The U.S. Department of the Treasury awarded the first batch of funding awards for the State Small Business Credit Initiative (SSBCI), a program designed to increase access to capital for traditionally underserved small businesses and entrepreneurs.
The new, expanded SSBCI provides nearly $10 billion to states, the District of Columbia, territories, and Tribal governments to promote entrepreneurship, especially in traditionally underserved communities. SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI capital funding. State governments filed plans with the Treasury on using their SSBCI allocation to provide funding to small businesses.
“This historic investment will help reduce the barriers that prevent small businesses and entrepreneurs from getting their ideas off the ground, building successful businesses, and creating jobs, especially in traditionally underserved communities where these opportunities are needed most,” Deputy Secretary of the Treasury Wally Adeyemo said. “Treasury is encouraged by these plans and their support for key industries, including manufacturing and the environmental sector.”
Treasury has structured SSBCI to ensure that these funds will reach underserved small businesses and entrepreneurs by providing $1 billion in incentive funds for jurisdictions that successfully reach underserved entrepreneurs. It also plans to deploy $300 million in technical assistance to reach businesses and entrepreneurs in need of assistance.
The first recipients under the expanded SSBCI program plan to target key industries and small businesses needing access to capital. One of them is Hawaii, which got approved for up to $62,021,957. Hawaii will launch new loan participation and credit enhancement programs, including HI-CAP Loans and HI-CAP Collateral, with two-thirds of its allocation. These programs will expand access to capital by lending to projects that will diversify Hawaii’s economy and reduce reliance on tourism, which struggled during the COVID-19 pandemic.
Another recipient is Kansas, which got approved for up to $69,596,847. It will operate a loan participation program, the GROWKS Loan Fund, and an equity program, the GROWKS Angel Capital Support Program, with over 80 percent of its funds. These programs will provide companion loans and equity investments with varying levels of SSBCI support. Kansas estimates that approximately 40 percent of businesses supported will be women-owned, and 20 percent will be minority-owned small businesses.
Michigan and Maryland also received funding, among others. Treasury intends to continue approving plans on a rolling basis.
In 2021, Americans applied to start 5.4 million new businesses, which is 20 percent more than any other year on record, according to a report released earlier this month by the White House. It also found that small businesses with fewer than 50 workers created 1.9 million jobs in the first three quarters of 2021 — the highest rate of small business job creation ever recorded in a single year. The investments being made through SSBCI are a key part of the Biden Administration’s strategy to keep this small business boom going.