In the current post-recession credit environment, many small businesses are finding it very difficult to find the capital they need to either start or grow their business. Luckily in a number states, including Washington, our next stop on the Access to Capital tour, Capital Access Programs (CAPs) are available to greaten the chances of small business owners securing a loan. These programs urge lenders to make small business loans that would, under normal circumstances, fall just short of being approved. This is possible due to the funds that the CAP provides to alleviate the risk to the lenders to cover losses from the defaulted loans. Therefore, CAPs are designed to encourage banks to underwrite loans to a higher risk threshold than conventional lending criteria would normally approve.
Small business, including non-profits, can investigate which lenders are partnered with a CAP in their region and contact them directly to learn more about the specific procedures. Generally, the lender will first examine the loan application under normal lending criteria. If the loan is not approved, the lender will then determine if the business is eligible for a CAP loan. If approved, the small business must pay a premium fee determined by the lender, which will be disclosed before the loan signing. At our Access to Capital event in Seattle, one of our expert speakers in the Town Hall will be Ruth Ann Halford from Fortune Bank. Fortune bank is an example of a CAP partnered lender who works with small businesses through the CAP fund. Other CAP partners in the Washington area include Pacific Continental Bank and Coastal Community Bank.
Most CAP lenders provide a series of loan types including start-up costs, working capital, equipment and inventory, acquisition, construction, or renovation of a place of business, and franchise fees. Typical documents for normal loan application are required for CAP loans consisting of a business plan and financial statements from the business owner and for the business itself. Come to our Access to Capital Event in Seattle on Nov. 12th to learn more about more about this program and other opportunities for your small business.