A new peer review lending partnership between several local banks in the Lehigh Valley area in Pennsylvania may help give some small business owners the capital they need to start a corporation.
The program allows banks who have narrowly rejected a small business owner’s loan application to forward the application to another of the financial institutions in the partnership, to see if any of them would be willing to reconsider the proposal.
“What will drive this recovery is access to credit,” Alan Jennings, executive director of the Community Action Committee of the Lehigh Valley, told the Morning Call. “Loans are being scrutinized for safety and soundness in ways they never have been before.”
The program includes 11 different financial institutions, the Rising Tide Community loan fund and the Small Business Development Center at Lehigh University. The banks will meet every other week for six months.
The Morning Call reports that while entrepreneurs whose loan is rejected can’t directly apply for the program, they can encourage banks to bring up their proposal.
Bank officials told the Express-Times that the program won’t promote irresponsible lending, but rather match small business owners with the financial institutions with the most advantageous lending criteria for their situation.
The paper says the program’s first loan was approved last week.
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