First Union Corp. and SunTrust Banks Inc. are offering below-prime-rate financing to help small manufacturers in Florida as part of a state program to encourage business growth.

"We'll help the businesses grow and get entrenched in the community," said William Serravezza, senior credit officer for SunTrust Banks of Florida. "As the community grows, we grow."

The financing program highlights bankers' roles in helping develop local businesses. The state economic development agency will promote the program, which began in February, while borrowers will interact directly with banks.

First Union and SunTrust will issue letters of credit to the business owners, and the development agency, Enterprise Florida, will use them to back bond offerings. The program is modeled after one in Pennsylvania.

The Florida program offers 20-year financing for real estate acquisitions and 10-year financing for large equipment purchases of $500,000 to $2 million.

John A. Mitchell, chairman of First Union National Bank of Florida, said the program appeals to banks that do not want to tie up their money in long-term loans.

"It allows us to provide an additional service to our customer base that we would be hesitant to provide on our own and make money doing it," Mr. Mitchell said.

The banks will charge a 1% fee for issuing the letters of credit, he said, and business owners are to pay variable interest rates as low as 30% below prime.

Mr. Mitchell, who is also chairman of Enterprise Florida's capital development board, said the agency expects to issue $25 million of bonds a year to finance 15 to 30 businesses.

David G. Franklin, president and chief executive officer of Enterprise Florida's capital development board, said the agency selected First Union and SunTrust from among 10 banking companies.

Other Florida banks can use the program and issue letters of credit to their customers, but either First Union or SunTrust would issue another letter of credit to back the bonds, Mr. Franklin said.

Charlotte, N.C.-based First Union is one of the largest banking companies operating in Florida, with $40 billion of assets in the state. SunTrust, headquartered in Atlanta, also is a large player, with $25.4 billion of Florida assets.

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