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November 11, 2021 | Tom Ballard

U.S. Department of Treasury issues long-awaited SSBCI 2.0 guidelines

The U.S. Department of the Treasury on Wednesday issued its long-awaited and much anticipated capital program implementation guidance for Version 2.0 of the “State Small Business Credit Initiative” (SSBCI) program.

The “American Rescue Plan Act,” which was approved earlier this year, reauthorized and expanded the “Small Business Jobs Act of 2010” which established the original SSBCI program. Version 2.0 will provide a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to empower small businesses to access capital needed to invest in job-creating opportunities as the country emerges from the pandemic. The funds will also support recipient jurisdictions in promoting American entrepreneurship and democratizing access to start-up capital across the country, including in underserved communities.

The feds expect a 10 to 1 leverage – $10 in small business lending and investment (i.e., venture capital) for each dollar of federal funds. According to this news release, nearly one-third of the federal monies are targeted for two areas: (1) businesses owned by socially and economically disadvantaged individuals or for programs that succeed in reaching those businesses ($2.5 billion); and (2) Tribal businesses ($600 million).

SSBCI 2.0 dollars are eligible to be used for these purposes:

  • Venture Capital Programs: Jurisdictions may set up public-private partnerships for equity investing or invest in venture capital funds. These investments are focused on providing capital to underserved start-ups and democratizing venture capital across geography and to diverse founders.
  • Loan Participation Programs: In these programs, states, the District of Columbia, territories, and Tribal governments buy an interest in the loans made by lenders or lend directly alongside private lenders, providing direct lending to finance small businesses.
  • Loan Guarantee Programs: States, the District of Columbia, territories, and Tribal governments use SSBCI funds to provide an assurance to lenders that they will be partially repaid in the event of default, after the lender makes every reasonable effort to collect, helping small businesses secure loans that may have otherwise been inaccessible or prohibitively expensive.
  • Collateral Support Programs: The programs in this model set aside funds as collateral for new loans, enabling start-ups to borrow funds to help their businesses grow with the assistance of SSBCI capital.
  • Capital Access Programs (CAPs): These programs provide portfolio insurance in the form of a loan loss reserve fund into which the lender and borrower contribute, supplemented with SSBCI funds.

For those who want to know more of the details, Treasury posted the “SSBCI Capital Program Policy Guidelines” here and a fact sheet here.

The State of Tennessee and all other entities must submit applications by December 11. In states that do not submit a complete application for SSBCI capital funding, municipalities will have until March 11 to apply.

According to this analysis from the State Science and Technology Institute (SSTI), Tennessee is eligible for $117 million, the same as neighboring Kentucky, and slightly more than Alabama, Mississippi and South Carolina.


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