FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department released Friday the first national report summarizing the 1997 nationwide performance of state-run Capital Access Programs (CAPs) as cumulative lending to small businesses neared $1 billion.

The report details the 27 percent growth in national CAPs loan volume in the 20 states and two municipalities that operate CAPs. In addition, the review covers CAPs performance in encouraging lending to minority-owned businesses and businesses in low and moderate income communities.

First developed in Michigan in 1986 as a method to increase the availability of credit to small businesses, CAPs allow banks to use their own underwriting standards for eligible loans. CAPs require little administrative cost for banks, borrowers, or governments. Under CAPs, banks and borrowers pay into a reserve fund, matched by the state, to enable the bank to make more difficult small business loans.

The Treasury Department has proposed legislation to support the start-up of new state CAPs and the expansion of existing ones. Currently the following states and municipalities operate CAPs: Arkansas, California, Colorado, Connecticut, Illinois, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, New York City, North Carolina, Ohio (Akron), Oklahoma, Oregon, Pennsylvania, Texas, Utah, Vermont, Virginia, West Virginia and Wisconsin.