What is the Delaware Capital Access Program?
The Delaware Capital Access Program is designed to give banks a flexible tool to make business loans that are somewhat riskier than a conventional bank loan, in a manner consistent with safety and soundness. It is designed to use a small amount of public resources to generate a large amount of private bank financing, thus providing access to capital for many Delaware businesses.
How it works:
The Delaware Capital Access Program is based on a risk pooling concept. It is an approach that is fundamentally different from the traditional type of insurance or guarantee program.
When a lending institution makes a loan under the program, the bank/borrower contribute a premium payment to a loan reserve fund. This is a private transaction to be negotiated between the lending institution and the borrower. The Delaware Economic Development Office (DEDO) then matches the premium payment. DEDO's matching premium can range from 2.5 to 6.0 times the lender/borrower contribution. The pool of reserves builds as additional loans are enrolled in the program. The lender can withdraw from the reserve in the event of an enrolled loan defaulting. Even after a loans maturity, the reserves remain available to the lender for additional loan claims.