Shopsteading is a new word in the vocabulary of urban renewal, and one you'll be hearing more about. It symbolizes the heightened attention being paid today to the small, independent business person and the role he or she plays in reversing neighborhood decline. On the personal and practical level, it's a new source of cash and confidence for small businesses that can't afford high rent.

Shopsteading is first cousin to the older homesteading programs now run successfully in many American cities.

Under homesteading, people buy run-down, city-owned houses for $1 or so, live in them and invest the money needed to fix them up, Shopsteading does the same for small commercial properties.

Together these pioneering programs attract seed capital to a neighborhood, encourage a stable business and residential population, with a personal and financial stake in the area, and return comatose properties to productive, tax-paying life.

Shopsteading began just two years ago, in Baltimore, crucible of many imaginative concepts in urban renewal, and in Jersey City, N.J.

In Baltimore, buildings cost $100. Three sources of low-interest financing are available: the city's own Commercial Revitalization Environmental Assistance loans, proving up to $50,000 of 7 percent money for 20 years; the state Home Rehabilition Program, with 6 percent, 20-year loans; and Section 312 loans from the federal Department of Housing and Urban Development, at 3 percent for 20 years (this program reserved for those in the greatest need).

In Jersey City, buildings cost just $1. There's a free grant for redoing the facade in line with a unified architectural plan, and 3 percent federal loans.

On his federal income tax return, a shopsteader gets a 10 percent investment credit for renovating commercial properties more than 20 years old (or not renovated in 20 years) and five-year accelerated depreciation for buildings in designated historic districts.

The buildings also have upstairs apartments, where the owner can live or which can be rented for extra income.

Not every business person need apply. Shopsteading requires people with experiences in running their own business, whose operations complement the neighborhood and who have the financial strenght to last awhile.

Nelson Bolton, Baltimore's first shopsteader, opened an ice-cream parlor last spring. His neighbors will be an Oriental imports firm, an architect, a craft school, a hair studio and a real estate office.

Among the ideal shopsteaders are craft people, who need a lot of space and can't afford high rent. Stained-glass maker Jeff Powley, a fugitive from soaring real estate rents and taxes in Washington, says that his monthly loan payments are just a little more than his Washington rent. And in Baltimore he owns the building.

Shopsteading is a lot riskier than homesteading because you depend on commercial success. And low-rent districts have their special headaches.

There's a high risk of vandalism during the renovation period; lean, hungry months for the first shopsteader on a street, until other businesses open up; refusal by existing businesses to fix up their properties; the very real possiblity that the neighborhood will improve too slowly to keep a business alive. Insurance has been hard to get in Jersey City, but not in Baltimore, where at least two companies are actively supporting the neighborhood rehabilitation.