A new program announced Friday will free up to $800 million in capital for North Carolina’s small businesses over the next two years. The North Carolina Capital Access Program will support loan loss reserves that allow banks and other qualified financial institutions to make business loans that otherwise fall just outside of their normal underwriting standards. The program is made possible by the State Small Business Credit Initiative, part of the federal Small Business Jobs Act of 2010. President Obama signed the bill into law in September. Gov. Beverly Perdue designated the N.C. Rural Economic Development Center to administer $46.1 million that North Carolina will receive under the initiative.
Larry Barbour, CEO of North State Bank and chair of the North Carolina Bankers Association, called the program “the most significant step yet to bring statewide scale to our collective efforts to re-fuel the engine of job creation – our state’s small businesses.” All businesses located in North Carolina with 500 or fewer employees are eligible for loans under the program. The maximum loan amount is $5 million. Loans may be used to finance the acquisition of land, construction or renovation of buildings, purchase of equipment and working capital. The individual lenders will be responsible for approving loans and setting terms, including a loan loss reserve fee to be shared by the lender and borrower. The Capital Access Program will then match the loan loss reserve fee. Federally insured banks and credit unions, and community development financial institutions are eligible to participate in the program. The Rural Center will hold workshops around the state for interested lenders starting in early January