In an effort to stem the flow of District businesses to the suburbs, 10 of the city's banks have agreed to finance up to about $120 million in long-term business improvement loans to the city's small and medium-sized businesses.

The loans program is part of President Carter's pledge to help revitalize businesses in the nation's cities.

"This will help business stay and expand in the city," said Mayor Marion Barry Jr. during a press conference yesterday. "The result will be in more jobs and neighborhood and downtown opportunities" for shoppers and merchants.

Because of restrictive workmen's compensation and minimum wage payments and other tax burdens imposed by the city, at least 108 businesses have left the District for greener suburban pastures since 1970, said Julian Nicholas, acting director of the Office of Business and Economic Development.

For example, Nicholas said that companies considering expanding from the District into the suburbs include District Hotel Supply Inc., Ottenberg's Bakeries Inc. and Garfinckel's distribution center. Companies whose offices have left the District or expanded into the suburbs within the past year include Ginns Office Supply, Merkle Press Inc., Hech-Hechinger's and Schwartz Brothers, Nicholas said.

The exodus "has meant a loss of more than $150 million in payroll" annually and the loss of 15,000 jobs, Nicholas said.

Under the new plan, the 10 banks have offered $12 million that can be leveraged to provide $120 million in loans. The Commerce Department's Economic Development Administration, the Small Business Administration and the Department of Housing and Urban Development will provide 90 percent loan guarantees.

The loans will be offered at the market rate and there is no special mechanism to speed up pocessing of the guarantees by government agencies, often a problem for small businesses.

"The important part is the availability of the money," said Samuel S. Beard, president of the National Development Council that helped arrange the banks' agreement. "If the company can't pay the interest rates, they shouldn't borrow the money."

Beard said the average size of the loan would probably be about $500,000 and would be available for businesses with 25 employes or less, "which represent two thirds of all private-sector jobs in cities," Beard said. The loans are for expansion, construction and equipment.

Most banks generally offer only short-term financing for businesses, Beard said, but the loans under the new program would extend for 15 or 20 years.

The plan announced yesterday was intended to offset somewhat disincentives that have been driving businesses from the District into Maryland, Virginia, Pennsylvania and West Virginia during the past decade.

Although many trade associations and white-collar firms have deluged the city, light industrial business has been drying up. This has eliminated jobs for the less-skilled, the underemployed and the unemployed.

Unlike suburban jurisdictions, the District has been unable to issue industrial revenue bonds because its finances have been in disarray.

The program will help stop the flight of jobs to the suburbs and help expand the city's tax base, said Barry.

The 10 banks in the program are: American Security Bank, $3 million; Riggs National Bank, $3 million; District of Columbia National Bank, National Bank of Washington, National Savings and Trust Co., Union First National Bank and United National Bank of Washington, $1 million each; Madison National Bank, $500,000; Industrial Bank of Washington, $400,000, and the Women's National Bank, $100,000.