A group of 26 minority-owned community banks may have found its own "blue light special" at Kmart.

The banks are teaming up to extend a $40.6 million revolving line of credit to the nation's third-largest retailer, which once showcased special deals by flashing a blue light near featured items. The Troy, Mich., company said it expects to use the loan this summer or early fall for merchandise expenses at its 2,161 stores.

"Kmart has a long history of working with minority vendors," said Mary Lorencz, a company spokeswoman. "We already have a program to work with small, minority-owned companies to help them get their products into our stores. This is an outgrowth of that commitment."

Kmart is just the latest Fortune 500 company that minority-owned banks have attracted.

A broader group of about 40 banks, including the 26 in the Kmart deal, have worked together in recent years to extend multimillion-dollar credit lines to giants such as Prudential Insurance Company of America, Wal-Mart Stores Inc., and Anheuser-Busch Co.

The banks in the Kmart deal, led by St. Louis-based Gateway National Bank, are from 20 states and the District of Columbia. They know each other through membership in the National Bankers Association, a Washington-based trade group for minority banks.

"Most of us are small banks that wouldn't be able to serve these kinds of companies by ourselves," said Donnell Reid, president and chief executive officer of the $34 million-asset Gateway. "Doing business with these big companies gives the minority banks involved a great opportunity to grow their loan portfolios and fee income - opportunities that wouldn't be available to us otherwise."

Kmart said it plans to use the borrowed funds to build inventory before the Christmas shopping season and then to repay the loan with the proceeds of merchandise sales.

Mr. Reid, whose bank took a $400,000 participation in the credit, said most of the banks involved committed themselves up to their legal lending limits. Hamilton Bank, a $1.7 billion-asset national bank in Miami, took the largest participation - $10 million. The smallest bank involved was $20 million-asset First American Bank in Jackson, Miss., which took a $100,000 participation.

"If it weren't for having a consortium like this to work with, a big company like Kmart would never come to me and sit down at the table to discuss financing," said Mary Ann Bacon, First American's president and chief executive officer. "This consortium gives me an A-rated credit and raises visibility for my bank because now we can say we serve Kmart."

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