Capital Access Program Information for Small Businesses

Through MEDC's Capital Access Programs, MEDC works directly with lenders who in turn can provide traditional financing to small businesses.

What is Capital Access and how can it help my business?

Capital Access is made up of several programs that can help small business throughout Michigan receive loans from banks and lending institutions to help their businesses grow and succeed. MEDC works directly with lenders who in turn can provide traditional financing to small businesses.

Small business owners in need of financing or loan support, are encouraged to find a participating lending institution based on the program of interest. Small business owners should feel empowered to talk with their local branch or lending institution and have them contact MEDC if they are not already part of Capital Access.

Over the past 10 years MEDC has deployed more than $180 million dollars to lending institutions across the state, who have in turn been able assist more than 250 small businesses. This has leveraged nearly $100 million in private investment in Michigan.

Capital Access Programs:

Collateral Support Program

The Collateral Support Program is funded by federal dollars provided under the State Small Business Credit Initiative (SSBCI) Act of 2010, and seeks to enable suppliers to acquire the necessary financing that might otherwise be unavailable due to a collateral shortfall according to the lender’s analysis. The program will supply pledged cash collateral accounts to lenders to achieve this goal for approved projects.

To qualify, a business must be engaged with a private lender for the purpose of acquiring a commercial extension of commercial credit (see list of currently participating banks in the document linked below) and must exhibit a collateral shortfall according to the lender’s analysis. The Borrower must have no more than 750 employees, and must participate in a qualified industry.

For program guidelines, more information and to see a list of all currently participating lending institutions, please review the following document:

Loan Participation Program

The Loan Participation Program seeks to enable companies to acquire the necessary financing that might otherwise be unavailable due to a cash flow shortage according to the lender’s analysis. The program will participate by purchasing a portion of the loan from the lender for approved projects.

To qualify, a business must be engaged with a private lender (see list of currently participating banks in the document linked below) for the purpose of acquiring a commercial extension of commercial credit for a diversification or expansion project. Borrowers must have no more than 750 employees, and otherwise comply with all state and federal requirements for the program. The borrow must also participate in a qualified industry.

For program guidelines, more information and to see a list of all currently participating lending institutions, please review the following document:

Capital Access Program

The Capital Access Program is an innovative program available to assist businesses with less than 500 employees with capital needs. The CAP uses small amounts of public resources to generate private bank financing, providing small Michigan businesses access to capital that might not otherwise be available.

The program can be used to finance most types of business (with the exceptions of the construction or purchase of residential housing; development of a casino, stadium or arena; or passive real estate). To date, 15 financial institutions in Michigan participate in CAP with more being added.

For program guidelines, more information and to see a list of all currently participating lending institutions, please review the following document:

Loan Guarantee Program

The intent of the Loan Guarantee program is for MEDC to partner with small business lenders, generally providing loans of $250,000 or less, to support new lending. The program mitigates a portion of the risk associated with small business lending by providing a partial guarantee to a qualified lender on new financing provided by that lender. The inclusion of the guarantee is intended to allow the small businesses to obtain financing that would not otherwise be available under conventional terms.

Private Activity Bonds

Private activity bonds are an attractive source of financial assistance to economic development projects in Michigan. They provide profitable firms with capital cost savings stemming from the difference between taxable and tax-exempt interest rates.

Public facilities, which generate a revenue stream, (parking structures for instance) have traditionally been financed by municipalities through tax-exempt “revenue bonds.” Private activity bonds apply this same tax-exempt finance mechanism to the “public purpose” of economic development. The governmental unit borrows money from private capital markets, secured only by the project’s revenues rather than the government’s full faith and credit. Interest income earned on bonds issued by a governmental entity to finance a project for a private company which has demonstrated a good public purpose is exempt from federal, state, and local income taxes, thereby reducing the cost of capital (including the cost of letters of credit, remarketing fees, etc.).

The Michigan Strategic Fund (MSF) issues private activity bonds on behalf of the borrower and lends the bond proceeds to the borrower. These loans can be made for manufacturing projects, not-for-profit corporation projects and solid or hazardous waste disposal facilities.

For more information, please review the information below:

Grow Michigan II, LLC

Grow Michigan II, LLC, is capitalized by members of Michigan’s banking community and the Michigan Strategic Fund. It provides attractively priced growth capital in the form of subordinated/mezzanine debt to the Michigan small business community.

Grow Michigan’s target loans are to profitable small businesses with strong management teams committed to excellence.

Contacts at MEDC

To utilize MEDC’s Capital Access programs, please review the listing of banks and lending institutions that already participate with MEDC and reach out to one in your area. You can also use the CDFI Resource Locator to search for and find lending partners by county or area of Michigan. To access the tool, visit here. 

If you do not see one in your area or would like to get your bank or lending institution involved, please have your bank’s representative contact MEDC’s capital access team:

SSBCI 2.0 Frequently Asked Questions

What is SSBCI?

SSBCI stands for the State Small Business Credit Initiative, which is a federal program designed to increase the availability of capital through lending or investment to small businesses. All programs under SSBCI are designed to leverage private sector investment and decision-making.

SSBCI was initially created in 2010 in response to the Great Recession and the lack of liquidity available for lending to small businesses. Today, the program is being reimagined as SSBCI 2.0 to address the economic impacts of COVID-19 having resulted in strained cash flow and disparities in recovery and lending efforts. Key customers of SSBCI funding include manufacturers, Main Street businesses, service providers, early-stage tech businesses, very small businesses and socially and economically disadvantaged individuals.

SSBCI 2.0 Number of Programs:

  1. Capital Access
  2. Loan Participation
  3. Collateral Support
  4. Loan Guarantee
  5. Venture Capital
  6. Technical Assistance

SSBCI 2.0 Participating Lenders:

  1. Regional and Community Banks
  2. Minority Depository Institutions
  3. Credit Unions
  4. Microlenders
  5. CDFIs

SSBCI 2.0 Target Customers:

  1. Manufacturers
  2. Service Providers
  3. Main Street
  4. Early-Stage Tech
  5. Very Small Businesses
  6. Socially and Economically Disadvantaged Individuals (SEDI)

What are the definitions of a small business, very small business or socially and economically disadvantaged individual?
SSBCI 2.0 includes requirements for support to small businesses owned by socially and economically disadvantaged individuals (SEDI) and to very small businesses (VSB).

  • Small businesses are those defined by the Small Business Administration as having 500 employees or less.
  • VSB businesses are defined as those with 10 employees or less.
  • SEDI businesses are defined as small businesses owned by individuals that have faced barriers to accessing the capital markets and networks they need to grow their businesses because of certain statuses or membership in certain groups, including membership in a group that has been subjected to racial or ethnic prejudice or cultural bias within American society. It also refers to small businesses in CDFI Investment Areas, which are generally low-income, high-poverty geographies that receive insufficient support for the needs of small businesses, including minority-owned businesses.

SSBCI 2.0 Loan Programs

What is the purpose of the SSBCI 2.0 loan programs?
SSBCI is intended to increase capital availability to small business. The programs are designed to allow private sector lenders to provide loans to small businesses that would otherwise not be available under conventional terms.

Does the MEDC provide loans directly to small businesses through SSBCI?
No. A loan must be provided by a bank, credit union, or community development financial institution (“CDFI”).

Is grant funding available through SSBCI 2.0?
No. The programs only support increased availability of loans. All funding is expected to be repaid.

How does a small business apply for SSBCI 2.0 lending support?
A small business will need to identify a bank, credit union, or CDFI that is interested in providing a loan. The lender, in turn, applies to MEDC for SSBCI support.

When will applications for SSBCI 2.0 loan programs be available for small businesses and very small businesses?
MEDC’s loan enhancement programs, including collateral support, loan participation, loan guarantee and capital access, are currently available using SSBCI 2.0 funds for businesses seeking support of more than $250,000. To learn more about MEDC’s Capital Access program visit michiganbusiness.org/access-capital.

Within the next 60 days, funding will also be available for loans of $250,000 or less for small businesses, with a focus on businesses owned by socially and economically disadvantaged individuals or businesses with fewer than 10 employees. Applications for these loans will go through specified lenders, rather than directly through MEDC. MEDC will share more information when those applications are available.

SSBCI 2.0 Small Business Venture Capital Program

What is the purpose of the SSBCI 2.0 Small Business Venture Capital Program?
The intent of the Small Business Venture Capital Program is to increase the availability of capital to early-stage technology-based small businesses headquartered in the state of Michigan. The program seeks to leverage private sector capital by making investments into Venture Capital Funds actively investing in the state of Michigan.

Will the MEDC invest SSBCI 2.0 Venture Capital funds directly into small businesses?
No. These funds will be invested into qualified VC firms in a Limited Partner arrangement. Please refer to The MVCA Michigan Entrepreneurial & Investment Landscape Guide for a comprehensive compilation of angel organizations, venture capital firms, entrepreneurial support organizations, and service providers active in Michigan’s growing entrepreneurial and investment community.

Questions?

Please direct all questions to [email protected].