Six Dallas community banks are teaming up to make small start-up loans in the city's poor Southern Sector.

Each bank has committed $25,000 to establish a nonprofit Bankers' Working Capital Coalition Inc.

Beginning early next year, the coalition will make "microloans" of $5,000 to $20,000 to low- and moderate-income people who want to start their own businesses and are willing to complete a 10-week entrepreneur training course. Some of the loans could also go to recent start-ups.

The course will be offered by the John C. Ford Program Inc., a nonprofit that provides free business and job training in the Dallas-Fort Worth area.

"This is strictly a group of independent banks focusing on investing in the community by helping small businesses get started," said Joe Goyne, president of $127 million-asset Lone Star Bank. "There are businesses out there in low- and moderate-income areas that don't need $50,000 or $75,000 even if they could get it. But they need $10,000 or so to get off the ground."

Though community banks have sometimes pooled resources to make larger loans, this program focuses on credit lines small enough for banks to extend by themselves. Many banks are reluctant to make business loans much smaller than $20,000, however, especially to start-ups in the city's Southern Sector, where four-fifths of such enterprises fail, according to Ford Program statistics.

With the Working Capital Coalition, banks have less risk because the loans are made through a nonprofit organization.

"There's some mom-and-pop shops that banks often haven't been interested in - the caterers and the commercial cleaners that are just starting up," said Jacqueline Varma, the Ford Program's executive director.

The banks believe program graduates will have a better chance of business success than the area's general population. Of the businesses formed by Ford Program graduates since 1996, when the program started, 92% are still open, Ms. Varma said.

But only 25% of the program's 500 graduates have actually started a business, primarily because of financing obstacles. Of the success stories, many business founders had decades of experience and sophisticated skills, reducing their credit risk.

For instance, Enrique Ordonez had worked for 34 years as an aerial photographer before joining the program this year in the hopes of making his fledgling business, North Texas Aerial Surveys, a success.

"I wanted to get more grounding in business practices - how to find clients and make contacts," Mr. Ordonez said.

The community banks want to open the door to even more ventures.

"This program has done very well at providing people with a good basis to start a business," said Chris Newtown, a senior vice president at $92 million-asset Abrams Centre National Bank. "After people graduated from the program, they had good skills and a basis to start a business, but they didn't have the capital to get started."

Besides Lone Star and Abrams, the coalition banks are First Mercantile Bank, North Dallas Bank and Trust, Signature Bank, and Texas Capital Bank.

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