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CALIFORNIA BUSINESS MINUTE
Guaranteeing Loans
02-22-11
Hi, I am Tim Johnson and welcome to the California Business Minute.
The U.S. Department of the Treasury has approved California’s plan for using its
full State Small Business Credit Initiative (SSBCI) funding allocation. The
allocation will help create jobs and spur an estimated $1.7 billion in additional
small business lending in the state.
“Public-private lending partnerships, such as the State Small Business Credit
Initiative, have a proven track record of success, and I am pleased that this
funding is on its way to support economic growth and job creation in California,”
said Rosie Rios, U.S. Treasurer
California State Treasurer Bill Lockyer says leveraging the funds will vastly
expand the state’s current lending ability. Under the Small Business Jobs Act,
the California SSBCI funding allocation is $168.6 million. California expects
to generate a minimum leverage of at least $10 in new private lending for every
$1 in federal funding lent, meaning the $168.6 million allocation could support
at least $1.7 billion in new private lending in that state.
California’s approved plan dedicates half of the state’s SSBCI funding ($84.3
million) to the California Capital Access Program (CalCAP). This program is
operated by the state Treasurer’s Office. CalCAP provides a reserve fund that
backs a portfolio of new small business loans made by a lender. Loans can be
used to finance the acquisition of land, construction or renovation of buildings,
the purchase of equipment, other capital projects and working capital.
The other half of the state’s funding ($84.3 million) will support the California
Small Business Loan Guarantee Program (SBLGP), offered through 11 Financial
Development Corporations, which helps enable a small business to obtain a term
loan or a line of credit. The SBLGP is administered by the California's Business,
Transportation and Housing Agency.
“The State's loan guarantee program has been crippled by losses and lack of general
fund support over the past several years,” said Mary Jo Dutra, President/CEO of
SAFE-BIDCO one of the eleven financial development corporations. “This infusion of
federal dollars will rejuvenate the program. The increased leverage ratio and
amended funding criteria (most notably larger guarantee size and a more liberal
definition of "small business") will allow access to capital to a larger segment
of the small business community. This is very timely for California“, said Dutra.
I am Tim Johnson and this has been the California Business Minute.
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