The State Small Business Credit Initiative (SSBCI) is part of the American Rescue Plan Act of 2021 and provides a combined $10 billion to states, the District of Columbia, territories, and Tribal governments to expand access to capital for small businesses emerging from the pandemic. This is the second iteration of SSBCI – the original program was established as part of the Small Business Jobs Act of 2010 in response to the Great Recession.
SSBCI funding is deployed by jurisdictions to small businesses through loan participation programs, loan guarantee programs, collateral support programs, capital access programs and through equity/venture capital programs.
Who is SSBCI designed to support?
SSBCI is designed to help a wide range of small businesses, with a special focus on underserved small businesses and socially and economically disadvantaged individuals (SEDI). The specific criteria and programs may vary from state to state, but the overall goal is to promote economic growth and job creation by supporting small businesses, particularly those facing challenges in accessing traditional financing.
Small business owners can access SSBCI resources by contacting their state, territory, or tribal government’s economic development agency, who administer individual programs.
What role do CDFIs play in SSBCI?
With a focus on serving small business owners and communities with a history of underinvestment, Community Development Financial Institutions (CDFIs) play a key role in SSBCI.
CDFIs partner with participating jurisdictions to help facilitate the distribution of federal SSBCI funds to small businesses. In this role, CDFIs originate and service loans made through the program and provide reports to participating jurisdictions to track progress made toward goals. CDFIs may also offer technical assistance and financial education to small businesses funded with SSBCI dollars, helping entrepreneurs maximize their financial status, set goals, and learn more about the capital options available to them.
CDFIs also act as fundraisers for the SSBCI program by securing private capital to supplement the financial support provided through the SSBCI federal funding.
SSBCI provides advantages for participating CDFIs. CDFIs can sell a portion of each eligible loan into the program and use the proceeds to increase the number of small businesses they serve. Additionally, this increased liquidity position can help CDFIs mitigate the risk of loan losses. Lastly, participating CDFIs can also benefit from increased brand awareness and enhanced reputation because of their participation in the SSBCI program.
SSBCI Compliance and Reporting
If you are one of the jurisdictions that received SSBCI funding, you are required to provide quarterly and annual reports to the U.S. Department of the Treasury.
SSBCI reporting, particularly the annual reporting, requires detailed information about the businesses served through the program, including demographic and business performance data to ensure that SSBCI SEDI requirements are being met. SSBCI reporting data must be submitted through the U.S. Treasury’s online portal.
You can learn more about the SSBCI reporting process and requirements by reading our blog plost: Preparing For State Small Business Credit Initiative Reporting.
Disclaimer: the information provided on this page is meant for general informational purposes only and may not reflect the most current resources and recommendations available.