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United Bank starts $12M loan pool

United Bank’s president and CEO, Robert R. Jones III, recently announced the creation of a $12 million loan pool designed to encourage small business growth and economic development across Alabama and the Florida Panhandle, according to a United Bank press release.

The pool is the first of its kind from an Alabama-based Community Development Entity (CDE) to leverage bank funds and New Market Tax Credit dollars to provide such funding. United Bank partnered with accounting firm Baker Tilly Virchow Krause, LLP (Baker Tilly) to secure access to the New Market Tax Credits and create the fund.

“Ensuring access to capital is essential to sustaining and growing small business across our markets,” Jones said. “The creation of this loan pool provides the benefit of tax credit funding to small business that would typically not pursue such loans based on the size of their projects and because of transactional costs. I am extremely proud of our partnership with Baker Tilly, our team of bankers, and of the impact we’re making on business growth and job creation in our communities.”

The loan pool is designed to assist companies with growth and expansion, and loan sizes will range from $250,000 to more than $3 million. Using capital created from New Market Tax Credits, borrowers receive up to 25 percent of their funds at zero interest as an economic development incentive.

Because of the complexity and expenses associated with them, transactions involving New Market Tax Credits often are not available or are not practical for projects less than $5 million. The creation of the loan pool, however, gives United Bank the advantage of making smaller loans without the additional cost.

Already United Bank has assisted at least five local companies with new equipment financing and debt restructuring totaling more than $9 million as part of the loan pool.