A not-so-new federal program to help small businesses just started distributing funds last week. How many? How does 10 billion dollars sound?
This is not a joke. The federal government is making $10 billion available, and every small business in the country is eligible for this money. It is not the paycheck protection program or the economic disaster loan program. Both of these Covid relief efforts have expired. It is also not a Small Business Administration loan program. It’s from the Treasury Department. The program is called the State Small Business Credit Initiative, or SSBCI, and it works like this.
The Treasury Department was authorized – through the American Rescue Plan Act 2021 – to distribute $10 billion to each of the states, the District of Columbia and tribal territories according to a formula based on local unemployment and the need for creation. jobs. As mentioned above, the money started flowing to five states last week and will continue through next year. Also, as mentioned above, the program is not new. SSBCI was established in 2010 and distributed $1.5 billion at the time. So let’s call this version 2.0.
So how does your business access these funds? You need to start googling “SSBCI” and your state, or you can go to the state resource map from the Board of Development Finance Agencies. Funds, once received by states, will then be distributed to existing and licensed organizations that fund and support local small businesses. These include Community Development Investment Funds (CDFIs), Minority Depository Institutions (MDIs), community banks, economic development groups and other non-profit organizations that work with small businesses in their region.
The funds will be used for loans, grants and equity investments. They can also be used to guarantee new debts with existing banks or to ensure their repayments. The idea is to put money into the hands of small businesses that otherwise couldn’t get financing through traditional lenders because of their financial history â or lack thereof. The program also rewards investments outside of traditional high-access areas and to startups that have struggled to receive funding. According to the Treasury, SSBCI is “designed to catalyze $10 of small business lending and investment for every $1 of SSBCI capital program funding, amplifying the effects of federal funds allocated under the program.”
Some funds are specifically for minority-owned businesses or businesses located in low-to-moderate income areas. But just about any business can apply for these funds, even nonprofits.
And that’s important, especially right now. Inflation is high, global demand is slowing, a potential recession is looming, and the Federal Reserve has already announced interest rate hikes over the next few months. Which means many small businesses across the country will have a harder time getting capital this year. In fact, a number of startups and venture-backed tech companies are already seeing this is the case. But the SSBCI program could be a lifesaver.
So, as a small business owner, what do you do? You start building relationships right now. Find out which organizations receive SSBCI money from your state and contact them. They need to get to know you and your business. The application process will take a bit of time, so you need to gather your documents â bank statements, tax returns, financial records â and start down this road. You should request funds from several places. These organizations will not come knocking at your door. But they have money to spend. Your goal is to get them to spend it on you.
The SSBCI program is not without adversaries. Some say the funding is too late and many businesses have recovered from the pandemic. Others think the money should be reallocated and used for other purposes. These views are reasonable. But for now, the money is starting to flow and it’s going to small businesses. Take advantage and start applying now, because before you know it, this last pandemic-related source of government funding will likely be gone forever.