The Capital Access Program (CAP) provides access to financing for companies in the state of Wisconsin, 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 through creating a lender specific loan loss reserve.
Each bank participating in CAP has its own reserve to protect against losses on loans approved by the bank and enrolled in the program. The lender along with the borrower set aside funds as a reserve, the combined total of which is matched by MEDC. If a borrower defaults, this reserve can be used to reduce the bank’s loss. If the funds aren’t needed, they become part of a permanent reserve for future loans made by the lender through CAP.
Taverns, liquor stores, gun shops and passive real estate projects are not eligible.
- The bank must have a signed Participation Agreement on file with MEDC.
- The bank sets its own criteria for determining whether to make the loan, as well as determines the loan term, interest rate, fees, collateral requirements and other loan conditions, and the 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 the matching amount to the bank for deposit into the loan loss reserve account.
- The reserve amount is 3% to 7% of the loan.
- Minimum contribution is 1.5% each, from bank and borrower.
- MEDC matches combined contributions up to 7%. If the bank and borrower each contribute 1.5% of the loan amount, MEDC contributes 3%.
- Fees plus earned interest accumulate in a bank controlled account.
- The bank taps the CAP account in case of shortfall on collection. Recoveries must be re-deposited into the CAP account.
- There is no processing delay, and virtually no paperwork.
- Fast turnaround.
- Few eligibility rules.
- Bank makes credit decision.
- The CAP is now statewide through Wisconsin Business Development.