More relief for businesses has arrived as high inflation, supply chain issues, and the threat of a recession pile onto other problems posed by the pandemic.
The U.S. Treasury is dispersing the first round of funds from the reauthorized State Small Business Credit Initiative (SSBCI) to five states: Hawaii, Kansas, Maryland, Michigan and West Virginia. The SSBCI is a small business aid program that’s been around for a little more than a decade, but was replenished in March 2021 after President Joe Biden signed the $1.9 trillion American Rescue Plan Act into law.
Altogether, the five states were approved for up to approximately $639 million in relief and Treasury already started distributing nearly $200 million to the states this month, according to a report from The Wall Street Journal. The federal stimulus package allocated $10 billion to the SSBCI, though the Treasury says that the program could deliver as much as $100 billion in total lending authority. The program expects to generate $10 in private investment for each dollar in federal funding.
SSBCI funds are not distributed directly to companies but instead to lenders. State governments previously submitted their individual plans to Treasury that detailed how they’d allocate the funds to small businesses, which can be dispersed through an array of programs offering venture capital, capital access, collateral support, loan participation and loan guarantees.
Maryland Governor Larry Hogan said in a statement that the Old Line State was the first in the country to submit its SSBCI deployment plan to the Treasury, explaining why it was one of the first states to be approved. Maryland will start deploying the funds beginning this summer. The state of Michigan could see the first round of SSBCI funding in the next 30 to 60 days, according to a release celebrating the award.
The state of Hawaii, for its part, plans to set up new loan participation and credit enhancement programs and dole out funds to underserved entrepreneurs in an effort to broaden Hawaii’s economy and make it less reliant on tourism. Meanwhile, West Virginia will use its funds to increase access to venture capital (the state does not have any resident venture capital firms, according to Treasury.)
Eligible small businesses and startups–typically defined as companies with 500 or fewer workers–can seek out loans or investments as they normally would through their bank, community lender, or equity investor.
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