The State Small Business Credit Initiative (SSBCI)

ARTICLE | August 06, 2022

The American Rescue Plan Act of 2021 reauthorized and funded the State Small Business Credit Initiative (SSBCI) to help underserved entrepreneurs and small businesses gain access to much-needed capital. The initiative is a partnership between the federal government and individual states and provides funding to state programs that offer financing and technical assistance to small businesses. 

The SSBCI program allocates nearly $10 billion to states, the District of Columbia, territories, and Tribal governments to increase access to capital and promote entrepreneurship. Over a third of the funds are reserved for socially and economically disadvantaged individuals, tribal governments, and micro-business technical assistance.  

States must submit plans to the U.S. Department of Treasury for approval, and thus far, plans in over 14 states have been approved for more than $1.5 billion in funding.

If you are a small business owner, it is important to understand how the SSBCI may help your business. This article will provide a brief overview of the program along with states that the Treasury has recently approved.  

Overview of the SSBCI  

The purpose of the SSBCI is to help owners secure the financing needed to start or expand their businesses. States propose different programs for approval and funding from the SSBCI. Business owners then work through the approved state programs to access their loan and investment opportunities.  

The types of programs that the SSBCI promotes and that states provide include:

Venture capital programs

States can set up public-private partnerships to invest in venture capital funds. These investments provide capital to underserved startups and democratize venture capital across diverse founders. 

Loan participation programs

States can use SSBCI funds to take an interest in the loans made by lenders or to lend directly alongside private lenders. 

Loan guarantee programs

States can use SSBCI funds to provide partial loan guarantees to lenders to help protect against default. However, lenders must make every reasonable effort to collect before accessing these funds. These programs are intended to help businesses secure loans that may have otherwise been inaccessible or prohibitively expensive. 

Collateral support programs

Collateral support programs set aside funds to be used as collateral for new loans, enabling startups to borrow funds to help their businesses grow with the assistance of SSBCI capital. 

Capital access programs

These programs provide portfolio insurance in the form of a loan loss reserve fund. Both the lender and borrower contribute to this fund, which is supplemented with SSBCI funds. 

Who is eligible for funding? 

To be eligible for assistance under the SSBCI, an applicant must be a small business owner who needs financing. In addition, the business must meet the following criteria: 

1. The business must be located in a state that participates in the SSBCI program,
2. The business must have fewer than 500 employees, 
3. The business must be for-profit, and
4. The business owner must be a U.S. citizen or legal resident alien. 

Beyond these general requirements, each program will have its own specific guidelines and requirements.

State participation 

Knowing which states have submitted plans and received approval for new programs is helpful. The following is a list of states that have received plan approval and funding. This list will undoubtedly grow as the Treasury continues to approve new plans.

For more information and recent news on the SSBCI, you can visit the U.S. Department of the Treasury website. Most states have applied for funding, so even if your state is not listed above, check the link for recent changes.

More information

If you are interested in applying for assistance under the SSBCI, you should contact your state's small business development center (SBDC). The SBDC can help you with information on the available programs and the application process. They can also connect you with the resources needed to help grow your business. 

This article is intended to provide a brief overview of the SSBCI program and is not a substitute for speaking with one of our expert advisors. If you would like to discuss the SSBCI program or financial planning for your business, please contact our office.