Cash Collateral Program
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Cash Collateral Program

Cash Collateral Program (SSBCI CCP)

The Virginia Small Business Financing Authority’s (VSBFA) Cash Collateral Program is designed to help Virginia’s small businesses obtain the funds to start, enhance, or expand their operations and thereby create new jobs for citizens of the Commonwealth. The VSBFA participating helps reduce the bank’s credit risk in those instances where the applicant company has the demonstrated ability to cash flow the debt, but the collateral coverage is insufficient for the bank’s normal underwriting standards. This is a deficiency guaranty of a bank loan in the form of a cash deposit to an account with a participating commercial bank. It can be used for lines of credit or term loans any time the bank believes it needs additional support in order to approve a business loan request.

Businesses should apply to commercial banks for their financing need. The bank determines if VSBFA participation is needed for their approval. The lender is encouraged to call the VSBFA to discuss the transaction. VSBFA approves or declines the participation after all required application information is received. Loan closings for approved requests are scheduled by the bank and documented using their normal procedures and forms.
CCP Lenders Application
CCP Borrowers Application

ELIGIBLE BORROWERS

Businesses operating in Virginia must meet at least one of the following criteria to be an eligible borrower:
  • $10 million or less in annual revenues over each of the last 3 years; or
  • A net worth of $2 million or less; or
  • Fewer than 250 employees in Virginia, and fewer than 750 employees overall
  • Be a 501(c) 3 non-profit entity

PARTICIPATING TERM

  • Term loans: maximum support term 5 years
  • Annual lines of credit not matured: may be renewed up to 4 times, with a maximum term of 5 years.

AMOUNT

The maximum participation under the program is $1 million or 40% of the initial loan amount, whichever is less
 

INTEREST RATE

Lender will set the rate

FEES

Application Fee: $200
Other fees may apply
 

THE FOLLOWING TYPES OF LOANS ARE ELIGIBLE UNDER THE CASH COLLATERAL PROGRAM:

  • Lines of credit to finance inventory and accounts receivable
  • General working capital
  • Loans to finance equipment, leasehold improvements, and other fixed asset purchases
 

THE CASH COLLATERAL PROGRAM CANNOT BE USED TO:

  • Eliminate the bank’s requirement for collateral or personal guaranty.
  • Finance passive real estate investment, purchase of residential housing, real estate construction or development.
  • Refinance a Lender’s existing debt, except that if there is additional debt added to the refinance amount, the additional principal is eligible for CCP.
  • Repay delinquent federal or state income taxes unless the Borrower has a payment plan in place with the relevant taxing authority; or repay taxes held in trust or escrow, e.g. payroll or sales taxes
  • Reimburse funds owed to any owner, including any equity injection or injection of capital for the business’ continuance;
  • Purchase any portion of the ownership interest in the Borrower; or to purchase any portion of the ownership interest in any company, including 100% interest;
  • Purchase goodwill.
  • Finance the unguaranteed portion
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