For virtually any purpose, except to purchase residential housing or real property that is not used for the business operations of the borrower or for refinancing the existing balance of a non-enrolled loan. Lenders participating in the Capital Access Program build a loan loss reserve each time they enroll a loan. These reserve accounts are maintained at participating banks. The lender determines which loans to enroll and how much of a guarantee fee to charge, which ranges within 3 and 7 percent of the guarantee amount. The Oregon Economic and Community Development Department then pays a matching amount equal to the borrower fee.
Reserves build as the bank enrolls more loans in the program.
Losses are recovered by tapping on reserve accounts to recover part of the interest and expense in case of defaults. The Oregon Credit Enhancement Fund is an important loan insurance tool that lenders can use to help businesses needing extra security to obtain financing. Program guarantees up to 75 percent of a loan made by a participating commercial lending institution to a small business. Terms for real estate loans can be as long as 25 years and working capital loans can be as long as seven years. Machinery loans are usually for 10 years or less.