You asked if any Connecticut banks make microloans.

Connecticut banks are not making high-risk microloans to borrowers who have little or no collateral or credit history, Community Economic Development Fund Corporation (CEDF) President Donna Wertenbach stated. Many are making microloans to borrowers with collateral and good credit histories, but are treating them as consumer loans, which are easier and less costly to service.

This practice reflects the costs associated with processing and servicing business loans for small amounts. Banks generally avoid making these loans because the principal and interest payments, together with the loan application fees, do not cover the banks' cost to underwrite and service them. This is not the case with larger loans.

Wertenbach works closely with lenders who invest in the corporation's parent organization, the CEDF Foundation. Among other things, the CEDF administers the state's Microloan Guarantee Program for Women-Owned Businesses, which finances startup and working capital loans for up to $ 50,000. The U. S. Small Business Administration (SBA) finances similar loans for up to $ 35,000 that are underwritten by the New Haven-based nonprofit Connecticut Community Investment Corporation (CTCIC).

Attachment 1 is the OLR analysis of the law creating the community economic development fund, Attachment 2 provides information CEDF (also available at www. cedf. com), Attachment 3 is the OLR analysis of the law creating the microloan program, Attachment 4 provides information about the SBA microloan program (also available at www. sba. gov/financing/frmicro. html), and Attachment 5 provides information about CTCIC (also available at www. ctcic. org).

JR: ro