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NEW LOAN FUND BEING PLANNED FOR SMALL BUSINESS, COMMUNITY DEVELOPMENT

 /ADVANCE/SAN FRANCISCO, Sept. 30 /PRNewswire/ -- A new loan fund for small business and community economic development lending in California is being planned by a group of banks and community leaders throughout the state.
 Titled the Community Economic Development Lending Initiative (CEDLI), the project proposes to create a multi-bank lending intermediary that will provide loans to small businesses and also work closely with local and public nonprofit and private-sector organizations engaged in small business and community development activities throughout the state. The task force will determine the unmet credit needs and find ways to facilitate access to private financing. CEDLI also will provide a technical assistance component to help borrowers successfully manage their businesses and meet their debt obligations.
 Richard C. Hartnack, vice chairman of Union Bank, today was named chairman of the executive task force of bankers and community leaders organized to design the CEDLI lending program. Over the next 14 months, the task force will develop and implement the lender program to address the development needs of small business, minority owned firms and microenterprises. Assisting Hartnack in leading the effort are Michael James, executive vice president and manager of the business loan division of Wells Fargo Bank and Jerry E. Bowman, executive vice president and manager of the business banking division of Bank of America.
 "Thus far, 45 banks have committed approximately $250,000 to the creation of CEDLI," said Hartnack. "We are delighted with this initial response and hope more banks see fit to join the program." The list includes the nine largest banks in California as well as a solid mixture of medium-sized and smaller banks from all parts of the state.
 "Small business formation and community economic development form the backbone of the U.S. economy," added Hartnack. "But in the face of a tightening economy, shrinking public resources and a tougher regulatory environment, raising private capital for small business expansion and local community development projects has been difficult in California. CEDLI will strongly address this void and give banks the opportunity to help shape the way small business lending in California will be conducted in the future. Hopefully, CEDLI will provide a model that can be used in other states."
 In addition to the senior executives at the banks, many government and community leaders have agreed to serve on the task force which held its first organizational meeting today at the San Francisco Fed. Other task force members include Kathleen Brown, state treasurer of California, Margaret A. Cheap, executive director, National Cooperative Bank Development Corp., San Francisco; Rodney E. Fernandez, executive director, Cabrillo Economic Development Corp., Saticoy; Robert E. Friedman, chairperson, Corporation for Enterprise Development, San Francisco; Michael R. Howland, (acting) regional director, U.S. Small Business Administration, San Francisco; Lynette Jung Lee, executive director, East Bay Asian Local Development Corp., Oakland; Raul Meyreles, president, California Rural Business Ventures, Sacramento; Alfred E. Osborne Jr., director, Entrepreneurial Studies Center, UCLA; Sherrie P. Pugh, executive director, California Community Economic Development Association, Oakland; Thomas S. Sayles, secretary, California Department of Business, Transportation and Housing, Sacramento; Wayne Schell, executive director, California Association for Local Economic Development, Sacramento; Barbara A. Vohryzek, executive director, California Statewide Certified Development Corp., Davis; and Constance J. Walker, program officer, The James Irvine Foundation, San Francisco.
 CEDLI is a joint initiative of the Federal Reserve Bank of San Francisco and The Development Fund, a San Francisco-based nonprofit corporation that establishes new financing programs to support affordable housing and community development. The Development Fund received its initial financial support for the project from the Charles Stewart Mott Foundation. The James Irvine Foundation, the Wallace Alexander Gerbode Foundation and the Wells Fargo Bank and Union Bank Foundations.
 "This is the beginning of a 15-month process, the result of which will be a major lending program that will significantly increase access to and availability of capital for small business and community economic development throughout California," said San Francisco Fed President Robert T. Parry. "We look forward to watching it grow from simply a good idea into a tremendous partnership that I know will provide an invaluable service where it is needed."
 Banks which have committed funds to CELDI include:
 Bank of America Bank Audi
 The Bank of California Bank of Commerce
 Bank of A. Levy Bank of Salinas
 Bank of Santa Maria Bank of Stockton
 Bank of the West Borel Bank & Trust Company
 California Center Bank California Korea Bank
 Comerica Bank - California Community Bank
 Community First Bank Exchange Bank
 Far East National Bank 1st Business Bank
 First Charter Bank NA First Interstate Bank
 First Professional Bank of California First Los Angeles Bank
 Founders National Bank Guardian Bank
 Harbor Bank Huntington National Bank
 Imperial Bank Independence One Bank
 Lippo Bank Manufacturers Bank
 Mid-State Bank National Bank of California
 National Bank of the Redwoods Pioneer Bank
 San Diego National Bank San Jose National Bank
 Sanwa Bank of California Scripps Bank
 Sumitomo Bank of California Tokai Bank of California
 Union Bank U.S. Bank of California
 University National Bank & Trust Co. Vineyard National Bank
 Wells Fargo
 Hartnack noted that, sometimes, small business and community development loans are unavailable or in short supply because of high transaction costs and the high risk to a potential lender. CEDLI will reduce both the cost and the risks of its loans by spreading risk among member banks through equal participation in loans based on bank size, and centralizing small business lending expertise to reduce transaction costs.
 Since 1987, The Development Fund has worked with the Federal Reserve Bank of San Francisco to establish large-scale financing programs for affordable housing. The California Community Reinvestment Corp., inaugurated in 1989 and now aiming toward a $250 million loan pool for affordable housing, has served as the model for other efforts around the country. Working together, The Development Fund and the San Francisco Fed have helped to create affordable housing consortia in five western states, with lending commitments totaling more that $400 million.
 -0- 9/30/93/1300
 /CONTACT: John Trauth of The Development Fund, or Kelly Walsh of the Federal Reserve Bank, 415-974-3314/


CO: Federal Reserve Bank of San Francisco ST: California IN: FIN SU:

SG-TB -- SF005 -- 7314 09/30/93 13:14 EDT
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Date:Sep 30, 1993
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