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What Is the State Small Business Credit Initiative (SSBCI)?

The U.S. Treasury recently announced that up to $890.7 million in funding would be made available to three states to expand funding to small businesses. This authorization was part of the State Small Business Credit Initiative, or SSBCI — a program that initially started a decade ago, but that many small businesses don’t know enough about.

If you don’t know about the SSBCI, read on to learn what this program is all about, and where this new funding will be deployed.

What You Should Know About the State Small Business Credit Initiative (SSBCI)

Let’s start with what the SSBCI is and how it started.

The State Small Business Credit Initiative is a program designed to infuse capital into the nation’s small businesses. The current program should deliver $10 billion directly to states, the District of Columbia, territories, and Tribal governments. Each jurisdiction will have its own rules on how it will use the money. But broadly speaking, it should be used to provide credit and investment programs for existing small businesses and startups, as well as technical assistance to small businesses applying for SSBCI and other government small-business funding.

The hope: Get more capital into the hands of traditionally underserved small businesses and entrepreneurs.

The current SSBCI is a “reawakening” of the original program. The SSBCI first sprung forth from the Small Business Jobs Act of 2010 — a means of rebuilding small businesses in the wake of the Great Recession. That program delivered $1.5 billion to small businesses up until September 2017. However, most businesses received their money in three tranches in fiscal 2011, 2013 and 2015.

The SSBCI was designed to generate $10 in new small business lending for every $1 in SSBCI funding received. And it came close, at $8.95 in new financing.

The Biden administration reauthorized and expanded the SSBCI as part of the American Rescue Plan Act of 2021. The “new” SSBCI will provide $10 billion in new funds. And the program expects a similar $10 in new funding to be created for every $1 it supplies.

SSBCI Programs

The SSBCI funds numerous types of programs across various jurisdictions, including:

  • Venture Capital Programs: Public-private partnerships for investing in equity or venture capital funds. The Treasury says “these investments are focused on providing capital to underserved startups and democratizing venture capital across geography and to diverse founders.”
  • Loan Participation Programs: Jurisdictions help provide direct lending to small businesses by either buying interest in loans made by lenders or lending directly alongside private lenders.
  • Loan Guarantee Programs: Jurisdictions can use SSBCI funds to provide partial guarantees to lenders, helping provide small businesses with loans they otherwise couldn’t have accessed (or that would’ve been prohibitively expensive).
  • Collateral Support Programs: SSBCI capital can be used as collateral for new loans to small businesses who otherwise might not have the collateral to secure a loan.
  • Capital Access Programs (CAPs): These create loan loss reserve funds that help lenders provide funding for riskier financing projects (loans to small businesses). These funds use both SSBCI funds, as well as fees from lenders and borrowers.

3 New States Added to SSBCI

The Treasury recently announced the addition of three state plans to the program. The states will receive up to a total of $890.7 million of SSBCI funds:

  • New Jersey (up to $255.1 million): The state will operate a loan guarantee program, two loan participation programs and three equity/venture capital programs. Two of the latter will provide support to underserved businesses and qualified life sciences businesses.
  • Texas (up to $472.0 million): The state will operate a capital access program and a loan guarantee program.
  • Washington (up to $163.4 million): The state will operate a collateral support program, three loan participation programs and an equity/venture capital program. The equity/venture capital program “provides limited partner capital commitments to new venture capital funds with diverse investment teams or that are focused on investing in underserved startups or targeted investment objectives such as climate technologies.”

With the addition of New Jersey, Texas and Washington state, SSBCI is now providing funding to 42 states.

Looking for Other Ways to Help Your Small Business?

Does your small business need new funds? You’re in luck — there are numerous sources of financing available to companies of all sizes. That includes special grants for women-owned businesses, minority-owned companies, even firms owned by veterans.

Not sure what you qualify for? McManamon & Co. offers a wide array of consulting services, including helping you find funding, establishing a corporate banking relationship, and more.

Let us help your small business blossom. Call McManamon at 440.892.8900 or contact us online today.

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