Business Owners Want Maryland to Bank Local

When the air conditioning at Trattoria Annamaria Italian Deli broke, its owner, Annamaria Christopher, needed a $1,500 loan to fix the problem.

But Christopher—despite having been in business for 11 years, and with equity in her building —was unable to get a loan from any of the large corporate banks in the city.  Eventually Penny Troutner, owner of Light Street Cycles, loaned her the money to fix the air conditioning. But Christopher's struggle to get a loan highlights the problems small businesses are encountering in such a tight credit market.

“One struggling business owner shouldn’t have to go to another struggling small business owner [for a loan],” Christopher said.

Christopher was one of several small business owners from throughout the state that gathered at Sofi’s Crepes in Belvedere Square on Monday to voice support for the Lend Local Act of 2012.

The legislation would put more of Maryland’s public deposits into community banks that are more likely to make loans to small businesses, according to supporters. The bill would require the treasurer to consider if a financial institution is operating in the state with less than $5 billion in assets and if it promises to make loans to small business in the state in aggregate of at least 200 percent of the funds deposited.

Citing a study done by Pepperdine University, Jason Judd, founder of Maryland Business, a small business advocacy group, said 34 percent of small business owners nationwide named access to credit as their top policy issue.

Judd said lawmakers in Annapolis pay a lot of lip service praising the importance of small business, but there has been little action taken on substantive policy issues that impact those businesses.

“We’re in danger of degenerating into a talking point down in Annapolis.” Judd said.

He said by directing more state deposits to local banks that more of that money would be loaned out and used locally, as opposed to major banks using the money to invest in Steel Mills in Rio De Janeiro or high speed rail in Beijing,

Judd argued that if $150 million in state deposits were made with local banks it would create hundreds of jobs in just a few years.

Ann Costlow, owner of also spoke in favor of the bill.

“Lend Local is a good proactive economic policy,” Costlow said.

Costlow said the tight credit market hasn’t had a dramatic impact on her businesses, but said that it has become an issue for entrepreneurs looking to start a Sofi’s franchise.  

She said that some of her employees have expressed interest in opening a Sofi’s Crepes because the business doesn’t require a large amount of capital to start. But she said even getting a small loan has been a problem.

Chef Spike Gjerde, owner of Woodberry Kitchen, said after the event that he was impressed with the idea of trying to make more loans available to businesses by making sure tax dollars are deposited with local banks.

 “We’re ready to grow, but I think for any small business this is a major road block,” Gjerde said.