Small Business Access to Capital Act - Overview
Small Business Access to Capital Act of 2020
The State Small Business Credit Initiative (SSBCI) was a federal financing program that delivered flexible, affordable capital to small businesses around the country. The expiration of the SSBCI Program in 2017 left a void in the marketplace for affordable small business loans. Small Business Access to Capital Act of 2020 (S. 3551) would provide $3 billion in funds to a reauthorized SSBCI Program and provide immediate access to capital for small businesses that desperately need it. The programs created by states under the original SSBCI are still in operation and would be ready to immediately deploy capital to businesses in need.
Reauthorization of SSBCI is one of the key tenets of CDFA’s
COVID-19 Comprehensive Recovery Strategy. Based on the input of our 500+ members, CDFA’s policy proposals would allow state and local governments, through development finance agencies, to be immediate problem solvers that can help alleviate the extreme economic challenges facing small businesses and communities to put America securely on the path to recovery.
Below you will find links and resources to learn more, send support letters, and show your support to help pass S. 3551, the Small Business Access to Capital Act of 2020.
Read the CDFA Press Release
+Sign CDFA's Letter to Congress
The Council of Development Finance Agencies (CDFA) and our joint coalition of partners is urging Congress to reauthorize funding for the State Small Business Credit Initiative (SSBCI) Program.
A $2 billion infusion in a reauthorized SSBCI Program would provide immediate access to capital for small businesses that desperately need it. The programs created by states under the original SSBCI are still in operation and would be ready to immediately deploy capital to businesses in need. There would be no need to create new rules and regulations should this option be enacted. States are prepared to receive an infusion of SSBCI funding immediately.
Completing this form adds your name to our coalition of hundreds of loan providers and development finance agencies asking that Congress include a reauthorization of funding for the SSBCI Program in the upcoming stimulus package.
View the Sign-On Letter
+Send Letters to Your Elected Officials
CDFA needs your support to raise awareness about the importance of the Small Business Access to Capital Act. As part of our outreach efforts, we've begun a targeted letter-writing campaign. We ask that industry stakeholders send letters to the Senate and House members to support the Small Business Access to Capital Act and reauthorize SSBCI. To make this process easier, we have created sample letters for your use.
Download the Sample Letter to Congress
View the Sign-On Letter
+Summary of the Small Business Access to Capital Act of 2020
The Small Business Access to Capital Act of 2020 amends Section 3003 of the Small Business Jobs Act of 2010 (12 U.S.C. 5702), which created the State Small Business Credit Initiative (SSBCI) by adding the substance below.
View S. 3551 on Congress.gov
+ 1. Definitions
- “eligible participating State” defined as a State that has expended, transferred, or obligated at least 80% of their second tranche of SSBCI funds under the Small Business Jobs Act of 2010.
- “unused funds” defined as both funds from the 2010 law disbursed to states and new funds under this bill that were not disbursed to states.
+ 2. Allocation for 2010 Participating States
- Allocation: Allocates $1 billion in formula funding in the same ratio as the 2010 law, effectively functioning as a fourth tranche of formula funding.
- Application: Sets the deadline for states to apply for this new formula funding as six months after enactment of this bill. Allows the Treasury Secretary to determine application content and process.
- Availability of allocated amount: Treasury shall transfer states this new formula funding after the eligible state has expended, transferred, or obligated not less than 80% of their third and final tranche of formula funding under the 2010 law.
- Use of transferred funds: Allows the use of these new formula funds for the same purposes as allowed under the 2010 law.
- Termination of availability of amounts: Allows Treasury to terminate availability of new formula funds for states that have not obligated at least 80% of their third and final tranche under the 2010 law within two years of Treasury’s approval of that state’s participation in the new formula round. These undisbursed funds will be distributed by Treasury in a competitive process.
+ 3. Competitive Funding
- In general: Allocates $2 billion in new funding to be awarded on a competitive basis to participating states and consortiums of states for the same purposes as allowed under the 2010 law.
- Application: Sets the deadline for entities applying for competitive funds to be not later than one year after enactment of this bill, which gives Treasury enough time to implement this new, competitive process while ensuring capital is deployed in a timely manner. Limits States to one individual application and one application as part of a consortium. Allows states that did apply for funding under the 2010 law to apply for competitive funding here.
- Factors: Lays out the factors that the Treasury Secretary shall consider when determining competitive awards under this bill, including:
- plans to leverage private capital; create and retain jobs; serve new companies; and serve low-or-moderate-income communities
- plans to establish self-evaluation mechanisms
- matching funds provided by applying entities
- the extent to which the participating State or States as part of a consortium expended, obligated, or transferred funds under the 2010 law
- Award of funds: Requires Treasury to transfer half of the competitive award within 30 days of the award being made. After 80% of this first half has been expended, transferred, or obligated by the State or consortium, Treasury shall transfer the remaining second half of awarded funds.
- State share: Requires states to provide at least 10% matching funds. Allows Treasury to determine what contributions by a State qualify as part of this matching share.
+ 4. Award of Unused Funds
- In general: Allows the Treasury Secretary to award SSBCI funds that were not disbursed to states on a competitive basis for purposes allowed under the 2010 law.
- Unused 2010 funds: Sets December 31, 2021 as the deadline for States to have obligated or expended 80% of funds received under the second tranche of the 2010 law, after which remaining non-disbursed funds (third tranche) will be made available for disbursement on a competitive basis. This mechanism provides and incentive for States to deploy the capital they received under the 2010.
- Application: Sets application deadline for this small, final, competitive round to be three months after the December 31, 2021 deadline. Allows Treasury to determine application structure.
- Factors: Directs the Treasury Secretary to consider the same factors as considered in the large, $2 billion competitive round above.
- Minimum amount: Requires awards under this smaller, competitive round to be at least $5 million to ensure that these awards are not spread too thin and to incentivize applications by States.
+ 5. Compliance and Reporting Requirements
The bill extends SSBCI compliance and reporting requirements for States receiving funds under this bill.
+ 6. Administration and Implementation
- Administrative expenses for participating states: Allows states to use 3% of any awards under this bill for administrative expenses, mirroring the 2010 law.
- Contracting: Allows the Treasury Secretary to enter into contracts to administer and implement the bill as needed.
- Amounts not assistance: Clarifies that administrative expenses used by states are not considered assistance to sates.
- Appropriation: Appropriates the $3 billion authorized under this bill.
- Termination of Secretary’s program administration functions – Extends Treasury’s compliance and administrative duties and authorities for eight years after enactment, allowing time for the new competitive round as well as the subsequent, smaller competitive round comprised of undisbursed formula funds.
+SSBCI and COVID-19
Reauthorization of SSBCI is one of the key tenets of CDFA’s
COVID-19 Comprehensive Recovery Strategy. Based on the input of our 500+ members, CDFA’s policy proposals would allow state and local governments, through development finance agencies, to be immediate problem solvers that can help alleviate the extreme economic challenges facing small businesses and communities to put America securely on the path to recovery.
Read the Comprehensive Recovery Strategy
Questions or concerns? Contact
CDFA's Government and External Affairs Team.