The clearing house said the organization, New York Community Investment Co., will serve companies in low-income and moderate-income areas of the city or those owned by minority or female entrepreneurs. The clearing house banks are starting the fund with $10 million in equity and debt, giving it the capacity to issue $100 million. They said it will have the largest equity base of any U.S. multibank community development corporation funding small businesses. "Banks came to the realization that there was a market out there they were not reaching," Jill M. Considine, president of the New York Clearing House Association and chairman of New York Community Investment Co., said last week. The prime financing targets will be companies with insufficient equity or operating history to establish or expand lines of credit. Amounts to be provided range from $50,000 to $500,000. Ms. Considine said candidates will include individuals or companies without credit histories, first-time borrowers, and family-owned businesses that need capital to expand. The clearing house said about 70% of its financings will be equity or "near equity" investments, typically subordinated loans with equity features. Funds will also be used for loans to not-for-profit intermediaries that, in turn, grant first-time credit in the form of mini-loans to emerging businesses. A third outlet will be mortgages for small commercial properties in redevelopment areas, with both for-profit and not-for-profit developers. The community investment company is setting up offices at 120 Broadway in Manhattan. The member banks will provide services, including credit evaluations, legal support, and communications, to help reduce the small borrowers' financing costs. Howard Sommer, a veteran manager of small-business funding organizations, has been picked as president. The rest of the board of managers will consist of Ms. Considine, representatives from each of the clearing house banks, Kevin Nunn of the Bronx Overall Economic Development Corp., Timothy Marshall of Jamaica Business Resource Center, Karen Phillips of Abyssinian Development Corp., and Delma Soto of Accion International. Ms. Considine said the company has an inherent advantage in that it already has funding, staff, and an infrastructure that allows it to begin operating immediately. She also suggested that the effort is something of a pilot for banks that are looking to expand their number of small-business customers. "The feeling among banks was to try something beyond normal lending while sharing the risks and the learning experience," Ms. Considine said. "Banks are trying to see if that kind of lending can be incorporated into normal products and they can keep expanding the net." "Small businesses are the backbone of our economy, and the NYCIC will enable them to take advantage of equity investment that they have never had in the past," the clearing house chief executive added. "The member banks strengthen the fund through the large equity base they have provided as well as through the services they will contribute. The fact that investors are willing to accept a lower level of return on their investment enables the fund to provide (small-business capital at) an affordable price." The clearing house banks are Bank of New York Co., Bankers Trust New York Corp., Chase Manhattan Corp., Chemical Banking Corp., Citicorp, European American Bank, Marine Midland Bank, J.P. Morgan & Co., National Westminster Bancorp, Republic New York Corp., and U.S. Trust Corp.

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