Austin – Today 13 state legislators joined State Rep. Mike Villarreal in urging Governor Rick Perry to support small businesses during these difficult economic times by transferring available funds to the Texas Capital Access Program (TCAP).
"As our economy slows and access to capital dries up, entrepreneurs are reporting greater difficulty obtaining loans to create and sustain jobs," noted Rep. Villarreal, who recently met with small business owners in San Antonio. "By supporting access to small business loans, the state can show it's not just putting all its economic development eggs into one big business basket."
TCAP is a loan-loss reserve program within the Economic Development and Tourism Division of the Governor's Office.
Starting in 1998, the program allowed participating lenders, including Community Development Financial Institutions (CDFIs) and banks, to serve more small businesses with limited access to traditional sources of credit. The lenders place a portion of the loans into the risk pool and the state matches the contribution. The program has not been funded since it received an appropriation of $869,000 for the 2004-2005 biennium.
Below is the text of the letter the legislators sent to the Governor today:
Dear Governor Perry,
As our nation faces a slowing economy and diminished access to credit, we encourage you to ensure that small businesses in Texas have the opportunity to access credit and create jobs. In particular, we urge you to transfer available funds to the Texas Capital Access Program (TCAP).
Small businesses form the backbone of our state's economy, comprising nearly one-half of all non-agricultural jobs in the private sector. The option of starting a new business also often provides a second chance to Texans who lose their job as employers downsize or go out of business. An entrepreneur with a strong work ethic and a good business plan should have the opportunity to start a new business to provide for his or her family, and maintain and expand that business over time.
In recent years, traditional lenders have shied away from providing small loans to launch or sustain small businesses. The crisis in the credit markets in recent weeks has made this problem even more acute. The nation's banking sector may resume lending following recent federal interventions, but our small businesses cannot afford to wait and see if capital is eventually available to them. Nor can they wait until the next biennium for the state to provide support for access to capital.
By resuming TCAP, the state can ensure that more Texas entrepreneurs can start, maintain or expand businesses. Lenders that finance small businesses would be able to enroll loans into the loan-loss reserve fund, pool the risk, and provide loans to more small businesses. We therefore urge you to support our state's small businesses by transferring available funds to the Texas Capital Access Program.
We appreciate your consideration of this request.