
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 17, 1995                   TAG: 9501170124
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE:                                 LENGTH: Medium

NEW LOAN VARIETY OFFERS MONEY WITH LESS RISK TO SMALL FIRMS

A representative of the U.S. Small Business Administration will be in Roanoke on Thursday to explain a new type of business-loan guarantee that holds promise for small firms that find borrowing difficult.

In a training session for bankers, Robert McLoone, an SBA economic-development specialist, will explain a new two-page application process for obtaining guarantees on loans up to $100,000.

Under its guarantee, the SBA promises to repay up to 90 percent of the loan if the borrower doesn't, up from the traditional 75 percent.

Banks nationwide are tapping into the program, announced last summer, because it eliminates much of the risk and paperwork that have made lending to small businesses difficult, said John Jennings, director of the Blue Ridge Small Business Development Center, an arm of the Roanoke Regional Chamber of Commerce.

``This is definitely a huge leap forward for small businesses,'' Jennings said. Many area firms are constrained by a lack of capital for buying equipment and inventory or hiring new employees - expenses the loans can cover, he said.

Borrowers must meet banks' normal lending guidelines to receive an SBA-guaranteed loan. To qualify for the guarantee program, a firm must have average annual sales of less than $5 million and employ fewer than 100 people.

Interest rates will be 2.25 percentage points over prime rate for loans up to seven years and 2.75 percentage points over prime for longer maturities.

The free briefing on the LowDoc Loan Guarantee Program will run from 10 a.m. to noon at the chamber of commerce offices, 310 First St. S.W. For a reservation, call 983-0717.

McLoone will return to Roanoke for two days each in February and March under a pilot program to spread information about SBA programs.

by CNB