California receives federal funding through the State Small Business Credit Initiative
WASHINGTON – The U.S. Treasury Department today announced approval of California’s application for up to $1.1 billion in funding under the State Small Business Credit Initiative (SSBCI), the largest amount of funding approved under the SSBCI program became.
The American Rescue Plan approved and expanded SSBCI, which was originally founded in 2010 and has been very successful in improving access to capital for small businesses and entrepreneurs. The new SSBCI builds on this successful model by providing nearly $10 billion to state, District of Columbia, territory and tribal governments to improve access to capital and encourage entrepreneurship, particularly in traditionally underserved communities emerging from the pandemic. SSBCI funding is expected to mobilize private investment of up to $10 for every $1 of SSBCI equity funding, amplify the impact of that funding, and provide small business owners with the resources they need to become sustainable grow and thrive. State governments submitted plans to the Treasury Department for how they will use their SSBCI allocation to fund small businesses, including through venture capital programs, loan participation programs, loan guarantee programs, collateral support programs and programs for access to capital.
“This is a historic investment in entrepreneurship, small business growth and innovation by the American Rescue Plan, which will help break down barriers to access capital for traditionally underserved communities,” he said Treasury Secretary Janet L. Yellen. “I’m excited to see how SSBCI funds will promote equitable economic growth in California and across the country.”
“This historic investment shows why the American Rescue Plan is one of the most transformative laws of the 21st century,” Senator Alex Padilla said. “The $1.1 billion invested in California’s small businesses will help unlock the potential of entrepreneurs in underserved communities across the state who may never have received the support needed to build their businesses and achieve the American Dream . When small businesses thrive, they create high-paying jobs that invigorate our neighborhoods and strengthen our economies.”
“By investing in small businesses, we boost our economies, create jobs and strengthen the building blocks of communities,” said Representative Katie Porter. As an advocate for oversight, I am proud to work with the Biden administration to legislate support for our nation’s small businesses and then verify that entrepreneurs are getting the help they need.”
“Small businesses are the backbone of our economy and I’m proud that the American Rescue Plan is delivering historic investments to help entrepreneurs thrive, especially in underserved areas.” said Representative Mike Levin. “My office has heard from local business owners who need more resources and additional help to get started, which is why these SSBCI funds are so important. I look forward to seeing this investment pay off for local small businesses soon.”
With its SSBCI funds, California will implement six programs that are expected to create jobs, drive key investments in underserved entrepreneurs, and increase long-term lending to small businesses.
- California has committed over $118 million to a capital access program that will help cover potential losses on small business loans to improve small business lending.
- California has committed over $390 million to a small business loan guarantee program designed to expand access to capital for underserved communities, in part by building existing relationships with lenders that are well established in those communities.
- California has committed over $472 million to a program that will help provide collateral for small business loans that are expected to generate over $5 billion in private financing over the next decade.
- California has committed $200 million to implement several venture capital strategies designed to provide critical investments for small businesses, including by first-time and underrepresented fund managers and those with track records of investing in underserved companies. These venture capital programs are expected to create or sustain more than 28,000 jobs and generate billions of dollars in private financing over the next decade.
The California Infrastructure and Economic Development Bank (IBank), an agency of the Governor’s Office of Business and Economic Development, will administer the state’s SSBCI loan guarantee program and venture capital programs, and the California Pollution Control Financing Authority, an agency of the State Treasurer’s Office the Capital Access Program and the Collateral Support Program.
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 adding 1.9 million jobs in the first three quarters of 2021 – the highest rate of small business job creation on record recorded in a single year. The investments being made through SSBCI are an integral 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 thrive. The work done by the Treasury Department during the implementation process to ensure SSBCI funds reach traditionally underserved small businesses and entrepreneurs will also be critical in ensuring the small business boom continues to empower communities disproportionately affected by the pandemic. The Treasury Department intends to continue approving state plans on an ongoing basis.
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