By State Treasurer John Chiang

In the Marvel Universe, Ironman’s ingenious suit is crammed with electronics, weapons, and gadgets galore all manufactured by mega-corporation Stark Industries.

And financing needed improvements? No problem for kajillionaire businessman Tony Stark.

Meanwhile, in the real world, our everyday heroes, California’s small business owners, do not have it so lucky. It is extremely challenging for many small businesses to locate financing for start-up, expansion, or even working capital.

Small businesses are the backbone of our economy. California’s approximately 4 million small businesses employ nearly half our workforce. To incentivize lenders to lend to our underserved small businesses, the California Capital Access Program for Small Businesses (CalCAP) was born.

CalCAP acts like Captain America’s shield — protecting lenders in the event of a loan default. With this assurance, lenders breathe easier and are able to offer borrowers better credit terms and conditions than they might have otherwise offered.

It works like this.

CalCAP is a loan loss reserve program, which may provide up to 100 percent reimbursement on losses as a result of certain defaults. While each lender is entirely responsible for its loan losses, CalCAP is there to reimburse each lender’s loan loss reserve. These funds are built through fees paid by the borrower and lender, and CalCAP’s contributions.

So when a small business owner walks into a participating financial institution for a loan, CalCAP is there as a backstop to provide the lender the extra confidence to make the loan.

With this safety net, it’s no surprise CalCAP and its partner lenders are so successful helping communities by providing financing to businesses that create jobs and improve the economy.

But it doesn’t stop there. Once that loan matures, the lender returns CalCAP’s loan loss reserve funds, which are then recycled into the program to backstop new small business loans. This cycle repeats over and over further incentivizing lenders to make new small business loans.

Just like the Marvel spinoffs, CalCAP’s success generated four additional programs.

First is a partnership with the California Air Resources Board to form the On-Road Heavy-Duty Vehicle Air Quality Program (CalCAP/CARB). This dynamic duo teams to assist operators of small business fleets purchase or retrofit their heavy-duty diesel trucks driven primarily in California in meeting state air quality regulations. They have financed more than 19,000 cleaner trucks and at least 600 exhaust retrofits. Upgrading 19,000 trucks is equivalent to taking more than 1.9 million cars off California roads every year.

Second is the CalCAP Americans with Disabilities Act (ADA) Financing Program. This program’s super power is encouraging lenders to make loans to small businesses for ADA compliance. These are truly small businesses with 15 or fewer employees, less than 10,000 square feet of space, and less than $5 million in annual gross income.

Third is the CalCAP Seismic Safety Financing Program. Retrofitting a small business, apartment complex, or registered mobile home for earthquake safety can be an expensive proposition. This program saves the day by incentivizing lenders to finance these costs.

Lastly, is the CalCAP Electric Vehicle Charging Station Financing Program. The more small businesses and apartment buildings with electric vehicle charging stations, the more their employees, clients, and tenants will be willing to purchase these type of vehicles, putting more electric vehicles on the road.

CalCAP creates. Start-up capital creates new small businesses fueling our recent vault to 5th largest economy in the world. Expansion loans help small business buy new equipment, hire additional employees, or open new locations. Working capital lending ensures our small businesses can thrive.

But the numbers speak for themselves. Over the past three years, CalCAP has seen an impressive 45 percent growth. In 2017, for every $1 of CalCAP money, $18 of private investments were leveraged by small businesses. Nearly half our loans were made in disadvantaged communities.

Are you a lender intrigued by CalCAP’s abilities or realize the value of expanding your marketing efforts to those small businesses that form your community’s foundation?

Maybe you’re a small business leery of taking on additional debt for ADA or environmental purposes. Apply for a loan and request your lender make it a CalCAP loan.

Participation is super easy. Simply visit the website and complete the CalCAP application form or call us at 916.654.5610.

The following article is based on remarks delivered by California State Treasurer John Chiang. To learn more about CalCAP click here .