A minority lending program set up by Merrill Lynch & Co. three years ago for Los Angeles and Orange counties has been so successful that the brokerage giant is expanding it to more of Southern California, as well as the San Francisco area.
Merrill Lynch last week announced a $159 million, three-year program in conjunction with the Greenlining Institute, a San Francisco nonprofit community rights group. The program expands on a $77 million project started three years ago, and will target minority-owned businesses and homeowners to lend money and financial expertise.
“We’re targeting under-served markets in Southern California and up north as well,” said Peter Case, a Merrill Lynch senior district vice president. “We’ve already provided $30 million in mortgage loans, through nonprofits. In the small-business area, we’ve committed $20 million in loans. We see (minority businesses) as a key building block for the communities in California.”
Case points out that the program is more than pure philanthropy. By building roots within minority communities, Merrill hopes to attract money from businesses and homeowners that wouldn’t normally consider investing through the brokerage.
The new program will include $120 million for small-business lending, more than $15 million to promote affordable-housing efforts, $16 million for recruiting financial consultants that Merrill will employ for community outreach, and $8 million for educational programs for businesses and nonprofit organizations.
In addition to L.A. and Orange counties, the expanded program will target Riverside, Ventura and San Bernardino counties, along with San Francisco, San Jose and Oakland.
The Greenlining Institute, which has released studies in the past showing a lack of financial commitment on the part of large banks to provide housing and small-business loans for minorities, hopes the program will spur others to follow suit.
“In 1996, Merrill Lynch became the first investment bank in the nation to develop an under-served community investment partnership with local community groups,” said John Gamboa, Greenlining’s executive director. “Greenlining’s philosophy is that all corporations can find profitable ways to do business in historically under-served areas.”
The program will disburse funds based on recommendations from a council composed of Merrill executives and local community leaders. In the original $77 million program, loans and grants ranged from $100,000 to as much as $2 million.
The CHARO Community Development Corp. in East L.A., a certified Small Business Administration intermediary that helps package loans for Latino companies, got a $300,000 grant from Merrill three years ago to help launch its business and financing center.
“We used the money to train people, bring in staff, pay salaries, acquire the software and hardware needed to save time, and help entrepreneurs with their businesses,” said CHARO President Richard Amador Sr. “This has been a new experience for Merrill Lynch. It helps our community, and we help recruit Hispanics (to do business with) Merrill. Many of our people have money in savings accounts and bank accounts, earning 2.5 percent, and think that’s a good investment. It’s been a win-win situation for both sides.”
