State Small Business Credit Initiative

State Small Business Credit Initiative

States are now receiving funding through the Small Business Credit Initiative (SSCBI) to empower small businesses. Be the first to apply before funds are gone. On March 11, 2021, President Biden marked The American Rescue Plan Act, which reauthorized and financed the State Small Business Credit Initiative (SSBCI). The new form of the SSBCI program gives a consolidated $10 billion to states, the District of Columbia, domains, and Tribal legislatures to enable private companies to get to capital expected to put resources into work setting out open doors as the nation rises out of the pandemic. 

The assets will likewise uphold beneficiary purviews in advancing American business and democratizing admittance to startup capital the nation over, remembering for underserved networks.

What is SSBCI?

The American Rescue Plan Act of 2021 reauthorizes and expands the State Small Business

Credit Initiative (SSBCI) Program, which was originally established in 2010. SSBCI will provide

a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to

expand access to capital for small businesses emerging from the pandemic, build ecosystems of

opportunity and entrepreneurship, and create high-quality jobs.

SSBCI provides recipient jurisdictions funding for: (1) credit and investment programs for

existing small businesses and start-ups, and (2) technical assistance to small businesses applying

for SSBCI funding and other government small business programs. Today, Treasury is issuing

guidance to implement the SSBCI credit and investment programs.

Types of Programs

The programs available under SSBCI to promote capital access to all recipient jurisdictions,

including in underserved areas, include:

• Venture Capital Programs: Jurisdictions may set up public-private partnerships for equity

investing or invest in venture capital funds. These investments are focused on providing

capital to underserved startups and democratizing venture capital across geography and to

diverse founders.

• Loan Participation Programs: In these programs, states, the District of Columbia,

territories, and Tribal governments buy an interest in the loans made by lenders or lend

directly alongside private lenders, providing direct lending to finance small businesses.

• Loan Guarantee Programs: States, the District of Columbia, territories, and Tribal

governments use SSBCI funds to provide an assurance to lenders that they will be

partially repaid in the event of default, after the lender makes every reasonable effort to

collect, helping small businesses secure loans that may have otherwise been inaccessible

or prohibitively expensive.

• Collateral Support Programs: The programs in this model set aside funds as collateral for

new loans, enabling start-ups to borrow funds to help their businesses grow with the

assistance of SSBCI capital.

• Capital Access Programs (CAPs): These programs provide portfolio insurance in the

form of a loan loss reserve fund into which the lender and borrower contribute,

supplemented with SSBCI funds.

Program Implementation and Guidance Design

Treasury’s implementation of the SSBCI program will expand access to capital, promote

economic resiliency, create new jobs, and increase economic opportunity. Treasury is focused on

expanding opportunities in underserved communities lacking capital and building financing

ecosystems that support entrepreneurs and small businesses. This focus is reflected in several

important features of these programs, including:

Promoting Equity.

The program has a new allocation of $1.5 billion for business enterprises owned and

controlled by socially and economically disadvantaged individuals (SEDI-owned

businesses), along with $1 billion of incentive funds for jurisdictions that demonstrate

robust support for SEDI-owned businesses. These allocations combine to be more than

the entire funding for the 2010 SSBCI program.

The $1.5 billion allocation targets (1) small businesses owned by individuals that

have faced barriers to access to the capital, markets, and networks they need to

grow their businesses because of certain statuses or membership in certain groups,

including membership in a group that has been subjected to racial or ethnic

prejudice or cultural bias within American society, and (2) small businesses in

Community Development Financial Institution (CDFI) Investment Areas, which

are generally low-income, high-poverty geographies that receive insufficient

support for the needs of small businesses, including minority-owned businesses.

Treasury will allocate the $1 billion of incentive funds to jurisdictions that

effectively deliver robust support to these groups, helping to promote lending and

venture capital investment for small businesses run by diverse founders or that

operate in geographic regions that have traditionally lacked access to capital.

• The program will provide over $600 million in allocated funds to Tribal governments,

which have been consulted during the process of policy design.

Catalyzing Private Investment.

• SSBCI is designed to catalyze $10 of small business lending and investment for every $1

of SSBCI capital program funding, magnifying the effects of the federal funds allocated

through the program.

• States, the District of Columbia, territories, and Tribal governments must describe in their

application how the SSBCI funding causes and results in new lending and investment,

ensuring that the funds are used for small businesses and start-ups that would otherwise

lack opportunities for growth-supporting capital.

• The program mobilizes local sources of capital, such as community banks, CDFIs,

Minority Depository Institutions, and investors, to support local small businesses. The

program also rewards investments outside of traditional high-access areas and to start-ups

that have struggled to receive funding.

Fueling Economic Growth and Good Jobs.

• SSBCI will build on the Administration’s work to support small businesses while

combating longstanding structural inequities in access to credit and unequal opportunities

for growth revealed and exacerbated by the pandemic.

• In their SSBCI applications, states, the District of Columbia, territories, and Tribal

governments must explain the economic benefits of their programs, such as how they will

create well-paying jobs and how they might support American manufacturing, supply

chain industries, communities facing transitions to net zero economies or

deindustrialization, or how they might further other policy objectives.

• The scale of capital funding, over 6.5 times greater than the initial SSBCI program, can

be transformative for communities impacted by large-scale job losses, within emerging

industries, and for the many centers of entrepreneurship currently underserved by capital

markets.

Learn more to apply when your state gets funding!