Capital Access Program for Participating Lenders

Lender Capital Access Program (CAP) is a flexible loan loss reserve program that provides lenders with a way to fund projects considered too risky for conventional lending through creating a lender specific loan loss reserve. CAP can provide access to financing for companies, especially start-ups and small businesses which may not be able to obtain conventional financing. This is accomplished through the creation of a lender-specific loan loss reserve.

CAP is structured as a public-private loan loss reserve program. Each lender participating in CAP has its own reserve to protect against losses on loans approved by the lender and enrolled in the program. The lender, along with the borrower, set aside funds as a reserve. This combined total of reserve funds is matched by MEDC. If a borrower defaults, this reserve can be used to reduce the lender’s loss. If the funds are not needed, they become part of an ongoing reserve for future loans made by the lender and enrolled in CAP.

ELIGIBLE PROJECTS & FINANCING

• Non-profit and for-profit businesses.
• Higher match percentage for Target Loans: Minority, Woman and Veteran majority owned businesses and businesses located outside Metropolitan Statistical Areas and loans made by Non-profit Lenders.
• Works well for short-term loans and lines of credit.
• Loan size: $1,000 to $250,000.

INELIGIBLE PROJECTS

• Taverns 
• Liquor stores
• Gun shops
• Passive or residential real estate investments.

HOW THE PROGRAM WORKS

• Lender completes a Participation Agreement with MEDC.
• Lender uses its own criteria for determining to make the loan.
• Lender determines the loan term, interest rate, fees, collateral requirements and other loan conditions.
• Lender submits a one-page Enrollment Form about the loan with fee.
• MEDC remits matching amount for deposit to the Lender’s loan loss reserve account.

RESERVE AMOUNTS

• MEDC matches 3% for loans up to $150,000 and 2% for loans over $150,000.
• Loans over $250,000 can be enrolled with preapproval from MEDC.
• MEDC matches 150% of the fee for Targeted Loans up to a maximum of $5,000.
• Reserve Fund plus earned interest accumulate in the Lender’s CAP account.
• Lender makes claims of charged off loans from the CAP account for shortfall on collection. Recoveries must be re-deposited into the reserve account.

BENEFITS

• There is no processing delay and virtually no paperwork.
• Fast turnaround. 3-day turnaround by MEDC.
• Minimal eligibility rules.
• Lender makes credit decision.