Funds boost small business lending
An additional $5.7 million in federal funding is available to help small businesses in Colorado leverage capital.
The Colorado Housing and Finance Authority (CHFA) and the Colorado Office of Economic Development and International Trade (OEDIT) announced the state has been awarded its second disbursement from the U.S. Treasury Department’s State Small Business Credit Initiative (SSBCI).
“We’re pleased that our success is being rewarded with an additional $5.7 million to fund the growth of Colorado’s small business community,” said Cris White, executive director and chief executive officer of CHFA. “By working with Colorado’s banks and community development financial institutions, we hope to leverage these funds with private capital to help businesses raise up to $50 million in new money for our state’s economy.”
Colorado was awarded a total of $17.2 million through the SSBCI program in October 2011, which the state will receive in three disbursements. Colorado received its second disbursement after lending $3.2 million, or 80 percent of its first disbursement. To date, federal funds have generated $28.8 million in private sector financing to Colorado businesses.
“We are thankful for these funds that enable Colorado’s small businesses to leverage new capital and create more jobs,” said Ken Lund, executive director OEDIT. “The program’s successful deployment shows that our economy and our businesses remain dynamic and are moving in the right direction.”
The SSBCI program was established in 2010 as part of the Small Business Jobs Act. Through the SSBCI, the Treasury Department awarded almost $1.5 billion nationwide to fund programs that support small businesses and small manufacturers. The program is expected to spur up to $15 billion in new private sector lending or investment in small companies by leveraging $10 in private capital for every dollar of federal support.
Colorado’s SSBCI funding is distributed through the Colorado Capital Access and Cash Collateral Support programs administered by CHFA. The programs are designed to help businesses with 750 or fewer employees obtain loans from local lenders for everything from working capital and inventory to real estate or equipment purchases and lines of credit
“Through the first disbursement, we were able to support 40 new loans under our Colorado Cash Collateral Support Program. The net result of these loans is 334 jobs that were either added or preserved for Colorado citizens and their families,” White said. “We hope to build on this momentum by engaging even more financial services partners to put this funding to work in the community as quickly as possible.”
Cash Collateral Support is a credit enhancement program designed to help businesses get access to loans they might not otherwise qualify for due to collateral shortfalls. Lenders can apply for up to $1.25 million in cash collateral support to strengthen a borrower’s collateral position. The maximum loan size supported is $5 million.
The Colorado Capital Access program established a loan loss reserve fund to help participating lenders offset losses that occur with loans registered in the program. Colorado Capital Access will match the lender’s contribution into its loan loss reserve fund dollar for dollar up to a maximum of 7 percent of the loan amount for each loan registered in the program. The maximum loan size is $750,000.