Today, Mayor Vincent C. Gray announced the creation of the District’s Capital Access Program. On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010. The Act created the State Small Business Credit Initiative and appropriated $1.5 billion to the U.S. Department of the Treasury to be used by the District, states, and territories to increase credit availability for small businesses. The District applied for $13.1 million of the funds on June 23rd, and the District’s application was approved on August 1st.
“The funds made available to the District’s Capital Access Program will provide participating lenders with a credit enhancement that will enable them to provide much-needed loans and lines of credit to local businesses that have faced difficulty obtaining the crucial credit needed to hire residents and expand their operations,” said Mayor Gray. “My administration is committed to doing everything within our authority to assist our local businesses in their efforts to create jobs and stimulate economic development in the District. In further demonstration of our commitment to this important initiative, I have authorized Deputy Mayor for Planning and Economic Development Victor Hoskins to provide $1.7 million in local funds to be used to provide additional enhancements for participants in the Capital Access Program.”
Each participating lender in the Capital Access Program is required to establish a loan loss reserve account, and deposit into that account a small percentage of each loan made. In addition to the lender’s contribution, each borrower is required to deposit an amount into the lender’s loan loss reserve account. The District will match the lender’s and borrower’s contributions using funds from the Treasury Department.
In addition, lenders that have enrolled fewer than $2 million in loans in the program, have assets of less than $1 billion or make loans to borrowers financing an enterprise zone project are entitled to receive additional matching contributions from District funds.
The Department of Insurance, Securities and Banking (DISB) and the Department of Small and Local Business Development (DSLBD) will jointly administer the Capital Access Program, and will work closely with the business and lending communities to ensure that every eligible business obtains the credit they need. DISB and DSLBD will be announcing outreach programs in the coming weeks.