It's not unusual for small-business owners to find themselves in a financial pinch once in awhile. There's an unexpected emergency or a temporary downturn in sales. Or there's a need to expand, and the bank won't approve a loan for the entire amount needed.

To bridge that funding gap, small-businessoperators will be able to turn to the Portland Development Commission for loans through a new program soon to be offered to businesses in Portland's low-income neighborhoods.

The "New Markets Tax Credits" fund eventually will contain $750,000 to lend to businesses. Between 30 and 50 loans could be made, depending on their size, said Fred Atiemo, the commission's business finance manager. More loans may be made through the revolving loan fund as loans are repaid.

The commission has made loans to small businesses in the past, Atiemo said, but the definition of "small" was 50 or fewer employees. With the New Markets loans, "small" can mean a one-person operation.

"Small" also figures in the size of the loans offered, which could go as low as $1,000 and as high as $50,000. Most loans are expected to be in the $10,000 to $20,000 range, Atiemo said.

This is the first public program in the nation that is offering loans of this size to small businesses, he added. Other agencies usually start withaminimumof $150,000.

The loans are targeted toward small "micro" businesses located in low-income neighborhoods designated by a federal government census. Those communities include, among others, North and Northeast Portland, Lents and Old Town. A map of eligible neighborhoods and the loan requirements should be on the Portland Development Commission Web site at www.pdc.us.

Most businesses will be eligible, especially if they will generate jobs and enhance the local community, Atiemo said. However, businesses that don't allow minors — taverns, for instance — may not be eligible, he added.

New businesses can apply, as long as they have a business plan that acts as a "roadmap that shows how they will get from point A to point B," he said. But the loans could be especially helpful for businesses that are a few years old and have temporary cash-flow problems, Artiemo added.

While banks calculate the risk factor of making a loan against the need to make a profit, the Portland Development Commission is a public agency that can take greater risks, Atiemo said.

"The objective is different than a bank," Atiemo said. "We are supporting businesses to succeed."

Banks usually consider whether the business owner can and will repay the loan and what can be used for collateral, he noted.

But when the loan is made through the "New Markets" fund, "We will look at what money management experience the business owner has, what public good the business will do and what jobs will be created," Atiemo said. "We will be flexible."

Interest rates will range from 3 percent to 8 percent and payback times will go from about seven to 10 years. Borrowers may have some options in the way they repay the loans, Atiemo added. For instance, they may be allowed to pay interest-only for a while before adding on the principle.

Business owners hoping to apply for the loans will have to be sponsored by local organizations, such as Oregon Association of Minority Entrepreneurs, the Hispanic Chamber of Commerce, Black United Fund or Portland State University's business outreach program. Applications first will be made through the sponsoring organization, and that organization will submit an application to the commission for approval. Once the commission receives the application, it should take about two to three weeks for approval, Atiemo said.

The tax credits will come through a partnership with Portland Family of Funds, which has worked with the Portland Development Commission on past tax-increment funding projects. The commission earns federal tax "credits" when it invests in low-income neighborhoods, and the credits become funds for low-interest loans, said Bob Alexander, the commission's economic development director.

Such tax credits have been used in the past for low-income housing projects.

"Clearly this is a way to creatively address the problem that businesses have to obtain working capital, which is what we often hear about," Alexander said.