Approval of State Small Business Credit Initiative Funding is Part of President Biden’s Investing in America Agenda
WASHINGTON — Today, the U.S. Department of the Treasury announced the approval of Alabama’s state plan for up to $97 million in funding through the American Rescue Plan Act’s State Small Business Credit Initiative (SSBCI). SSBCI provides funding to states, the District of Columbia, territories, and Tribal governments to support small business and entrepreneurship and expand access to capital.
“Expanding access to capital is key to continuing the historic small business boom that’s occurred under President Biden,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “We are helping entrepreneurs across the country unlock access and opportunity, and we’re excited to expand this work to include Alabama’s small businesses – providing collateral, supporting venture capital programs, and reaching communities in need of investment.”
Reauthorized and expanded by President Biden’s American Rescue Plan, SSBCI includes nearly $10 billion to support small businesses and entrepreneurship in communities across the United States by providing capital and technical assistance to promote small business stability, growth, and success. It provides funds to states, the District of Columbia, territories, and Tribal governments for those jurisdictions to create tailored programs that offer funding to small businesses and entrepreneurs through equity/venture capital, loan participation, loan guarantee, collateral support, and capital access programs.
Alabama, approved for up to $97.9 million, will operate five programs: a loan guarantee program, a collateral support program, a loan participation program, and two equity/venture capital programs. Alabama allocated approximately $26.9 million to the Innovate Alabama Collateral Support Program, which will use SSBCI funds to create cash collateral accounts with participating lenders to enhance loan collateral where a collateral shortfall exists. The Innovate Alabama Co-Investment Program, allocated $16 million, will make direct investments in early-stage companies, while the Innovate Alabama Fund-of-Funds Program, allocated $9 million, will provide equity capital support to small businesses by investing in multiple venture capital funds as a limited partner. The equity/venture capital programs include a focus on reaching startups traditionally overlooked by venture capitalists, including companies led by women and minority entrepreneurs and those located in Alabama’s distressed communities, as well as venture capital funds dedicated to reaching underserved businesses.
The work the Treasury Department has done through SSBCI’s implementation process to help these funds reach traditionally underserved small businesses and entrepreneurs will continue to be critical to ensuring the small business boom lifts up communities disproportionately impacted by the pandemic.
###