Today, the California State Assembly Committee on Jobs, Economic Development, and the Economy (JEDE) voted in favor of Senate Bill 551, which sustains a state program that helps Community Development Financial Institutions (CDFIs) and small banks make responsible small-dollar loans to California small businesses.
S.B. 551, sponsored by State Sen. Ben Hueso (D-San Diego) and strongly supported by Opportunity Fund would extend the life of the California Capital Access Program (CalCAP), which creates a loan loss reserve program that enables non-profit lenders like CDFIs and small banks to extend much needed credit to small business owners that have trouble finding financing from large financial institutions. CalCAP is at risk because funds from the federal State Small Business Credit Initiative that extended $1.5 billion for state sponsored small business finance programs are nearly gone.
Gwendy Brown, Opportunity Fund’s VP of Research and Policy testified in support of the bill. Her full testimony is below.
*Pictured here: Gabriel Villarreal, Opportunity Fund’s Policy Associate, Gwendy Brown, Opportunity Fund’s VP of Research and Policy and Aaron Brieno, Senator Hueso’s Legislative Director
Good morning Chairwoman Quirk-Silva and members of the committee. Thank you for taking the time to consider this important bill.
I am Gwendy Brown, Vice President of Research & Policy at Opportunity Fund. Opportunity Fund is California’s largest nonprofit microlender to small businesses and a strong supporter of SB 551. Since 1994, Opportunity Fund has supported 8,000 California small business owners with $300 million in loans, virtually all of which have been backed by the CalCAP programs. These dollars are reaching underserved entrepreneurs from all across the state –89% of the businesses we fund are minority-owned and 30% are women-owned.
Together with lenders, the CalCAP program has accomplished some amazing things for California small business owners. However, due to a lack of lender confidence in the program, those accomplishments are currently at risk. Lenders need an administering partner that deeply understands small business finance and values lender input in order to craft the most efficient and responsive program possible.
We strongly believe that the CalCAP program should be run by our state’s small business experts – the Small Business Finance Center at the IBank. With a singular focus on the needs of California small business owners and those serving them, the Small Business Finance Center is best positioned to ensure this important program’s future success. That’s what SB 551 would achieve.
As you know, a majority of participating CalCAP lenders support SB 551 – we want to be able to focus on our work of saying “yes” to small business owners across the state. Entrepreneurs like Jilla Navah, owner of Portal Languages school in Fullerton. With a modest loan for Opportunity Fund, she was able to renovate her classroom, buy materials and grow her business – all with the help of CalCAP.
A strong, efficient CalCAP program is essential for lenders like Opportunity Fund to continue financing our state’s microbusinesses – especially at a time when federal funding for our work is at risk. Please consider an “aye” vote for SB 551 and thank you for supporting California small business owners and the lenders that back them.
Congrats to our Policy team for helping this important legislation make it past the JEDE Committee. The next step will be the testimony in front of the Banking Committee later this summer.