SANTA ANA, Calif. – A journal article for the California Association for Local Economic Development by economic development executive Michael Ocasio cites the importance of capital access programs to California’s present and future economy.
Published December 9, 2016, the article, titled “Capital Access Programs to Support Community and Economic Development,” references a potential weakening of the seven-year recovery, and citing the most recent 2016 Chapman University Economic Forecast, indications of outright decline in nonresidential investment and corporate earnings. New frontiers in public finance, however, such as the plethora of capital access programs available through the California Infrastructure and Economic Development Bank (IBank) are spurring business growth, job creation and a strong state economy, states Ocasio, chief executive officer of the Small Business Development Corporation of Orange County.
The article continues, “IBank is the state’s municipal bank and for all intents and purposes has supplanted redevelopment agencies since Governor Brown’s order to shutter them. IBank was formed/created in 1994 to finance public infrastructure and private development. The bank has broad authority to issue tax-exempt and taxable revenue bonds. It provides financing to public agencies together with a variety of credit enhancement vehicles to support and encourage small business growth, as well as new innovation and company expansion which ultimately creates new jobs in California.
Of particular interest for economic developers, commercial banks, credit unions and non-bank community development financial institutions (CDFIs) however, is the plethora of capital access programs utilized to spur economic development and infrastructure financing. These include the Infrastructure State Revolving Fund (ISRF) Loan Program, California Lending for Energy and Environmental Needs (CLEEN) Center, and the Bond Financing Program. Since its inception and through 2016, the IBank has financed nearly $37 billion in infrastructure and private development throughout the state promoting a healthy climate for job creation, a huge economic contributing factor to California’s strong and vibrant economy.
These same programs also help institutional lenders deploy capital and investment dollars to support small businesses and their access to credit focusing on underserved communities and neighborhoods.
IBank’s delivery system for these programs is its network of non-profit Financial Development Corporations (FDC) all of which were created through legislation and which have authority to leverage public dollars to support a lender’s credit or bond risk, including farm loan transactions
The California State Loan Guarantee Program is perhaps IBank’s core small business assistance program offering lenders a loan guarantee of up to $2.5 million to support almost any type of small business loan transaction including export assistance. In return, the business agrees to create new jobs, retain existing employees and help to increase the local community tax base. Over the previous five years, the FDCs have leveraged $296 million in public dollars in guarantee issuance supporting the deployment of over $418 million in new bank/private investment capital to small businesses across the state while creating thousands of new jobs and first-time business entrepreneurs.
The future capacity of California’s capital access programs is quite strong, but in many cases underutilized. These programs are solid economic development tools which can assist in creating and bringing new wealth and prosperity to communities, whether an organization is a public-sector conduit or community development lender seeking to deploy its investment capital.
California leads the nation in innovation and economic development opportunities, now and into the foreseeable future. It’s family of FDC corporations are the boots on the ground actively seeking new partnerships and community collaborations to help deploy capital investment to support new and existing businesses, company expansion and the creation and retention of new jobs.”
ABOUT SMALL BUSINESS DEVELOPMENT CORPORATION OF ORANGE COUNTY
SBDC of Orange County (http://sbfdoc.com) is a quasi-public/private 501(c)(3) not-for-profit public benefit corporation, which operates under the state’s public municipal bank, The California Infrastructure and Economic Development Bank (iBank). SBDC of Orange County is not affiliated with the U.S. Small Business Administration.
The corporation, established in 2001, is a mission driven organization dedicated to assisting small business owners secure operating capital through its capital access programs including California’s State Loan Guarantee Program, Export Lines of Credit, bond conduit and Green Energy Initiatives to support small business access to credit.