At the turn of the last century, Treasurer Steven Grossman’s grandfather Max took a chance and decided to become and entrepreneur. With the help of a small bank, Max Grossman started an envelope company. The company sold specially designed envelopes that would hide the fact they contained money being sent back to Italy from Italian immigrants in East Boston and the North End.In the spirit of small banks helping small business grow and become successful job creators, Grossman started the Small Business Banking Partnership after being elected.
On Monday, the Treasurer’s program reached its $300 million goal of deposits in small banks with a $5 million deposit in East Boston Savings Bank (EBSB), one of the first banks to enter the program. The deposit brought the state’s deposits in community banks to $302.75 million.
“The Small Business Banking Partnership is all about creating jobs and opportunity and putting our public resources to their optimal use,” said Grossman. “East Boston Savings Bank joins 50 other banks in every corner of the Commonwealth that are committed to supporting small business and the entrepreneurial spirit that make our communities and our state great places to live.”
The Small Business Banking Partnership uses Treasury cash reserve funds typically held by large national and international financial institutions and deposits them in amounts of up to $10 million in Massachusetts community banks. In exchange for the infusion of new deposits, the banks sign a Memorandum of Understanding signaling their intent to enhance their loan portfolios to small credit-worthy Massachusetts businesses with a particular focus on women-owned and minority-owned enterprises. According to the most recent reporting data, participating banks have made nearly 4,000 loans worth $570 million, many of them attributable to the Partnership.
EBSB, which prides itself on community involvement and investments in local business enterprises, also operates the East Boston Savings Bank Charitable Foundation, which has distributed over $1 million to deserving community causes.
“East Boston Savings Bank is committed to helping small businesses throughout our market area succeed” said EBSB Chairman and CEO Richard Gavegnano. “Since we began our participation in the Treasury’s Small Business Banking Partnership in 2011, we have originated over $19 million in loans to 68 small business owners throughout our communities.”
Gavegnano added that the business sectors receiving loans include automotive, retail, restaurants, machine shops and transportation. “By providing funding to smaller businesses we hope to help create jobs which helps stimulate the local economy,” said Gavegnano. “The Bank, which is celebrating its 165th Anniversary this year, is proud to participate in the Small Business Banking Partnership assisting small business owners with their financing needs.”
House Speaker Robert DeLeo was on hand to praise the program as a job creator and EBSB as a bank that has continued its roots in Eastie and surrounding communities.
“I’m proud of the work the Treasury is doing to support community banks and job growth across the Commonwealth through the Small Business Banking Partnership,” said DeLeo. “By depositing funds into community banks, such as East Boston Savings Bank, the Treasury is helping to create jobs in neighborhoods, such as East Boston, and the communities of Winthrop and Revere I represent.”
When it was created in 2011, the Partnership was envisioned as a $100 million program with a deposit limit of up to $5 million per bank. Because of the overwhelmingly positive feedback that Treasury received from participating banks and the demonstrated increase in loan activity and job creation. The Partnership was expanded to allow more banks to participate and to increase the maximum deposit amount. Participating banks are required to post their loan activity on their website every quarter, information that is also posted on the Treasury website.