It’s been a rough ride for businesses – large and small – during this challenging economy, but for forward-thinking lenders, one way to thrive is to finance community development initiatives.

In 2010, despite the sluggish economic recovery, banks with expertise found ways to help generate jobs through community development lending.

Community development lending can encompass many types of commercial loans, including financing multifamily affordable apartments, nonprofit organizations that offer services to needy families or businesses that provide jobs to the local workforce.

Community development lending often entails combining multiple private and public funding sources in complex ways that separately would be insufficient to complete the necessary financing. More recently, some community development lending is associated with federal economic stimulus funding that has been working its way to the local level since 2009 into affordable housing, health centers, and job creation efforts.

Groundbreaking Financing

Boston Private Bank recently closed loans on two large developments totaling $66.5 million to renovate almost 300 public housing apartments in Cambridge that have not been updated in about 50 years.

Without the approximately $20 million federal economic stimulus funding that is part of the highly complex financing package, this renovation would not be possible. The redevelopment project at the Lincoln Way/Jackson Gardens and LBJ Apartments public housing developments recently broke ground after a year of extensive preparation and financial structuring.

It is creating approximately 1,000 construction jobs, as well as renovating the apartments to make them more energy efficient.

In 2009, when this redevelopment was being structured, many banks were unable to consider such lending as they dealt with their own business challenges from the financial crisis. Financing affordable apartments that have a history of stable performance, a strong borrower, and public funding make the financing more attractive, however, to lenders with expertise and an understanding of public funding requirements.

Another example of a large real estate community development project that started in 2010 is the Whittier Street Health Center expansion in Roxbury. The health center has been serving low-income and underserved patients for more than 75 years.

The health center has seen an explosion of new patients, with visits increasing by about 20 percent last year. Boston Private Bank, together with the Property & Casualty Initiative and MassDevelopment, is providing $9 million in financing to support construction of a 78,000-square-foot facility. The new building is within walking distance of public transit and five public housing developments, and will enable the health center to double the number of patient visits.

The developer estimates that 200 construction jobs will be created, as well as 50 permanent jobs, and a long vacant property will be put back into productive use for the community. The $9 million loan is part of a comprehensive $37 million financing package to support the construction of the center.

Federal funding and multiple financing sources are essential to leverage private sources and make these deals work. A low-income population cannot support repayment of debt without additional funding support, normally from the government, that requires minimal or no repayment. Federal funds leverage significant private capital, thus reducing the need for public subsidy.

Without federal funding, however, private capital would not be able to finance these community development projects in a way that would make sense from a business perspective, while also complying with safe and sound standards of operation.

Small-Business Opportunities

In addition to large and complex community development loans, there are several other good lending opportunities that help to stimulate jobs and the economy.

For example, Boston Private used a special U.S. Small Business Administration (SBA) program funded through the federal Economic Stimulus Bill to finance a restaurant in Roxbury whose owner wanted to purchase the property he had been renting.

Given moderated property values in the neighborhood and the Stimulus Bill’s 90 percent SBA guarantee, it was an ideal time for the restaurant owner to acquire the property with stable financing from a bank. Without the SBA guarantee, it would have been difficult to provide the $350,000 in total financing.

In 2010, Boston Private Bank financed a record of almost $100 million in community development loans. Although federal stimulus funds are diminishing in 2011, there are always community investment lending prospects.

Think of how, when businesses and communities work together, they can stop the downward spiral of the economy and help reverse its direction by providing services, jobs and opportunity.

Esther Schlorholtz is director of community investment at Boston Private Bank & Trust Co. Email: eschlorholtz@bostonprivatebank.com