Virginia Capital Access Program (VCAP)
The Virginia Small Business Financing Authority's (VSBFA) Virginia Capital Access Program (VCAP) provides access to capital for Virginia businesses by encouraging banks in Virginia to make loans that they would otherwise not make due to a borrowers riskier profile. Unlike government guaranty programs which provide a guaranty of a specific loan, VCAP utilizes an insurance concept on a portfolio of loans. The Program establishes a loan loss reserve at each participating bank which is funded by enrollment premiums paid by the Borrower/Bank and VSBFA. Because the participating bank determines what loans to enroll without VSBFAs involvement, the Program is a flexible, non-bureaucratic tool to assist banks in meeting the financing needs of Virginias businesses. (For banks wishing to participate in the program, please see the VCAP Program Manual and the VCAP Participation Agreement).
To apply for financing through VCAP, a business makes application to a bank operating in Virginia. (See the Participating Bank List for a current list of banks participating in VSBFA programs.)
If the participating bank determines that the proposed financing request does not meet the banks normal underwriting guidelines, the bank will then determine whether the proposed loan transaction would be acceptable if the loan were enrolled in VCAP. The Virginia Small Business Financing Authority does not participate in the banks underwriting decision or the banks decision to utilize VCAP to provide financing.
Once the bank has approved the financing for enrollment in VCAP, the bank determines the premium amount to be paid by the borrower based on the banks perceived level of risk. Enrollment premiums paid by the borrower typically range between 3% and 7% of the loan amount and are non-refundable. VSBFA contributes a matching premium, and in cases where the borrower is a technology company or the participating bank is new to the program, VSBFA's premium is twice that of the borrower's premium. Both the borrower's and VSBFA's premiums are contributed to a loan loss reserve fund established for the benefit of the bank. In the event of a default on an enrolled loan, the bank can utilize funds in this reserve to offset its loss.
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