State Small Business Credit Initiative (SSBCI)

On March 11, 2021, President Biden signed The American Rescue Plan Act, which reauthorized and funded the State Small Business Credit Initiative (SSBCI). The new version of the SSBCI program provides a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to empower small businesses to access capital needed to invest in job-creating opportunities as the country emerges from the pandemic. The funds will also support recipient jurisdictions in promoting American entrepreneurship and democratizing access to startup capital across the country, including in underserved communities. 

DON'T WAIT UNTIL FUNDS RUN OUT!

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. o 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. o 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.