MARYLAND CAPITAL ACCESS PROGRAM (MCAP) is a revitalization resource
to support the growth and success of small businesses in Priority Funding Areas
throughout the State of Maryland. This is a credit enhancement program that
enables private lenders to establish a loan loss reserve fund from fees paid by
lenders, borrowers, and the State of Maryland. Communities that have small
businesses receiving financing through loans enrolled will benefit from new or
expanded services provided by the small businesses.
|
ELIGIBLE BORROWERS
Most Maryland small businesses, including nonprofit organizations, are
eligible. Businesses must be located in Maryland's
"Priority Funding Areas" (PFAs) approved by the
Maryland Department of Planning for State funding in accordance with
the Smart Growth Act of 1997.
|
ELIGIBLE LENDERS
Lenders that may participate are federally insured financial institutions,
institutions regulated by the Commissioner of Financial Regulation, and others
who have a participation agreement with the
Maryland Department of Housing and Community Development. Current
participating lenders are; BB&T, Bank of America, PNC Bank and SunTrust
Bank.
|
HOW MCAP WORKS
|
-
A small business applies to a participating lender. Current participating
lenders:
-
The lender underwrites and enrolls an appropriate loan (or portion of a loan).
Enrolled amounts may range from $10,000 to $1,000,000.
-
Typical loans under this program would be those that fall slightly outside the
lender's normal credit guidelines.
-
The lender, borrower, and MCAP deposit their contributions into a reserve
account. Typically, the borrower and lender make up one-half of the
contribution and MCAP matches that amount. An example would be: 1.5 percent
each from the lender and borrower, or a total of 3 percent, and a 3 percent
match from MCAP, for a total of 6 percent of the original loan amount for the
reserve account. The lender determines the amount of contribution within a
range established by MCAP.
-
A one-page enrollment form with summary information is submitted to MCAP by the
lender.
-
There is one reserve account for each financial institution where all their
enrolled loans are placed.
-
In the event an early loan defaults, reserves may not be sufficient to cover
the loss. In that case, additional withdrawals from the reserve account may be
made on subsequently enrolled loans, providing the remaining balance of the
claim is not greater than 75 percent of the balance in the reserve account.
Early loans are considered to be the first two million dollars of enrolled
loans made by the lender.
-
If a loan goes into default and the lender has performed their normal methods
of collection, at the time of charge-off a lender uses a one-page form to file
a claim for all or part of an enrolled loan.
|
ADDITIONAL BENEFITS OF THE
PROGRAM
|
-
Easy and timely loan processing for both the lender and the small business
borrower.
-
Assistance to borrowers who may not be covered under other existing loan
programs.
-
May be combined with other loan programs.
-
Can be used for both lines of credit and term loans.
-
Leverages $1 million of State funds to develop approximately $33 million in
small business loans.
|
RESTRICTIONS
|
-
A project financed by a loan enrolled must be located in a Priority Funding
Area.
-
The following types of projects and activities will not be considered for
enrollment:
-
The proceeds of the loan will not be used to finance passive real estate
ownership.
-
Residential or transient living facilities, e.g., multifamily or single-family
housing developments, nursing homes, assisted living facilities, crisis care
centers, group homes, transitional housing, and homeless shelters.
-
Facilities such as community halls, fire stations, hospitals, colleges, or
universities.
-
Adult bookstores, adult video shops, other adult entertainment facilities,
check cashing facility, gambling facilities, liquor stores, massage parlors,
pawn or gun shops, tanning salons, or tattoo parlors.
-
The proceeds of the loan will not be used for the furtherance of sectarian
religious instruction.
|
FOR MORE INFORMATION, PLEASE
CONTACT:
Michael Haloskey
Director, Business Lending Programs
Maryland Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032
Phone: 410-514-7237
Haloskey@mdhousing.org
Frequently Asked Questions (FAQs)
|
|