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Arkansas Capital Corporation: forging partnerships for progress.

A banker in Springdale needs an additional source of financing to help a local business owner expand his operation. An entrepreneur in Stuttgart wants to start a small business but can't qualify for enough money in loans from traditional banking sources. A manufacturing plant in South Arkansas needs extra funds to increase production and meet growing demand.

Money. Finding enough to finance new and expanding ventures is a challenge banks and businesses face every day. Fortunately, Arkansans have a place they can turn to--Arkansas Capital Corporation and its sister affiliate Arkansas Certified Development Corporation.


Arkansas Capital Corporation (ACC) is a privately owned, non-profit organization set up to serve as an alternative source of financing for companies in Arkansas. Its main goal is to improve the economic climate in the state by providing long-term (up to 10 years), fixed-rate loans both to locally owned businesses and to out-of-state companies with Arkansas operations.

ACC makes loans to existing operations and business start-ups for everything from new construction and equipment to working capital. Services also include industrial and commercial financing advice and counsel at no cost.

As an "alternative" funding source, ACC does not compete with banks or other financial institutions. Instead, the organization cooperates with other lenders by helping to bridge the gap between the level of funding a company needs and what it is able to get through traditional banking sources. In fact, ACC's board of directors is made up of bankers and business leaders from across Arkansas, all of whom volunteer their time and services. In addition, ACC recently moved its offices into the Arkansas Bankers Association headquarters building, further strengthening its ties with the state's banking community.


ACC loans may be used in combination with bank loans, municipal bond issues, and other sources of financing. Generally, loans range from a minimum of $100,000 to a maximum of $500,000, but sometimes ACC's Loan Committee will approve loans below the minimum amount to accommodate the needs of women and minority applicants.

In addition, ACC can exceed its $500,000 maximum loan amount on certain projects because it is a designated "certified lender" by the U.S. Small Business Administration (SBA). As a certified lender, ACC can loan an additional $750,000 in SBA-guaranteed loans on qualifying projects.

Originally established in 1957, Arkansas Capital is a privately owned, nonprofit "business development corporation" operating exclusively in Arkansas. ACC is not a government agency, but it is the only non-public entity allowed to borrow money from the State of Arkansas. The money is repaid, with interest, and ACC is responsible for the debt even if its own borrowers default on their loans.


In 1989, Arkansas Capital sponsored the establishment of the Arkansas Certified Development Corporation (ACDC), a statewide "Certified Development Company." Like ACC, ACDC is a private, nonprofit corporation and is the only statewide administrator of the SBA's 504 Loan Program in Arkansas. It is designed to offer long-term (up to 20 years) financing on land, construction, expansion, and equipment to small businesses at below-market interest rates.

To be eligible, a company must meet SBA's definition of "small business" for its industry. The program is open to both start-up businesses and established firms, and for the most part, any project involving the purchase, construction, or improvement of fixed assets is eligible.

ACDC lends up to 40 percent of the project's total cost (to a maximum of $1,000,000). The borrower provides 10 percent of the project cost, and the remaining 50 percent is funded through a loan from a private lender, usually a bank. This 50/40/10 funding formula can be adjusted in many ways to suit the needs of either the borrower or the private lender, as long as ACDC's participation is within its funding restrictions. ACDC's lien position is subordinated to the private lender.

To learn more about the loan programs available through ACC and ACDC--or to receive no-cost counsel on project financing--call 374-9247 in Little Rock.
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Publication:Arkansas Business
Article Type:Company Profile
Date:Aug 16, 1993
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