CARB offering lease-to-own truck financing

March 14, 2012

The California Air Resources Board (CARB) is offering a lease-to-own financing program that encourages small-business owners to replace their older diesel trucks with cleaner new equipment.

Officials said the objective is to encourage early compliance with CARB’s on-road diesel vehicle and tractor-trailer greenhouse gas regulations.

“This is a program that benefits small fleets and owner-operators,” said CARB chairwoman Mary Nichols. “It provides them with an additional way to pay for a cleaner truck, even if their credit isn’t stellar.”

Financing is available under the California Capital Access Program (CalCAP), which encourages banks and other financial institutions to make loans to small businesses that fall just outside of their conventional underwriting standards. CalCAP insures loans made to small businesses to assist them in growing their business.

The maximum loan amount is $5 million and the maximum enrolled amount is $2.5 million. Lenders set all the terms and conditions of the loans and decide which loans to enroll into CalCAP. Lenders determine the premium levels to be paid by the borrower and lender (within the parameters of the program).

Loans can be short- or long-term, have fixed or variable rates, be secured or unsecured, and bear any type of amortization schedule.

CalCAP offers lenders a mechanism to provide loans to small businesses that may not otherwise be able to get a loan. With CalCAP portfolio insurance, a lender is able to cover portions of loans that exceed the risk threshold normally set for business loans. The program guidelines include:

• Almost any business loan is eligible under CalCAP, with a few exceptions.

• Loans up to $5 million ($2.5 million enrollment max) can be included in the CalCAP portfolio.

• The maximum lender/borrower contribution for any single borrower in a three-year period is $100,000.

• The borrower’s business must be in one of the industries listed in the qualified Standard Industry Classification (SIC) or the North American Industry Classification System (NAICS) codes list.

• The borrower’s primary business and at least 51% of its employees or business income, sales or payroll must be in California.

• The business activity resulting from the bank's loan must be created and retained in California.

• The small business must be classified as a small business under U.S. Small Business Administration guidelines (Title 13 of the Code of Federal Regulations) and have fewer than 500 employees.

For more information, visit or call (866) 634-3735.

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