South Carolina venture capital and small business loan programs will soon be able to take advantage of more than $101 million in American Rescue Plan Act funding earmarked for the state, according to Sen. Tim Scott’s Deputy Legislative Assistant Luis Reyes.
The capital is a portion of the $10 billion in State Small Business Credit Initiative funding provided to states, the District of Columbia, U.S. territories and tribal governments when ARPA was signed into law on March 11, 2021.
The SSBCI program first commenced in 2010 and ran until 2017, during which the Council of Development Finance Agencies called it “one of the most successful federal programs to expand access-to-capital delivery mechanisms at the time.” It deployed $1.4 billion in funding to more than 16,900 small businesses. After a four- year hiatus, ARPA brought the program back to life.
According to Reyes, the revitalized version of the program, like its predecessor, will target venture capital, capital access, loan participation and loan guarantee programs, as well as collateral support initiatives run by governments, financial institutions and community or economic development organizations.
Loan participation programs allow public entities to buy an interest in a loan or to lend to small businesses alongside private entities. Loan guaran- tee programs enable public entities to use SSBCI funding to back-up lenders with at least half of a what’s owed them in case a borrower defaults, according the to the U.S. Treasury Department. Capital access programs differ from the other capital offerings by supplementing a loan loss reserve fund for both the lender and borrower with SSBCI funds.
States submitted application forms for candidate programs to the U.S. Treasury Department on Feb. 11, and the U.S. Treasury extended the application deadline to May 11 for tribal governments such as Rock Hill’s Catawba Nation.
All jurisdictions, barring tribal governments, must submit applications for technical assistance to the Treasury Department on June 30, but, as of publication, guidance for the application had not yet been posted on the U.S. Treasury website – still the best source of information for the SSBCI, according to Reyes.
“They do provide a lot of helpful resources that break this down,” he told credit union and community development representatives present at Ten at the Top’s Upstate Entrepreneur Ecosystem meeting on March 16.
According to the site, about $56 million in SSBCI funding will go towards South Carolina’s Main Capital fund, $4 million toward micro-business capital and $26 million in capital for businesses that are privately owned by socially or economically disadvantages individuals, called “SEDI businesses” by the Treasury Department. The state will have initial access to $14 million.
As of March 3, the Treasury Department began collecting demographic data from participating jurisdictions on small business owners’ race, ethnicity, sexual orientation and gender identity to measure the impact of the program on SEDI enterprises.
“The State Small Business Credit Initiative program’s design is intended to help remedy the unfortunate reality that underserved communities have historically faced greater barriers to accessing capital than others, preventing them from pursuing their business ideas and ambitions,” U.S. Treasury Deputy Secretary Wally Adeyemo said in a news release. “This new reporting will give Treasury the information we need to assess the impact of this program in communities across the country and work to provide these communities with the capital they need to realize their entrepreneurial visions.”