The Capital Access Program is a dedicated initiative designed to empower small businesses, particularly those historically marginalized and facing financial constraints. By providing equitable access to affordable capital, CAP aims to create a more level playing field for these businesses. The program is guided by three primary objectives:
- Equitable access: Breaking down barriers for minority-owned businesses historically excluded from traditional funding.
- Closing the gap: Providing financial opportunities to underserved small businesses to help them thrive.
- Community wealth building: Fostering a more prosperous and equitable Seattle for all.
CAP pays down 20% of the principal or $30,000 (whichever is less) on qualifying loans from participating mission-based lenders. Businesses do not apply directly for a CAP Award. Eligibility for the program is considered by their lender upon approval of a loan. By covering 20% of the loan principal, our CAP program helps eligible small businesses – especially those that have been previously excluded from equitable access to financial support – manage debt and improve their financial health while they grow their business.
To address the ongoing challenges minority-owned businesses face, CAP expanded its focus to include capital paydown awards. The program partners with community lenders and leveraging their loan products. Small Business loans originating from these programs could be eligible for the CAP loan principal paydown.
Between July 2021 and May 2023, CAP successfully distributed $6.9 million to 295 Seattle-based businesses, leveraging an additional $27.8 million in low-interest Flex Fund loans. While this investment helps small businesses, it has also highlighted the challenges facing these program beneficiaries.
Evaluation and adjustments
Beyond financial assistance, CAP is committed to building a robust support infrastructure. By collaborating with Seattle-based community lenders and offering capital readiness support, the program equips businesses with the tools and knowledge needed to succeed.
Through extensive engagement with Community Development Financial Institutions and user experience research, CAP identified key obstacles: limited capital readiness, difficulty accessing financing information, unclear project needs, and challenges in utilizing financial tools effectively.
In response to these findings, CAP evolved into a multifaceted strategy with four core components:
- Capital readiness support program
- Subsidized financial products
- Strengthening CDFI organizational capacity
- Risk mitigation support to mission-based lenders
Our program in the past has served 295 businesses, where over fifty percent of them were women-owned businesses, and over fifty percent of them were BIPOC-owned businesses.
More about the need for CAP
Average business earnings dropped by 11% for Black business owners, 15% for Asian business owners, 7% for Latinx business owners, and 2 % for white business owners between 2019 and 2020, according to a SBA Office of Advocacy report. Without adequate cash reserve and the inability to secure funds, several minority-owned businesses were at higher risk of displacement.
Minority-owned small businesses are more optimistic and more likely to offer support to their local community (McKinsey & Company). Like their counterparts, local Black- and Latinx- owned businesses have grappled with the conditions that caused the mass closure of small businesses across the country: loss of revenue, depleted savings, and disrupted business operations. But unlike many of their counterparts, Black- and Latinx- owned businesses were more likely to confront these conditions in a preexisting financially distrusted state. CAP supports these businesses so they can continue serving their community with the four major strategies to support the place making for the community to come together.
- 58% of Black-owned businesses were at risk of financial distress before the pandemic compared to 27% of their white peers. | Reference: Federal Reserve Bank of New York
- COVID disproportionately affected Black-owned businesses as compared to their white peers. | Reference: Brookings institute
- Capital is the lifeblood of entrepreneurship, but historically marginalized entrepreneurs start with far less. Black entrepreneurs start their businesses with about $35,000 of capital, while comparatively, white entrepreneurs begin on average with $107,000 – over three times as much. | Reference : McKinsey & Company
- Just 16% of Black-owned businesses’ financing needs are met, compared with 48% of white-owned businesses. | Reference: Kauffman Foundation
Take action
CAP could help reduce the cost of borrowing funds for the small business you own or support. For eligibility criteria and list of lenders please visit our website.