IS STATE LIB Financing Programs Illinois Department of Commerce and Economic Opporunity Rod R. Blagojevich Jack Lavin Governor Director Capitol Access Program The Capital Access Program (CAP) is designed to encourage lending institutions to make loans to new and small businesses that do not qualify for conventional financing. The maximum loan amount under the program is $100,000. CAP is based on a portfof® insurance concept where the borrower and the Illinois Department of Commerce and Economic Opportunity (DCEO) each contribute a percentage of the loan amount into a reserve fund located at the lender's bank. This reserve fund enables the financial institution to make loans beyond its conventional risk threshold and is available to draw upon to recover losses on loans made under the program. A CAP loan is a private market transaction between the lender and the borrower with all terms, fees, conditions, rates, collater¬ al, etc. being determined by the lending bank. The borrower s non-refundable contribution to the reserve fund must be between 3 percent and 7 percent of ® total loan amount. DCEO will provide a matching contribution. A133 percent match to the borrower's contribution will be provided on the first $2,000,000 in CAP loans enrolled at the lender bank. A higher match will be provided on loans made to minority/woman/disabled owned businesses (150 percent) and businesses located in a federally designated Empowerment Zone or Enterprise Community (200 percent). Loan proceeds cannot be used for debt refinancing or for financing passive real estate ownership. I Participation Loan Program me Participation Loan Program provides credit enhanced financial assistance to Illinois small businesses that provide employment opportunities to Illinois citizens. Through banks, development corporations and other lenders, the Department of Commerce and Economic Opportunity (DCEO) can participate in business loans up to 25 percent of the total amount of a project, but not less than $10,000 or more than $750,000. DCEO's terms will typically match those of the participating financial institution in regard to inter¬ est. rate and maturity Funds available through the program can be used for a number of business activities including the purchase of land and buildings, construction or renovation, purchase and installation of machinery and equipment, working capital, etc. Funds cannot be used for debt refinancing or contingency funding under this or any of DCEO’s financing programs. There are three derivatives of the Participation Loan Program: Minority, Women and Development Dorroration Enterprise Disabled Participation Participation Loan Zone Financing Loan Program Program Program A D T Minority, Women or Disabled business is a evelopment Corporations provide financ¬ he Enterprise Zone Financing Program is business which is at least 51 percent owned ing to supplement commercial lending and designed to encourage businesses to locate by one or more minority, women or disabled per¬ support economic development. They may spe¬ within an Illinois Enterprise Zone. There are 93 sons and the management and daily operations of cialize in development and rehabilitation of Enterprise Zones designated statewide and 4 the business are controlled by one or more of the commercial real estate, investment in or lend¬ additional Enterprise Zones have been certified minority, women or disabled persons who own it. ing to businesses, or related activities. Develop¬ under the auspices of the Quad Cities Regional Minority shall mean a person who is a citizen or ment Corporations are most often public and bank sponsored and funded financial institu¬ Economic Development Authority Act, the lawful permanent resident of the United States tions. They serve as a source of supplemental Southwestern Illinois Economic Development and who is African-American, Hispanic, Asian- business capital for small businesses whose Authority Act, and the Upper Illinois River American, American-Indian or Alaskan Native. Disabled shall mean a person with a physical or credit requirements cannot be adequately served Valley Development Authority Act. The partic¬ by conventional lending institutions. mental impairment that substantially limits one or ipation works the same as the PLP, but offers an more of the major life activities of an individual. incentive rate of 200 basis points below index Under the Development Corporation Participation rate on DCEO's portion of the financing for Loan Program, DCEO's participation in a loan must Under the Minority, Women and Disabled Partici¬ be 50 percent or less of the Development Corpora¬ variable rate loans, with fixed and adjustable pation Loan Program, DCEO can participate in tion's loan, not to exceed 25 percent of the total pro¬ rate loans being comparable with U.S. Treasury small business loans up to 50 percent of the total ject or $750,000 maximum. DCEO will generally Notes plus 0-1%. There are fewer industry amount of the project, subject to a minimum of share collateral positions with the Development restrictions. $10,000 and a maximum of $50,000. DCEO's inter¬ Corporation. The interest rate on DCEO's portion of est rate will be the index rate used minus V/i% for the financing will be the Development Corporation's variable rate loans and plus lli-V/i% for fixed and rate less 1 percent. adjustable rate loans. Each loan originated and submitted to The lender will be responsible for the DCEO for funding assistance must be in review and approval of the loan contin¬ compliance with the following criteria: gent upon DCEO's participation, collat¬ eral, security and documentation, and The project for which loan funds will be for the verification of the information in used would not be undertaken unless the the application. DCEO will review the loan is provided. information submitted by the lender for its decision on the participation request. DCEO's participation wall cause a project to be undertaken which has the potential to create or retain substantial employment DCEO has designed these programs in Illinois or to modernize or improve the to encourage lenders, banks or devel¬ competitiveness of the borrower in rela¬ opment corporations to make loans tion to the amount of the loan. that they otherwise would not make for a variety of reasons. All loan ser¬ The business project is a start-up, expan¬ vicing, except some necessary reports, sion or other new venture opportunity is handled by the local lender. The designed to improve the competitiveness whole process is designed to be sim¬ of the company through modernization, An applicant may apply for a loan ple and efficient. and is not a relocation of an existing busi¬ through a bank, development corpora¬ ness from another site within the state of tion or other lender. The lender may Illinois, unless that relocation results in then submit the application to DCEO for substantial employment growth. a participation. All information included The borrower has demonstrated to the with the original application will remain Any for-profit small business operat¬ lender that it is ready to implement the confidential consistent with the Small ing in the State of Illinois which has, project for which the loan is being made Business Development Act and the including its affiliates, fewer than 500 and that it has the financial ability to carry Illinois Freedom of Information Act. full-time employees is eligible. out the project. The Illinois Department of Commerce and Economic Opportunity (DCEO) DCEO is the lead state agency responsible for improving the competitiveness of Illinois busi¬ nesses in the global economy resulting in pros¬ , , perous growing industries, rising real incomes and high quality jobs. DCEO provides informa¬ , tion assistance and advocacy to facilitate and advance the economic development process. , Through the follozving financing programs DCEO's Business Finance Division helps small businesses obtain financing through Illinois , banks development corporations, and other , lending institutions for business start-up , expansion and modernization efforts leading to a more productive and competitive business infrastructure. ILLINOIS STATE LIBRARY 115=1 Dinnai □ UNIVERSITY OF ILLINOIS-URBANA 3 0112116643591 For More Information Illinois Department of Commerce and Economic Opportunity Business Finance Division 620 East Adams Street Springfield, Illinois 62701 217/782-3891 TDD 217/785-6055 FAX 217/785-6328 Illinois Department of Commerce and Economic Opportunity Business Finance Division 100 West Randolph, Suite 3-400 Chicago, Illinois 60601 312/814-2315 TDD 800/419-0667 FAX 312/814-2686 or e-mail [email protected] Printed by the Authority of the State of Illinois Printed on Recycled Paper 03 0688 1,000 5/03