On Thursday, South Shore Savings Bank rolled out its first loan under Massachusetts Treasurer Steve Grossman’s Small Business Banking Partnership plan, launching the beginning of a special program to deploy state funds.
As part of Grossman’s plan to move Massachusetts money from out-of-state banks and investments, South Shore Savings was one of the first community banks in line to take state deposits, CEO John Boucher told Banker & Tradesman.
The $5 million in deposits arrived about a month ago, and on Thursday the bank officially celebrated its loan to Stone Design Marble & Granite Company owner Hoa Thanh Vu. To put the money to work, South Shore Savings created a Façade Improvement Loan program where businesses looking to do site improvements can apply for a $10,000, Small Business Administration-guaranteed loan.
The loan marks the first in Grossman’s program, which moved state reserve deposits into Massachusetts community banks with the understanding that those funds will be used to make loans to creditworthy businesses. So far about 50 community banks have said they’d participate in the program, according to an email from treasurer spokesman Jon Carlisle, although not all are fully signed on yet.
As to whether enough local borrowers would be deemed creditworthy enough to receive the funds, Boucher responded, "Well, we’re going to find out," saying he was hopeful there were, and adding that South Shore Savings bankers were busy promoting the program.
His bank’s specific plan, the Façade Improvement Loan, was inspired by the mayors of Braintree and Weymouth. The officials were inquiring about a business lending program for façade improvement among commercial properties in the Weymouth Landing district. The bank created the loan, but opted to expand eligibility to any small business in its footprint.
The loans are offered for between three and seven-year terms at interest rates ranging from 3.49 percent to 5.49 percent. A press release notes that SBA fees have been waived and there are no closing costs.
"It’s kind of a win-win for everyone," Boucher said.
