliary consulting assistance, will serve to help small businesses in targeted commercial areas,” said Peyton Patterson, chief executive officer of the bank and its holding company NewAlliance Bancshares, in a written statement. “The program can help to create and retain jobs, thus supporting development in those areas.”
The loans will apply to Stamford”™s existing enterprise zone in the area near its train station. In Norwalk, an area between East Avenue and Main Street has been identified for the program.
Paul McCraven, senior vice president of community development banking, did not rule out the bank adding areas of Stratford in time, where NewAlliance recently received state approval to open a branch.
In its most recent Community Reinvestment Act (CRA) grades from the federal government, NewAlliance slipped to a grade of “satisfactory” from the previous “outstanding” rating it had received in the past.
McCraven said the bank expects the new program to help it recover its outstanding status on CRA, which the federal government uses to assess whether banks are making loans in areas where they draw deposits.
Businesses based in or expanding into targeted areas can apply for loans of up to $150,000 at fixed or variable rates at a discount from the prime rate, providing they meet the bank”™s credit requirements and have been in business two years.
The bank is steering startups to an established loan program it runs backed by the U.S. Small Business Administration, but said it would provide discounts either in rates or fees.
NewAlliance indicated the loans will also carry more flexible repayment terms, without divulging details.
Some nonprofit organizations that provide direct services to client businesses in a zone may also be eligible.
Besides Stamford and Norwalk, the bank is offering the program to stimulate development in:
Ӣ New Haven;
Ӣ Hartford;
Ӣ Hamden;
Ӣ Manchester;
Ӣ Chicopee, Mass.;
Ӣ Holyoke, Mass.; and
Ӣ West Springfield, Mass.
NewAlliance had $396 million in commercial loans outstanding as of June 30.
The bank was recently one of seven in the Northeast cited for excellence in cash-management services, in a poll of 22,000 businesses conducted by Greenwich Associates, along with Bridgeport-based People”™s United Financial Inc., which also was recognized for overall banking excellence.
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