Small business owners gathered in Baltimore earlier this week in order to support legislation which will require state deposits to go to local banks. Small businesses in Maryland are struggling because they are being denied loans from their local banks. According to a study done by Pepperdine University, 34 percent of small business owners nationwide named access to credit as their top policy issue.
In the instance of small independent business owner, James Racheff, chairman and CEO of DMS Applied Information and Management Sciences in Frederick, had a line of credit with Bank of America that he was using to wage his payroll as he tried to expand his company.
In a shocking turn of events, Bank of America cancelled this line forcing Racheff and his wife to sell their Frederick home and one of their family cars as the only solution to paying their employees.
In order to bolster support for small business owners, Senate Majority Leader, Rob Garagiola proposed the Lend Local Act of 2012, co-sponsored by Senator Young.
When deciding whether to make an agreement with a financial institution to provide specified banking services to the State, this bill will require the Treasurer to consider whether the financial institution is operating in the State with assets less than 5 million dollars. If assets are below this amount, the Treasurer must commit to make loans to small businesses in the State in an aggregate amount of at least 200% [deposited by the Treasurer].The Lend Local Act of 2012 will strengthen Maryland economy. By granting more loans to small businesses, they will finally have the capability to expand. As a result, this expansion will incur a higher demand for jobs. Keeping Maryland small businesses alive is important to Maryland identity as well as essential to economic growth.
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