Montgomery County will invest $10 million in local banks to help promote small business lending.

Known as “Small Business Plus!,” the program establishes partnerships with community banks through county deposits for the banks to lend to local businesses. Participating banks will commit an amount equal to the county, with the result that $20 million will be lent to local small businesses to promote new jobs, according to a county news release.

At any one time, Montgomery holds a balance of working capital that it uses to meet payroll, pay its bills and invest for longer periods to gain more competitive rates of return, Finance Director Joseph Beach said. From that investment, the county will allocate money toward this particular program, he said.

The county entered into the program because it wanted to invest its short-term money in a more competitive manner, he said. It was approached by banks for the program, and thought it would be a good way of earning the county a higher rate of return, supporting small business lending and supporting local banks, he said.

Banks are eligible to participate if they are headquartered in Montgomery County, have assets greater than $200 million but less than $5 billion, and meet certain standards, under the program.

Among the banks that have agreed to partner with the County are Capital Bank, Congressional Bank, EagleBank, Monument Bank and OBA Bank.

What businesses are eligible for loans is out of the county's hands.

“Who the banks make loans to, that is really their call as part of their credit process,” Beach said. “We just invest our $10 million with the banks and how they loan that out is really their call.”

Under the program, a participating bank must originate the loans within 12 calendar months of the commitment by the county to make a program-related deposit in that bank. All of the funds deposited will be covered by FDIC (Federal Deposit Insurance Corporation) insurance. Montgomery County will produce an annual report documenting the loan activity and estimating the number of jobs created through the program, according to the release.

kalexander@gazette.net