BofA to boost small biz loans

Bank of America Corp., which is Connecticut's largest out-of-state bank, said Thursday that it will provide $10 million in grants to nonprofit lenders who provide loans to small and rural businesses.

The loans, which will be used for reserves, are meant to leverage funds provided by the U.S. Small Business Administration and the U.S. Department of Agriculture, and could unlock as much as $100 million in low-cost, long-term capital for small business microloans nationwide over the next 12 months.

"Helping strengthen small businesses and new start-up companies stimulates job creation and is critical to our nation's economic recovery," said David Darnell, president of Global Commercial Banking, Bank of America. "Bank of America is empowering these entrepreneurs by directing private sector capital to unlock exponentially greater amounts of federal dollars for their businesses."

SBA and USDA microloans are made through local nonprofit lenders, which also provide business training and technical assistance.

To access the capital, nonprofit lenders participating in these federal loan programs must set aside loan loss reserves at levels of up to 15 percent of the capital provided by the agencies.

 However, due to the economic recession, most of these lenders have been unable to meet the reserve requirements, limiting their access to loan capital.

Bank of America hopes to ease this credit crunch with its lending initiative.