BUSINESS RESOURCES & EDUCATION of San Francisco projects , how funds are disbursed on behalf of the LBE , what funding will cover , and general program guidelines for limits and duration . The CAPP loans are not underwritten according to banking industry standards , but rather based on specific project proceeds and profitability . As LBE advocates , we assist participating LBEs in gathering and providing the information required to request the CAPP funding , including their cash flow projections and reviewing the contractual requirements with them .
Once a LBE is connected by the CDP staff with the CAPP Project Manager , the formal development of the Project Package Checklist begins , which will include gathering all project-specific data . The CAPP process becomes one of analyzing all package information and specifically reviewing project estimate , schedule and cash flow to determine the LBE ’ s cash liquidity needs to complete the project . Cash flow needs are determined by assessing the LBE ’ s current cash position and a CAPP funding strategy is developed .
The Purpose of the CAPP The Contractor Accelerated Payment Program ( CAPP ) continues its evolution in addressing the needs of LBEs . The original pilot program parameters for CAPP were to provide working capital loans to LBEs only on construction projects . Based on a CAPP loan which we are in the final stages of closing out , we have been able to expand CAPP to include non-construction LBEs for which the CAPP funds can be beneficial .
In 2021 , a CAPP loan approval was provided to a LBE who – despite a successful business track record , balanced finances and reasonable amount of working capital – lacked the overall liquidity to finance the materials required for the proposed contract . The contract called for materials that suppliers had to manufacture to specification and ship from remote locations around the country , which translated to a long lead time . Because of the contractor ’ s relatively short time in business and lack of commercial credit history , the material manufacturers were requiring a 50 % upfront payment on approximately $ 200,000 in special orders . This expense , combined with the typical billing cycle under the contract , made it impossible for the contractor to finance the purchase , much less afford the costs of labor and equipment for early work on the project .
With the CAPP loan arrangement , the contractor was able to purchase materials while using his company ’ s own resources to successfully cash flow other project expenses , as well as provide the bonding required by the contract .
Another LBE utilizing the CAPP was embarking on his first contract as a second-tier subcontractor , with a 45-day payment term . Over the prior year , this contractor had been enrolled in our Contractor Development Program ( CDP ) training to increase his business skills while attempting to identify and bid proposals . Although the LBE ’ s starting position for working capital was close to zero , he was able to provide the CAPP with a cash flow projection indicating profitability on the project . The LBE ’ s CAPP loan was approved up to $ 250,000 , with additional training provided in pay application and change order procedures . In this manner , the CAPP provided and prepared a LBE with essentially no working capital the opportunity to successfully start and complete a construction project .
The Benefits of CAPP With Contractor Monitoring Division , Risk Management , and San Francisco Community Investment Fund support , the CAPP has arranged eight funding commitments over the last 18 months . This translates to over $ 1.5M of working capital support provided to-date for LBEs , supporting $ 7.5M in contracts , with an average loan size of $ 180K . So far , the CAPP ’ s highest transaction has been $ 200K and our loans have facilitated 42 local hires .
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