Business loans for children?

Press, 13 May 1987, Page 29

Business loans for children?

By

THOMAS WITOM

of Reuter

through NZPA Chicago

Plans for a new kind of financial institution, a bank for children, are drawing interest even though they are still largely on the drawing board.

The Colorado Banking Commission recently approved a charter for The Young American Bank in Denver.

The veteran banker, Roger Knight, who will serve as its president, said the goal was to have the new bank working by the time school starts next autumn.

“It is a unique concept, offering young people a range of financial services such as chequing and saving accounts, credit cards,, business loans and certifi-

cates of deposit, Mr Knight told Reuters in a telephone interview from Denver.

In addition, the bank, which was .initially called “The Kids Bank,” will provide a variety of educational programmes and seminars for its clientele, who will range in age from 10 to 22. “Unlike traditional financial institutions, the Young American Bank is directly addressing its youthful audience,” said a marketing consultant, Art Lucey, of Alexander Lucey.

He said the bank will be scaled down in size, making pint-size clientele feel confortable at the walk-up window. Two sets of loan forms will be available, one geared to the comprehension level of a 10-year-old and the

other to those aged 16 and over.

Mr Lucey said the limit on amounts young patrons might borrow or write cheques against will rise as they “prove” themselves. Cheque limits, for instance, might start at $lO and then rise to $lOO. The proposed venture is the brainchild of Bill Daniels, aged 66, a Denver cable television entrepreneur who has put SUSI.S million of his own money into the project. He is also a shareholder and director of a Los Angeles-based savings and loan company. Mr Daniels said no dividend would be paid, and profits would be funneled back to support the bank.

“It will not be transformed into a regular ‘adult’ bank, but will put profitability and education

on an equal footing,” he said.

“My purpose is to give young people the opportunity to get financial experience and education which will assist them for the rest of their lives,” he added.

The Colorado Council on Economic Education will play an active role in the bank, and the American Bankers Association and Colorado Bankers Association have expressed their support as well, said Mr Knight, who expects similar institutions to sprout up in other states.

Under-age patrons who want to borrow from the

bank will need their parents or guardians to cosign the notes. To make cheque cashing easier, the bank issue photo identification cards.

Last August, a sceptical Colorado Banking Commission turned thumbs down when the idea was first proposed, questioning the bank’s ability to stay in business, but Mr Daniels convinced commission members that the enterprise would be viable and won a reversal.

To support the young people’s bank, he has been lining up corporations and foundations who were asked to make deposits at low or no interest.