The US Treasury Department just approved $940.2 million in small business funding to nine states as part of the $10 billion State Small Business Credit Initiative (SSBCI). If your small business operates in Arizona, Connecticut, Indiana, Maine, New Hampshire, Pennsylvania, South Carolina, South Dakota or Vermont, you should be checking with local small business lenders, venture capital firms and your state government to see if you’re eligible to apply for funding.
In late May 2022, the US Treasury Dept. issued the first chunk of the federal government’s much-debated SSBCI – a $10 billion program included in the $2.1 trillion America Rescue Plan Act of 2021 that distributes money to states, territories and tribal governments for the purpose of providing venture capital to, and encouraging private lending for, small businesses.
Here is how much money each individual state has been approved for and what they plan to do with it.
- Arizona was approved for up to $111 million and will use $87 million of those funds to operate two state-led venture capital programs that will focus on Series A-stage funding for technology startups in underserved markets. The additional $24 million in funding will be used to guarantee loans for small businesses in underserved communities.
- Connecticut will use the $119.4 million it was approved for to fund its new Connecticut Future Fund, which will provide financing for entrepreneurs from underserved and diverse backgrounds, and The ClimateTech (CT) Fund, which will support startups that have a focus on clean energy, environmentally safe manufacturing, and climate resiliency.
- Indiana will fund two different programs with the $99.1 million it was approved for: a venture capital program to which it has allocated over $70 million. The program will fund Indiana startups with between $500,000 and $5 million in equity capital financing, with a portion of those funds targeted to investments in companies started by underserved founders. The state will use the remaining $29.1 million to finance a loan fund investment program aimed at increasing the amount of funding, including low-interest loans, to underserved entrepreneurs and business owners.
- Maine plans to use the $62.2 million it was approved for to fund two venture capital programs, to which it has allocated $20 million; a $22 million loan participation program focusing on the state’s 10-year economic development plan, and $20 million in loan guarantees to local small business lenders.
- New Hampshire will spend the $61.5 million it was allocated on a loan participation program that will support small business loans from community banks in rural and other underserved areas of the state. The program will be administered by the New Hampshire Business Finance Authority.
- Pennsylvania will use the $267.8 million it was approved for to fund equity capital investments and venture capital investments programs, to which it has allocated a combined $142 million. The programs will provide equity investments to early-stage technology companies in conjunction with VC firms Ben Franklin Technology Partners and Life Sciences Greenhouses. The state will also use some of those funds on venture capital investments in new funds under the management of underserved venture capital firms. Additionally, it will fund a $125 million loan participation program that will provide loans of no more than 50% of total financing to small business borrowers through certified economic development organizations (CEDOs) and community development financial institutions (CDFIs).
- South Carolina was approved for up to $101.3 million and will use $51 million to finance a small business loan participation program, part of which will be earmarked for community development financial institutions (CDFIs), and the remainder on a venture capital program to fund startups in underserved communities and rural areas of the state.
- South Dakota will use the $60 million it was allocated to fund a loan participation program that will be administered by local banks and CDFIs. The program expands access to capital for underserved communities by using data to identify underserved markets and relying on partners to conduct outreach and raise awareness.
- Vermont will use $29 million of the $57.9 million it was allocated on two venture capital programs that will provide seed fund investments, investments in leveraging accelerator programs to make small investments in rural, pre-seed stage companies, and investments in high-growth, technology innovation companies in the healthcare sector. The remainer will be used to fund a loan participation program to help small businesses grow, hire and serve underserved markets and address climate change initiatives.
The US Treasury Dept. still has more than $7 billion to allocate to states for small business funding initiatives over the next two years, but you need to diligently check with your state to see if it has been approved for funding. Continually inquire about funding with local lenders and your state’s small business administration, and keep an eye out for press releases from your state’s Governor’s office to see if your business is eligible for potential funding.