Eligible Uses of Loan Proceeds CalCAP insures bank loans made to small businesses to assist them in growing their business. Loans can be used to finance the acquisition of land, construction or renovation of buildings, the purchase of equipment, other capital projects and working capital. There are limitations on real estate loans and loan refinancings. Ineligible Uses of Loan Proceeds CalCAP's current fund source, from which the Authority makes its premium contributions, prohibits financing certain projects. Examples of ineligible uses of loan proceeds include any type of luxury facility, such as a golf course or country club, racetrack, airplane, gambling facilities or any facility involved in the sale of alcoholic beverages consumed off site.
Lenders determine the premium levels to be paid by the borrower and lender.
CalCAP's Flexibility CalCAP offers lenders a mechanism to provide loans to small businesses that may not otherwise be able to get a loan. With CalCAP's portfolio insurance, a lender is able to cover portions of loans that exceed the risk threshold normally set for most business loans. CalCAP provides insurance on a lender's portfolio of loans. Funds are placed in the loss reserve account as each CalCAP loan is enrolled. A bank can enroll all or a portion of a loan.