State Small Business Credit Initiative - Fact Sheet
Section 3301 of the American Rescue Plan Act of 2021 (ARPA, Public Law 117–2
) reauthorized the State Small Business Credit Initiative, providing $10 billion to implement the second round of this program. The U.S. Department of the Treasury (Treasury) will allocate formula and incentive-based funding to States, Territories, Washington D.C., and Tribal governments (Eligible Governments) for small business financing programs and the provision of Technical Assistance to small businesses applying for SSBCI and other government programs.
See Treasury’s Fact Sheet on the American Rescue Plan Act of 2021 and SSBCI website for more information.
September 27 - Treasury Issues Notice Regarding Applications for the State Small Business Credit Initiative (SSBCI)
On September 27, the U.S. Department of the Treasury issued a Notice Regarding Applications for the State Small Business Credit Initiative (SSBCI). The notice provides information regarding the requirements and timeline for applications, and pertains to funding for both Capital Programs and Technical Assistance. Key takeaways are noted below:
An Eligible Jurisdiction (states, the District of Columbia, territories, and Tribal governments) must initiate an application in Treasury’s online portal by December 11, 2021. Applications can be amended after that date, but must be finalized by February 11, 2022.
CDFA anticipates that applicants will be able to access the online application portal once Treasury delivers updated guidance for SSBCI 2.0. The following information must be submitted by December 11, 2021:
- Designation of implementing entity
The department, agency, or political subdivision designated by the Eligible Jurisdiction to implement and participate in the program.
- Identification of key contacts
Contact information for the authorized official of the Eligible Jurisdiction and at least one program point of contact for SSBCI.
- List of proposed programs
A list of SSBCI programs the Eligible Jurisdiction intends to operate and the amount of funding requested for each program.
- Statement on legal actions
A description of the necessary legal actions that the Eligible Jurisdiction has taken or needs to take to enable the designated implementing entity to implement the intended SSBCI programs.
Eligible Jurisdictions seeking Technical Assistance funds from Treasury will be required to submit an application by March 31, 2022. Treasury will issue additional guidance with details about the terms and conditions for Technical Assistance. CDFA expects Treasury to provide more information on allocation amounts and the basis for allocations within the coming weeks.
Frequently Asked Questions (FAQs)
1. What are the different components of the $10 billion SSBCI program?
- $6 billion to States, Territories, and Washington, DC allocated on a formula basis.
- $500 million to Tribal governments in the proportion determined appropriate by the Secretary of the Treasury. View Treasury’s Tribal Government SSBCI fact sheet for more information.
- $1.5 billion to Eligible Governments for business enterprises owned and controlled by socially and economically disadvantaged individuals (SEDI businesses).
- $500 million to Eligible Governments for Very Small Businesses, defined as a business with fewer than 10 employees, including independent contractors and sole proprietors.
- $1 billion in additional incentive allocations to Eligible Governments that demonstrate robust support for SEDI businesses.
- $500 million to provide Technical Assistance to certain businesses applying for SSBCI or other government programs that support small businesses.
2. Have SSBCI funds been disbursed?
SSBCI funds have not been disbursed. A preliminary allocation table for a portion of SSBCI funds was published in April 2021. Treasury has indicated that program guidance will be issued in 2021. Eligible Governments can apply for funds through December 2021. Funds will be disbursed to Eligible Governments upon Treasury’s approval of their application. Additional information and key dates can be found on Treasury’s SSBCI website.
3. How can SSBCI funds be used?
SSBCI funds will be used to support small business financing programs and the provision of Technical Assistance to small businesses applying for SSBCI and other government programs.
- During the previous round of SSBCI (SSBCI 1.0), Eligible Governments used SSBCI funds to support the following types of small business financing programs:
- Capital Access
- Collateral Support
- Loan Guarantee
- Loan Participation
- Venture Capital
- During SSBCI 1.0, every dollar of SSBCI capital leveraged $8.95 in new financing, achieving a 8.95:1 leverage ratio. A leverage ratio of 10:1 will be targeted in the current round (SSBCI 2.0).
See Treasury’s 2017 program evaluation, State Small Business Credit Initiative: A Summary of States’ 2016 Annual Reports
, for more information on SSBCI 1.0.
4. How can SSBCI Technical Assistance (TA) funds be utilized?
In its May 2021 Notice and Request for Information
, Treasury outlined the following description of how SSBCI TA resources may be deployed and utilized. Future guidance may provide further clarity.
5. What is a SEDI business?
- Treasury may provide funds to states to carry out a TA plan that includes financial advisory, legal, accounting services, either directly or by contract;
- Treasury may transfer funds to the Department of Commerce’s Minority Business Development Agency to provide TA; and/or
- Treasury may contract with legal, accounting, and financial advisory firms to provide TA.
Treasury has provided
the following working definition of business enterprises owned and controlled by socially and economically disadvantaged individuals. Additional guidance may provide further clarity.
SEDI business means a business that:
- If privately owned, 51 percent is owned by one or more socially and economically-disadvantaged individuals;
- If publicly owned, 51 percent of the stock is owned by one or more socially and economically-disadvantaged individuals;
- And in the case of a mutual institution, a majority of the Board of Directors, account holders, and the community which the institution services is predominantly comprised of socially and economically disadvantaged individuals.
- Socially and economically disadvantaged individuals is defined by Section 8 of the Small Business Act (15 U.S.C. 637) and the regulations thereunder.
- Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
- Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.
Learn More and Stay Up-to-Date on SSBCI
Visit the SSBCI Resource Center
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Become a CDFA member to participate in the SSBCI Coalition, gain full access to the SSBCI Resource Center, and receive discounts on current and future SSBCI events.