SSBCI OCSP (Other Credit Support Programs)
SSBCI 2.0 Other Credit Support Programs (OCSP)
As defined in the SSBCI 2.0 Guidelines, OSCP (Other Credit Support Programs) allow for each State, Territory and Tribal Government to develop and operate a range of innovative small business lending and investment programs.
What is it?
Under SSBCI 2.0 States, Territories and Tribal Governments can utilize one or more Other Credit Support Programs that are not CAPs (Capital Access Programs).
The 4 distinct program models are as follows:
- Loan Guarantee Program
- Collateral Support Program
- Loan Participation Program
- VC (Venture Capital) and Equity Capital Program
OCSPs also include qualifying loan or swap funding facilities, which are contractual arrangements between a State, Territory or Tribal Government and a private financial entity. Under this model, the state delivers funds to the private financial entity as collateral; that entity, in turn, provides funding to the State, Territory or Tribal Government.
SSBCI OCSP (Loan Guarantee Program)
HOW IT WORKS
Loan Guarantee Program
A Loan Guarantee Program enables small businesses to obtain term loans or lines of credit to help them grow and expand their businesses. The program provides a lender with the necessary security, in the form of a partial guarantee, for the lender to approve a loan or line-ofcredit.
SSBCI OCSP (Loan Participation Program)
HOW IT WORKS
Loan Participation Program
A Loan Participation Program enables small businesses to obtain medium to long-term financing, usually in the form of term loans, to help them grow and expand their businesses. States may structure a Loan Participation Program in two ways: purchase transactions, also known as purchase participation, in which the state purchases a portion of a loan originated by a lender; and companion loans, also known as co-lending participation or parallel loans, in which a lender originates a senior loan and the state originates a second (usually subordinate) loan to the same borrower. This program enables the state to act as a lender, in partnership with a financial institution lender, to provide small business loans at attractive terms.
SSBCI OCSP (Collateral Support Program)
HOW IT WORKS
Collateral Support Program
A Collateral Support Program is designed to enable financing that might otherwise be unavailable due to a collateral shortfall. The program supplies pledged cash collateral accounts to lending institutions to enhance collateral coverage of individual loans. The program may be designed to target certain geographies or industries, such as real estate lending, in which a lender may be willing to fund at 80% loan-to-value but a company may not be able to bridge the difference in cash at closing.
SSBCI OCSP (Venture Capital Program)
HOW IT WORKS
Venture Capital Program
A Venture Capital Program provides investment capital to create and grow start-up and early-stage businesses. State Venture Capital Programs often take one of two forms: a state-run venture capital fund (which may include other private investors) that invests directly in businesses; or a fund of funds, which is a fund that invests in other venture capital funds that in turn invest in individual businesses. Many factors, particularly resources and available talent, inform a state’s decision on which form to choose. For example, a state may choose to invest in a large venture fund that agrees to reinvest in that particular state an amount equal to that invested by the state, as opposed to trying to attract that same talent to a smaller fund capitalized with state money.
