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Monday, Jul 22, 2024

Support CalCAP for Small-Business Lending

Small businesses provide economic opportunities, jobs and services we all rely on. But the future of a state program that helps entrepreneurs like us get the capital we need to launch and grow our businesses is in jeopardy.

Our company, Exclusive Window Cleaning, specializes in window cleaning and restoration — mainly graffiti removal for commercial clients like Taco Bell, Wendy’s and Jack-in-the-Box — and there is strong demand for our services. But when we wanted to expand, we couldn’t land a traditional loan because big banks rarely lend less than $250,000. We didn’t need nearly that much money, but we did need to hire some additional employees so we could take on new work.

Creating Jobs

Fortunately, we found Opportunity Fund, a Community Development Financial Institution (CDFI) that specializes in giving small-dollar loans to businesses like ours. Opportunity Fund, with the support of a little-known state program called CalCAP, California Capital Access Program, loaned us $14,000. We grew from four employees to 10 and landed a new contract with Starbucks.

Unfortunately for Opportunity Fund and other California CDFIs and small banks that use CalCAP, the program is running out of money — a huge blow to small businesses. Since 1994, Opportunity Fund has provided 6,000 small business loans with the help of CalCAP. These loans reach underserved entrepreneurs across the state — their clients are 88 percent ethnic minorities and 39 percent women. Opportunity Fund research shows that every dollar they lend generates $2 in local economic activity and each loan they make to an entrepreneur creates or sustains three jobs, on average.

Reducing Risk for Lenders

In short, California’s small businesses grow when we can access affordable capital which, in turn, bolsters our communities. And all of this would not be possible without the CalCAP program. By providing a small but meaningful match on each loan CDFIs and other small lenders enroll, CalCAP helps those lenders build a loan loss reserve pool that eases the risk of making those loans.

It’s a great investment. Every dollar CalCAP contributes to Opportunity Fund yields as much as $30 in loans to underserved businesses.

Loans Can Create Jobs

Opportunity Fund, with the help of CalCAP, helped our business. And now state legislators need to do their part for California’s entrepreneurs.

We are grateful that our own state Sen. Ben Hueso (D-San Diego) has sponsored SB 551, a bill that would extend and sustain the remaining funds in CalCAP for as long as possible.

A series of votes on the bill is expected to begin in the coming days. We’ll be watching. We’re asking state lawmakers to pass it and support job creation and economic opportunity in San Diego and across California.

Hasani James and Ruben Wade own Exclusive Window Cleaning, which is based in Chula Vista.


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