The City of Buffalo is teaming with a group of local banks to create a $1.7 million small-business loan fund.
On Wednesday, Mayor Byron W. Brown announced the new partnership with Citizens Bank, M&T Bank, Key Bank, Greater Buffalo Savings Bank and HSBC Bank USA that will provide loans to new and expanding city businesses.
"It fits with our goals to grow businesses, create jobs, and strengthen and expand our economy," Brown said.
The low-interest loans will primarily serve as "gap" financing, according to Tim Wanamaker, president of the Buffalo Economic Renaissance Corp., the city agency that will administer the loan pool.
"These funds will target that gap between what businesses can raise through primary funding sources and the true cost of the project. We know there is a need for this kind of financing," Wanamaker said.
The availability of gap financing can often make or break projects involving reuse of older urban buildings, where high renovation costs cannot always be justified based on future revenues from the project site.
While the target recipients of the new, low-interest business loans are small "mom and pop" operations, the city will consider applications from larger "moderate" size companies seeking to expand and add jobs in Buffalo. Loans will generally be capped at $350,000.
The bank contributions include: $500,000 from HSBC; $350,000 each from Citizens, M&T and Key banks; and $150,000 from Greater Buffalo Savings Bank. The city previously entered a partnership with Bank of America on a $2 million loan program to aid business growth in Buffalo.
The Buffalo Economic Renaissance Corp. will back the loans via a loan loss reserve account.
Wanamaker credited the five banks for "proving their commitment to growing businesses in Buffalo."