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Two anti-illegal immigration groups are protesting a state bond bill that would pay for a permanent Wheaton facility for a Washington, D.C.-area nonprofit that gives business loans to Latinos and other low- and moderate-income populations, saying the program most likely serves illegal immigrants.

But the director of the Latino Economic Development Corp. says his nonprofit provides a valuable service by aiding potential business owners who otherwise would be overlooked by major financial institutions for loans.

"To draw the conclusion that un-bankable people are illegal is just asinine," said Manuel Hidalgo, the director of LEDC.

The anti-illegal immigration groups' claims came two weeks ago at a public hearing for several routine bond bills in Annapolis. The bond bill, which will reimburse LEDC for its already built facility, has not yet been assigned a second reading date in the House or Senate. The grand opening for LEDC's Wheaton facility is April 17, Hidalgo said.

Several members of Help Save Maryland and Citizens First, which both started in Montgomery County, protested the proposed $500,000 grant on the grounds that LEDC refuses to check the immigration status of its clients, who are people rejected by bank and government programs.

"We have to assume these people who don't qualify for any legitimate institution are illegal," said Brad Botwin, director of Help Save Maryland.

But Hidalgo said LEDC serves people who can't get a loan from a bank, whether it's because their credit score is too low or non-existent or they don't have enough collateral to leverage a loan. He said those factors don't necessarily make people unreliable recipients for a loan, but they do make it more likely for major financial institutions to skip over those applicants because they are usually asking for too small of a loan.

"The amount of time that goes into making a loan is extensive, whether it's a $5 million or $5,000 loan," Hidalgo said.

However, Hidalgo said LEDC will not create a loan for an applicant who is engaged in an illegal or immoral business, owes back taxes to the state or has not paid outstanding court judgments or child support.

It's so common to get turned down for a loan for a low credit score or little collateral that in 1994, Congress created a program to make sure those people can get funded, said Frederick Cooper, former deputy director of the program, called the Community Development Financial Institutions Fund.

Cooper said just because major financial institutions tend to have more stringent loan regulations than micro-loan programs, such as LEDC, doesn't mean applicants for an LEDC loan are delinquent.

"If you're starting a business yourself, you have very literal collateral to offer. You're left with only your personal assets," said Cooper, who now runs his own low-income financial advising company in Silver Spring. "These are just very basic, very simple, very direct lending issues."

About a year ago, Montgomery County started a micro-loan program that so far has provided up to $15,000 each for five start-up businesses. Program co-coordinator DeVance Walker Jr. said it's designed to help businesses prop themselves up with a viable business plan that they can then take to larger financial institutions for more money.

Botwin and members of Help Save Maryland said programs like LEDC's are duplicating those of Montgomery County and the federal government.

Cooper said the difference between public and private micro-loan programs is that organizations like LEDC can get creative with how they set up the loan.

For example, LEDC set up an agreement to accept DeJaBel Café owner Eddie Velasquez's espresso equipment as collateral for his $10,000 loan to start the Wheaton coffee shop. Velasquez said he was denied by several major banks before being referred to LEDC.

"For me, a micro-loan is an excellent way of getting that extra boost that you need," he said, adding "they're there for that last-ditch effort to get a loan."

However, Botwin said he's concerned LEDC is lending to people who won't be able to pay back the money.

Hidalgo said LEDC has a 94 percent repayment rate for its micro-loans. And while about 70 percent of LEDC's clients are Hispanic, the nonprofit serves anyone who's applicable in the county, Hidalgo said, adding that half of the recipients of LEDC's micro-loans aren't Hispanic.

LEDC is prohibited by law from distinguishing by race or ethnic heritage the people it serves, said Del. Jeff Waldstreicher (D-Dist.18) of Kensington.

Waldstreicher declined to comment on the opposition to the LEDC bond bill, but he did say the state is funding LEDC's new center in part to alleviate overcrowding at the nearby Gilchrist Center, a county-run immigrant resource program.

"It's a public/private facility that serves the community generally without regard to race or heritage," Waldstreicher said of the new LEDC facility.

And unless hiring for a job, nonprofits, the local government, public schools and hospitals in Montgomery County, officials cannot inquire about the immigration status of someone, Hidalgo said.

Botwin said he would like to change that, suggesting a policy like Howard County's—where a person's immigration status is checked for every county service except in an emergency—would be more beneficial to Montgomery County. In the meantime, Botwin said his group is filing a request with the county's inspector general to audit LEDC and make sure it is loaning to legal residents.