Small-business lending is expected to be a key part of a community reinvestment agreement being hashed out between activists and First Chicago NBD Corp. and Banc One Corp.

The Woodstock Institute, a Chicago fair-lending advocacy group, hopes to have a Community Reinvestment Act agreement with the merging banks by mid- July. The group wants the pact to include a major commitment to small- business lending in inner-city Chicago, said Marva Williams, a senior project director for Woodstock.

"There's lots of room for improvement," said Ms. Williams, Woodstock's chief negotiator. Neither banking company has been a leader in this area, she said.

The new Banc One, with $230 billion of assets, should, at a minimum, make the same percentage of these loans in low-income areas as it does in high-income neighborhoods, she said.

The negotiations are the latest evidence that small-business lending is becoming an increasingly significant part of banks' community reinvestment pledges. Lending to businesses has become a major focus for activists since 1996 when bank regulators began compiling data for lending to firms in poor communities.

Since banks began supplying the information, community advocates have been scrutinizing it.

"It doesn't mean housing isn't still an issue," said Daniel Immergluck, vice president of Woodstock. But business lending "is definitely a front- burner issue for many groups."

In Chicago's inner city, the need for capital is particularly strong, and big banks have failed to keep up with their smaller counterparts in making business loans there, according to a Woodstock study released this month.

"We agree with Woodstock," said Thomas Kelly, a First Chicago spokesman. "We'd like to do more small-business loans throughout Chicago, and we're taking steps to do that." He said the company has plans to open lending offices and adopt an expedited application process for very small loans.

Supplying capital to low-income and minority neighborhoods isn't just a Chicago issue. "A lot more pledges are addressing small-business issues," said Alan Fisher, executive director of San Francisco's California Reinvestment Committee. "It's key, from our point of view, to have both jobs and housing."

Woodstock is seeking specific commitments from First Chicago rather than a giant pledge. Mr. Immergluck said recent CRA agreements, including NationsBank Corp. and BankAmerica Corp.'s merger-related pledge of $350 billion in lending over 10 years, lack many specifics.

The NationsBank commitment included $180 billion for small-business loans, but no dollar amount was earmarked for low-income areas, he said.

Mr. Immergluck said First Chicago included a large number of small- business loans made in high-income areas as part of a six-year community reinvestment commitment made in 1995.

First Chicago has made $600 million of the $700 million of small- business loans it pledged, Mr. Immergluck said, but 85% of these loans were made in middle- to upper-income areas. First Chicago's Mr. Kelly said he could not verify these figures.

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