Programs offer businesses help in securing financing
Two new programs offer a total of $17 million in funding to help small businesses in Colorado secure capital.
The programs — Colorado Capital Access and Cash Collateral Support — are designed to help businesses with 750 or fewer employees obtain loans from their local banks for working capital, inventory, real estate or equipment purchases and lines of credit.
“As we traveled around the state during the bottom-up economic development process, we heard from communities from Cortez to Julesburg about the importance of access to capital. These programs will increase the availability of capital that small businesses need to hire more employees, grow their product lines and expand their businesses,” said Colorado Gov. John Hickenlooper.
Funding for Colorado Capital Access and Cash Collateral Support was authorized by Congress through the Small Business Jobs Act of 2010. In October 2011, Colorado received $17.2 million through the Small Business Credit Initiative Program, which was designed to assist states in implementing capital access programs.
While $15.2 million has been earmarked for the Cash Collateral Support program, the remaining $2 million will be used for the Colorado Capital Access program. All proceeds must be deployed by October 2013.
The Colorado Housing and Finance Authority (CHFA) will administer the programs based on the experience of the agency in overseeing the Colorado Credit Reserve program. “CHFA’s strong partnership with banks will help ensure these resources are deployed to small businesses across the state,” said Cris White, executive director and chief executive officer of CHFA.
Colorado Capital Access is modeled after the Colorado Credit Reserve program (CCR), which has helped more than 500 businesses obtain a total of $20.5 million in financing and create or retain more than 3,800 jobs.
Lenders participating in the Colorado Capital Access program will set up a pooled loan loss reserve fund to help offset any losses that occur with loans registered in the program. Colorado Capital Access will match the lender’s contribution into their loan loss reserve fund dollar for dollar up to a maximum of 7 percent of the loan amount. The maximum loan size is $750,000.
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 may apply for up to $500,000 in cash collateral support to strengthen a borrower’s collateral position. The maximum loan size supported is $5 million.