Areas Served: City of Milwaukee, Wisconsin
The Capital Access Program (CAP) can provide access to financing for Milwaukee, Wisconsin companies, especially start-ups and small businesses, which may not be able to obtain conventional financing.
CAP is a flexible loan loss reserve program that provides lenders with a way to fund projects considered too risky for conventional lending.
This is accomplished through the creation of a lender specific loan loss reserve.
CAP is structured as a public-private loan loss reserve program.
Each bank participating in CAP has its own reserve to protect against losses on loans approved by the bank and enrolled under the program.
The lender, along with the borrower, set aside funds as a reserve.
This combined total of reserve funds is matched by MEDC.
If a borrower defaults, this reserve can be used to reduce the bank’s loss.
If the funds are not needed, they become part of a permanent reserve for future loans made by the lender through CAP.
Eligibility for Capital Access Program
¢ Non-profit, as well as for-profit businesses are eligible.
¢ Works well for short-term loans and lines of credit.
¢ Loan size: $1,000 to $250,000. Taverns, liquor stores, gun shops and passive real estate projects are not eligible.
Loan Terms for Capital Access Program
¢ Bank must have a signed Participation Agreement on file with MEDC.
¢ The bank sets its own criteria for determining whether to make the loan.
¢ The bank determines the loan term, interest rate, fees, collateral requirements and other loan conditions.
¢ Bank determines reserve percent for each loan.
¢ The bank submits to MEDC a one-page form about the loan with notification that the fees are deposited in the loan loss reserve account.
¢ MEDC remits matching amount to the bank for deposit into the loan loss reserve account.
¢ Reserve = 3% to 7% of loan.
¢ Minimum contribution is 1.5% each, from bank and borrower.
¢ MEDC matches combined contributions up to 7.0%.
If bank and borrower each contribute 1.5% of the loan amount, MEDC contributes 3.0%.
¢ Fees plus earned interest accumulate in a bank controlled account.
¢ Bank taps CAP account for shortfall on collection.
Recoveries must be re-deposited into the CAP account.
Benefits
¢ There is no processing delay and virtually no paperwork.
¢ Fast turnaround.
¢ Few eligibility rules.
¢ Bank makes credit decision.
Contact InformationMilwaukee Economic Development Corporation
Address: 809 N Broadway
City: Milwaukee
State: Wisconsin
Website:
http://www.medconline.com/Loan_Programs.html#capital
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