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The program is aimed at starting and improving businesses in distressed areas of the state.

By ABIGAIL CURTIS Bangor Daily News December 5, 2008

BANGOR — The bankers, politicians and nonprofit officials behind a new $9.5 million low-interest loan program for small businesses in Maine are hoping that they've hit upon a way to give the state's economy a much-needed lift.

"This is an economic stimulus package that's good for Maine," said John Edwards, the executive vice president and chief banking officer of Bangor Savings Bank, which will underwrite the loans. "This isn't a bailout program. This is something that's very, very unique."

Edwards spoke at a press conference Thursday afternoon at the Eastern Maine Development Corp. office to announce creation of the Maine New Markets Loan Fund program.

Bangor Savings and the nonprofit Coastal Enterprises Inc. have worked for two years to create what they call a first-in-the-nation partnership between a nonprofit and a community bank to provide smaller loans through the Maine New Markets Loan Fund.

The loans are less than $2 million for businesses, nonprofit organizations and other groups that want to expand or move into economically distressed areas.

Those areas are determined by the U.S. Census and are in Maine's "rural rim" counties, including Washington, Aroostook and Piscataquis, and in disadvantaged metropolitan areas, including parts of Portland, Bangor, Rockland and Orono.

The loans can be used to acquire, build, rehabilitate, purchase or make additions to business-related real estate. They also can be used to purchase long-term capital assets or equipment, but can't be used for working capital.

"This innovative approach could not come at a better time as our small businesses are falling victim to tightening credit due to the weakening economy," said U.S. Sen. Olympia Snowe in a statement.

The loans are made possible through Coastal Enterprises' acquisition of U.S. Department of Treasury New Markets Tax Credit funds. Until now, the New Markets Tax Credit program made possible only loans of $2 million or greater.

"I understand how important small businesses are," said U.S. Sen. Susan Collins in a statement. "Small businesses employ more than half of all Americans -- and families and businesses throughout Maine and the nation are struggling to make ends meet during these difficult economic times."

The $500,000 to $2 million loans feature lower interest rates than are commercially available and a longer-than-usual term of 25 years so that businesses will have lower monthly payments, Edwards said.

In exchange for making the loans, the bank will receive a 39 percent tax credit to help offset the bank's risk.

Coastal Enterprises was selected in October by the U.S. Department of Treasury to be among 70 organizations that would distribute the $3.5 billion in New Markets Tax Credit funds in low-income communities. Snowe co-sponsored the legislation to make the program possible.