California Loan Programs

In previous emails I said I would send information on California small business loan programs. Please find below information from Toni Symonds Chief Consultant for the Assembly Committee on Jobs,Economic Development and the Economy and Kurt Chilcott President and CEO of the Greater San Diego CDC Small Business Finance. Thank you both.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA 94116
shauge@cal-insure.com
415-680-2188

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From: Symonds, Toni [mailto:Toni.Symonds@asm.ca.gov]
Subject: RE: EDD Tax Branch News #156 (California Business Owners)

There are several state and federal loan assistance programs. The California Capital Access program is a loss reserve program, which is designed to help businesses that are very close to being credit worthy. Each bank has its own reserve account. When a loan is enrolled in the account, the bank, the business and the state each put is a fee. The lender has access to the full reserve account for any defaults. The state generally puts in double the fee of the lender and the business. Prior to the most recent federal injection of $78+ million, the program only had $4 million new dollars each year. The Treasurer’s Office, who administers the program has been working with the JEDE Small Business Roundtable members to get more banks to participate in the program. Caled and others have been helping to encourage banks to sign-up.

The state also administers a 90% guarantee program, which is backed by a $30 million state managed account. This program also received $78+ million from the feds and is in the process of gearing up. This program best serves businesses that are credit worthy but do not necessarily fit the bank’s optimum profile for such things as years in business. Attached is a joint marketing flyer the Roundtable put together. We also have a very cool chart that talks about each of these programs and types of businesses they target. It has been used in cross training of public and private lenders by the SBDCs this past year. We should probable think about how to use it more broadly. I think it would be good to have a large lender list.

The link to the California Small Business Credit Initiative (pdf) can be found here:

http://www.smallbusinesscalifornia.org/Small%20Business%20Credit%20Initiative%20Flyer.pdf

The state’s programs have been very limited. Given the state’s financial situation, the state’s core programs have suffered through annual budget reductions. The federal Small Business Jobs Act, however, have given new life to the two state programs. So they may be worth a second look. I fully agree that there needs to be a secondary market for the state’s guarantee program and we have been talking about how to create more conformity among the loan products. The federal dollars may give us the incentive to jump start this work


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From: Kurt Chilcott [mailto:kchilcott@cdcloans.com]
Subject: FW: Small Business Lending

Small Banks and Alternative Mission Drive Lenders Providing Greater Access to Capital
California small businesses should be aware that there are capital resources available to them beyond the large bank and even community bank infrastructures. In fact a recent survey by Biz2Credit found that mission driven lender credit unions, microlenders and other non-profits are providing an increasingly large share of the smaller loans to small businesses. Due to declining sales and profitability, many banks are reducing or eliminating line of credit financing to small businesses. This cots off a vital source of working capital for many small businesses. Both small businesses and banks should be aware of and seek out alternative financing available through a range of alternative lenders. Many new programs have been established to meet these needs. Examples include:

1. SBA has implemented the 504 Debt Refi program available to small businesses who want to refinance the debt on their facilities at terms and maturities typically not available elsewhere: http://www.sba.gov/content/504-loan-refinancing-program

2. SBA has established a new program Community Advantage delivered by non-profit lenders for loans $250,000 and under. http://www.sba.gov/content/advantage-loan-initiatives

3. California has increased the reach of its State Loan Guarantee Program by increasing loan sizes to $1 million. http://buildworksource.com/california-loan-guarantee/

4. California has provided funding for the California Capital Access Program that provides a reserve fund for higher risk loans made by a range of financial institutions – banks and non-profits. http://www.treasurer.ca.gov/cpcfa/calcap.asp