Benchmark Bank in west suburban Aurora is the latest small Chicago-area lender to face a regulatory order requiring it to raise capital and clean up its ailing loan portfolio.

The $202-million-asset bank, which is more than a century old, appears to need at least $12 million in fresh capital to meet higher-than-normal guidelines established in the “cease and desist” order, issued Oct. 15 by the Federal Deposit Insurance Corp. and the Illinois Division of Banking. The order gives the bank very little time to find new investors, requiring it to have the capital in hand by Oct. 31.

CEO John Medernach, a former vice-president promoted to the top job in March, said Wednesday that the bank is moving to sell delinquent loans and other assets to reduce the amount of capital it has to raise. There’s no shortage of potential buyers, but coming to terms is a challenge, he said.

“One of the growth industries that has emerged are these different hedge funds that have formed to buy loans,” he said. “I get calls every day from different funds that are looking.”

He declined comment on whether the bank could meet the Oct. 31 deadline, but said Benchmark is “certainly making the best efforts to comply with the order.”

The order requires the bank to reduce its concentration of commercial real estate and construction loans. As of June 30, 36% of Benchmark’s $157 million in loans were construction-related. More than half, or $31 million, of the $57-million construction-loan portfolio was no longer accruing interest as of June 30.

Benchmark’s Chicago-area branches are in Aurora and St. Charles and were opened about a decade ago. But its roots go back much further in Central Illinois, where it started as an agricultural bank in the 1890s. It still has branches in the Downstate towns of Verona, Ransom and Seneca.