Program Purpose

New York State’s Capital Access Program (CAP) is funded through the State Small Business Credit Initiative (SSBCI), a US Treasury program authorized by the American Rescue Plan Act of 2021. CAP provides portfolio insurance to participating Lenders to increase small business lending in New York State. NYS small businesses can utilize CAP by contacting a participating Lender who will conduct their own loan application process and determine loan terms.  

Benefits of CAP Participation

• Entrepreneurs can obtain financing or additional financing where they previously could not.  
• Small businesses can access financing to expand their business, or for facility and technology upgrades, and working capital.  
• Lenders can use CAP to provide more small business financing, obtain CRA credit and provide larger loans, up to $500,000.  
• New York’s CAP is an economic development tool that creates employment opportunities for all New York citizens.  

CAP Participating Lender Eligible Loans

• An eligible loan is a term loan or line of credit used for expansion, facility or technology upgrading, start-up or working capital.  
• A program loan may be made with interest rate, fees, and other conditions as the Lender and Borrower may agree. Enrolled loans must reach maturity within seven (7) years.  
• The maximum amount for a Program loan is $500,000.  
• CAP does not have a minimum loan amount.  
• An enrolled Program loan must be for the entire loan amount and not a portion of a loan to be covered under the Program.  

Lending Criteria

For participating lenders to enroll small business loans into portfolio insurance, the borrower must be a small business whose primary place of business is in New York State with 100 or fewer employees and must meet at least 2 of the 6 requirements below:  

• The business has been operating for less than five years.  
• The business has not secured business financing from a bank within the three years prior to the anticipated origination date of the loan, provided that the business may have accessed financing from a community development financial institution or other alternative lender.  
• The primary owner of the business has a FICO score of below 700.  
• The business is unable to provide more than ten percent (10%) of the loan as collateral.  
• A SEDI business owner, including, but not limited to, minority and women-owned business enterprises, service-disabled veteran-owned businesses, and veteran-owned businesses located in communities that are economically distressed.  
• The business is in a community that is economically distressed.  

Reserve Account

• Each CAP borrower and lender must pay into the lender’s loan loss reserve fund an amount equivalent to 3 percent to 7 percent of the principal amount of the loan to be covered by the loan loss reserve fund receipting CAP funds. The CAP borrower contribution must not exceed 50% of this contribution.  
• ESD will use CAP funds to match the combined borrower and lender funds at a ratio of 1:1, making the total contribution into the loan loss reserve fund a total of 6 percent to 14 percent of the principal amount of the loan.  

Lender Enrollment

Financial Institutions will be enrolled for CAP participation after executing a Portfolio Insurance Agreement and after being determined to be fiscally sound.  Staff will conduct due diligence described in the federal guidelines (summarized below), in addition to other analytical procedures. Staff will also recruit for participation only those institutions that are either state or federally charted banks, credit unions, or community development financial institutions that are federally certified by Treasury.  

The federal guidelines include the following recommendations for institution review, which will be secured by ESD as necessary: 

1. Banks: 

Reports needed to complete review: 

• Uniform Banking Performance Report (“UBPR”) showing that commercial loans and leases comprise a significant part of the institution’s assets.  
• A “UBPR” peer group analysis showing that the institution’s percentage of non-current loans and leases does not exceed its peer group average.  
• Self-certification that the financial institution is not operating under any supervisory enforcement action.  

2. Community Credit Union: 

Reports needed to complete review:  

• Financial Performance Reports (“FPRs” from the NCUA.  
• Self-certification that the financial institution is not operating under any supervisory enforcement action.  

3. Community Development Financial Institutions (CDFIs): 

Reports needed to complete review:  

• A review of the CDFI’s CARS rating (if available, however not necessary). 
• Annual report with audited financial statements.  

In addition, the following documents are important to start gathering in order to be considered to participate in ESD’s CAP: 

• Three years of financial statements  
• Current loan portfolio  
• Current aging report  
• Current loan loss reserves  
• Types of small business loan products and/or potential products, in addition to potential CAP enrollment fees for your organization 
• Geographic coverage  
• Underwriting policies 
• Projected number of loans (number and dollar amount) and targeted groups under *SEDI to be made in the next seven years