Maine bank regulators expect to see a first application for the new small-business-bank charter within 30 days.

"We're plowing new ground," said H. Donald DeMatteis, superintendent of the Maine Bureau of Banking.

The governor signed legislation last week authorizing the charter. The Maine Bankers Association and the Maine Association of Community Banks supported the move.

The institutions will be called merchant banks; they will be designed to provide debt or equity financing for start-up or undercapitalized businesses that have difficulty qualifying for traditional bank loans.

"We have a lot of entrepreneurial people here with good ideas that need money up front to get started," Mr. DeMatteis said.

Portland attorney James Zimpritch said one of his clients plans to apply soon to form a merchant bank to augment financing available from traditional banks.

"There is a gap in capital available for ventures that are undercapitalized or in the earlier stages of their development," Mr. Zimpritch said.

Merchant banks will be prohibited from soliciting or accepting deposits. Instead, they will be funded by investors and corporate borrowing.

Merchant banks will be classified as nonbanks under federal guidelines, so they would not be regulated by the Federal Deposit Insurance Corp. or the Federal Reserve.

"They can make loans that are riskier than would be prudent for a bank that had depositors' money at stake," Mr. Zimpritch said.

Mr. Zimpritch said merchant banks would be no threat to traditional banks because they would lend to different businesses or make equity investments that would complement bank loans.

"The hope is that a traditional bank would view a merchant bank as a collaborator, not a competitor," he said.

Chris Pinkham, president of the Maine Association of Community Banks, agreed. "We identified that there may be a gap in financing banks can provide," he said.

The state requires that merchant banks have more than $20 million in initial capital and maintain a capital ratio of 9% to 12%, which is higher than is required of traditional banks.

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