Skip to content

Loan Participation Program

The Loan Participation Program is an intermediary small-business lending program that works with local lenders like you across North Carolina to help expand access to capital. 

Looking for more information on the first iteration of the Loan Participation Program? While this iteration of the program is no longer creating new loans, you can find information about it here.

 

The Issue

Many small and medium sized businesses lack the cash equity required to meet Institutional Lenders’ loan-to-value minimum desires or requirements, creating a risk gap which prevents the loan from being injected into the local economy.

 

The Solution

Utilize our Loan Participation Program to obtain a 20% ‘injection’ of subordinated debt, de-risking the loan in an incremental manner so as to make the transactional risk acceptable for the Institutional Lender.      

 

What Lenders Need to Know

  • LPP is available through partner lenders (banks, credit unions, and CDFIs) in all of North Carolina’s 100 counties. The Center does not directly administer loans to small-business owners. Instead, borrowers apply directly through our partner lenders. 
  • Partner lenders who participated in the first iteration of LPP will need to create new applications for this round of funding. 
  • We will purchase up to 20 percent of an eligible term loan made to a small business through a partner lender, defined as a business with 500 or fewer employees. 
  • Our minimum participation is $30,000. Our maximum participation is $400,000. Our terms match those set by the originating lender.  To participate in the program, lenders must first enter into a Master Loan Participation Agreement with the Rural Center.  
  • In 2022, we are launching a new program feature focused on addressing the social and economic barriers faced by many small business owners. For businesses at least 51% owned by individuals who identify with a group that has faced racial or ethnic prejudice, or cultural bias, including but not limited to people of color, women, veterans, and rural residents:
    • The Rural Center will purchase up to 30 percent of an eligible term loan made to a small business through a partner lender
    • The Rural Center’s maximum loan participation is $450,000.
  • Partner lenders maintain responsibility for managing and servicing all loans. 

 

Benefits

In addition to helping promote economic development and create jobs in North Carolina, the SSBCI Loan Participation Program benefits both small businesses and lenders.

For the small business owner:

  • Provides loan capital at attractive rates
  • Allows the borrower to provide less equity
  • No applicable fees
  • Fast review process, as compared to many other national credit enhancement programs 

For the lender:

  • Reduces the risk of loss
  • Allows bankers to offer more competitive terms
  • No applicable fees
  • Allows approval of loans that would normally be declined due to high LTV/LTC

 

For more information and to review additional eligibility criteria, please stay tuned as we are updating our materials. To contact us for more information in the interim, please click here