The latest round of relief from the US Treasury is on its way to small businesses as recession concerns continue to rise across the country.
The US Treasury announced plans on Friday to deploy its third round of reauthorized State Small Business Credit Initiative (SSBCI) funds to Colorado, Montana, New York and Oregon. In total, the four additional states were approved to receive up to $751 million in aid.
The SSBCI is a small business relief program that has been around since 2010, but was reinstated in March 2021 thanks to the $1.9 trillion American Bailout Act that President Joe Biden signed into law.
The $10 billion financing program aims to expand access to capital for underserved communities. SSBCI funds are not distributed directly to businesses, but instead go to lenders. Eligible small businesses and startups, generally defined as businesses with 500 workers or fewer, can seek loans or investments as they normally would through their bank, community lender or equity investor.
The news follows an earlier release of funds in May to five states: Hawaii, Kansas, Maryland, Michigan and West Virginia. The five states were approved for up to approximately $639 million in aid.
In July, the Treasury approved another $1.5 billion in funding after greenlighting nine state plans in Arizona, Connecticut, Indiana, Maine, New Hampshire, Pennsylvania, South Carolina, South Dakota and Vermont. The agency has announced more than $2.25 billion in funding approvals to date, or nearly a quarter of the $10 billion program.
Treasury estimates that the program could generate $10 in private investment for every dollar in federal funds, bringing the overall bill to states to $100 billion in total lending authority.
There is a menu of resources available to businesses through SSBCI, including venture capital, access to capital, collateral support, loan participation, and loan guarantee programs. State governments previously submitted their individual plans to the Treasury outlining how they would allocate the funds to small businesses.
Montana, for its part, says it will operate a loan-sharing program with its funds and plans to expand opportunities for rural and Native American entrepreneurs in the state. Colorado hopes to oversee three different programs focused on small businesses and specifically set aside $10 million of its SSBCI allocation to help businesses recover from the pandemic. Colorado Governor Jared Polis praised the announcement in a Friday press release, saying the funds will help support more than 11,000 jobs in the Centennial State.
Echoing that praise, US Treasury Secretary Janet Yellen: “This is a historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan that will help reduce barriers to access to capital for traditionally underserved communities, including those in rural areas. Yellen said in a statement Friday.
The roadmap for future releases and the amount of relief is unclear. Details are expected to be revealed as funding is approved.