Maryland Launches Revamped Small Business Lending Program with $14 Million in Direct Loans

The Maryland Department of Housing and Community Development (DHCD) has announced a significant overhaul of its small business financing initiatives, introducing a new Small Business Lending Program designed to bolster entrepreneurs and community development projects across the state. This reimagined program offers four distinct loan products, aiming to provide essential access to capital for businesses and nonprofits facing economic challenges. A competitive application round for $14 million in Small Business Direct Loans is set to open on August 17, 2026, marking a key opportunity for eligible entities.

The Small Business Lending Program, managed by DHCD’s Division of Business Development, is the latest iteration of the department’s commitment to financial assistance for small businesses, building upon the 30-year legacy of Neighborhood BusinessWorks. The updated program reflects current economic conditions and addresses identified community needs, such as expanding housing options, increasing childcare accessibility, and improving access to fresh food. This initiative is expected to provide crucial financial tools to help businesses grow, create jobs, and contribute to a more resilient state economy.

The program features four distinct loan products. The Small Business Direct Loans offer up to $2 million with a competitive fixed 4% interest rate, funded entirely by the state. These loans require applicants to demonstrate a clear community need and a documented financial necessity for their project. Applications for these direct loans will be evaluated and ranked based on factors including community impact, financial need, business viability, and readiness. Priority will be given to projects that support new housing construction, enhance childcare services, bring healthy food options to underserved areas, or involve the rehabilitation of vacant properties. Interested parties can sign up for updates on these competitive rounds.

Additionally, the program includes Small Business Companion Loans, available on a first-come, first-served basis, offering up to $5 million at a 4% interest rate, contingent on a dollar-for-dollar match from a private lender. The Own Your Future Loans are designed for owner-occupied real estate acquisition, construction, or renovation, also providing up to $5 million at a 4% fixed interest rate and requiring a minimum 1:1 match from a private lender. Finally, Loans-to-Lenders provide capital to Community Development Financial Institutions (CDFIs) at a 1% interest rate, with the aim of stimulating further investment in Maryland’s small businesses. The latter three loan programs will be funded through the U.S. Treasury’s State Small Business Credit Initiative (SSBCI), with Maryland receiving nearly $200 million in SSBCI funding to be deployed to small businesses and nonprofits, with the Maryland Department of Commerce and the Maryland Technology Development Corporation (TEDCO) serving as subgrantees.

Businesses, nonprofits, and prospective entrepreneurs are encouraged to seek an initial consultation with a DHCD Business Development Officer before submitting an application. These consultations will help assess specific needs and determine eligibility for the Business Lending Program or other state financial assistance options. Further details regarding eligibility criteria and the application process can be found on the DHCD website.

Article by Mel Anara, based upon information from the Maryland Department of Housing and Community Development

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