Colorado, Oregon, New York and Montana have approved $750 million to support small business investment
WASHINGTON – Today, the U.S. Department of the Treasury announced an additional set of four state plans approved under the State Small Business Credit Initiative (SSBCI) for up to $750 million in funding to expand access to capital for small businesses . Treasury has announced more than $2.25 billion in funding approvals to promote small business growth through SSBCI. The US Rescue Plan reauthorized and expanded the SSBCI, which was originally established in 2010 and was very successful in increasing access to capital for traditionally underserved small businesses and entrepreneurs. The new SSBCI builds on this successful model by providing nearly $10 billion to states, the District of Columbia, territories and tribal governments to increase access to capital and promote entrepreneurship, particularly in traditionally underserved communities as they emerge from the pandemic. SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI equity funding, amplifying the effects of this funding and providing small business owners with the resources they need to sustainably grow and thrive. State governments submitted plans to the Treasury on how they will use their SSBCI allocation to provide funding to small businesses, including venture capital programs, loan participation programs, loan guarantee programs, support programs collateral and capital access programs.
“This is a historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan that will help reduce barriers to access capital for traditionally underserved communities,” said Treasury Secretary Janet L. Yellen. “I am excited to see how the SSBCI funds will drive equitable economic growth across the country.”
A White House report released in June found that more Americans are starting new businesses than ever before. In 2021, Americans applied to start 5.4 million new businesses – 20% more than any other year on record. It also found that small businesses are creating more jobs than ever before, with businesses with fewer than 50 workers creating 1.9 million jobs in the first three quarters of 2021 – the highest rate of job creation for small businesses ever registered in a single year. Investments made through SSBCI are a key part of the Biden administration’s strategy to sustain this small business boom by expanding access to capital and providing entrepreneurs with the resources they need to succeed. The work that Treasury has done during the implementation process to ensure that SSBCI funds reach traditionally underserved small businesses and entrepreneurs will also be critical to ensuring that the small business boom not only continues, but also continues. uplift communities disproportionately affected by the pandemic. The Treasury intends to continue approving state plans on a permanent basis.
These recipients under the SSBCI program plan to target key industries and small businesses in need of access to capital, including support for underserved businesses seeking contracting opportunities, which aligns with the Biden-Harris Administration’s focus on advancing equity through procurement federal following the passage of the historic Bipartisan Infrastructure Act.
The following descriptions highlight some of the key programs Treasury has approved for these states:
- Colorado, approved for up to $104.7 million, will operate three programs, including a venture capital program, for which it has allocated nearly $60 million. The program expects to invest in two venture capital funds per year for three years to build a diversified seed portfolio of small businesses in need of capital. Colorado has also allocated $35 million to an existing cash collateral support program that enables small businesses and nonprofits to secure loans by pledging a cash deposit as collateral. Additionally, Colorado has set aside $10 million for a loan program aimed at helping Main Street businesses recover from the pandemic.
- Montana, approved for up to $61.3 million, will operate a loan participation program modeled after a successful program in the previous iteration of SSBCI. This new program is designed to significantly increase the number of eligible CDFIs and non-profit local economic development agencies with revolving loan funds (RLFs) that can participate in the program, to obtain a much broader reach to target underserved markets. In addition, this program gives rural and Native American entrepreneurs greater opportunities to create new businesses and expand existing small businesses – creating jobs and economic opportunity in rural Montana counties and Indian Country.
- New York, approved for up to $501.5 million, will operate multiple programs, including an access to capital program, loan guarantee programs, loan participation programs and venture capital programs. For example, New York has allocated over $154 million to a program that provides capital support to small businesses by investing through private venture capital funds and accelerator funds. This program will provide capital support to funds with diverse and emerging managers and teams. Additionally, New York has allocated funding for two programs designed to help small and underserved businesses compete for government contracts, which may include projects funded by the Bipartisan Infrastructure Act. As part of those efforts, New York will expand an existing program that saw a significant majority of its support for potential contractors going to minority- and women-owned businesses.
- Oregon, approved for up to $83.5 million, will operate five programs, including two venture capital programs, for which the state has allocated $30 million. Venture capital programs are designed to invest in funds that need additional capital to launch and scale and to co-invest in companies together with private investors matching the structure and terms of the lead investor. Across its programs, the Oregon plan aims to counter systemic barriers to economic opportunity by providing access to capital in persistently underserved, low- and moderate-income areas and rural communities. Oregon expects these programs to be self-sustaining, providing vital support to Oregon small business now and for the long term.