Box 4, Folder 4, Document 28

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FORM 1667 (YC ‘@


TO A. H. Sterne

FROM cC. Linden Longino, Jr. SUBJECT: Bank Loans to Minority Businesses

I have a collection of many news articles and other reports, as well as my own thoughts,
on the general subject of business formation and development in urban "underprivileged-
ghetto-black-minority" areas. Common threads bind all of these together:

1. A city cannot endure with a central core of business and individual poverty.

2. Strengthening the underprivileged business community would go a long way
toward solving the overall number one problem of the city. (Minority group
members comprise 12% of the U. S. population but they own only 3% of U. S.
business, according to government figures.)

3. This uplifting can be done by direct government "intervention" or by the more
fortunate members of the "privileged" business community; the latter being a
better way for innumerable reasons, but a combined effort being workable and
not necessarily undesirable,

4, Many government programs exist and many private organizations have been
formed to cope with these problems, but there is much duplication of effort
and a general lack of intercommunication and coordination.

5. Banks can play a key role because of the general scarcity of money available
to the ghetto businessman for starting or upgrading his business. (Only 150
of this country's 14,000 commercial banks engage in specific loan programs of
this nature.)

6. A bank can follow three basic paths:

A) Establish its own high risk loan plan (C&S has done this).

B) Participate with the SBA in "Project Own", a liberalized loan guarantee
program. This plan is endorsed by the ABA. (Trust Company, First National,
National Bank of Georgia and maybe Fulton National Bank do this.)

C) Banks within a city can organize a "pool" of funds and talent, offering
loans as well as management assistance. (This has been informally discussed,
but no such move is under way in Atlanta. Banks in some other cities have
taken such action.)

7. Conculsion: Each bank must make its own decision as to the extent of its
involvement, if any, in this area of community service. A formal "pool" of
banks is not necessary if each bank will assume its responsibilities and take
an active role in this area of lending. A central "clearing house" would make
the job easier for all interested parties, public and private. Independent
services of banks, attorneys, accountants, consultants and various national,
state, and local government bodies could be efficiently channeled toward the
common objective. We have suggested that the Atlanta Chamber of Commerce might
assume the role of coordinator if such a "clearing house!" is established.

CLL,JRiebs 4) 47

1-15-69 eo

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