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FROM THE OFFICE OF PUBLIC AFFAIRS October 16, 1998RR-2761 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.
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