Proper Use of CAP Loans

Proper Use of CAP Loans. Contract loans may be used for cost associated with a construction project or construction related contract being used as collateral for each loan. A properly notarized “letter to redirect funds” may be substituted in lieu of a contract with certain governmental agencies. Such letters must be pre-approved by the Mississippi Development Authority. In the event the contract involves a subcontractor, the subcontractor may also apply for the Capital Access Contract Loan. In this case, the prime contractor or other qualified entities must agree to pay the subcontractor’s loan amount directly to the lending institution. The maximum amount that may be loaned to anyone borrower is the greater of $75,000.00 or 75% of the contract amount. This loan program has a limit of three loans per borrower. The loan may not be used in conjunction with any other State finance program. The Mississippi Development Authority may at its discretion require control of use and disbursement of funds on these loans. The applicant will be responsible for the cost of all fees associated with the loan.