The U.S. Department of the Treasury announced the approval of 11 additional state plans for up to $1 billion in funding under the State Small Business Credit Initiative (SSBCI). The department has approved 31 state plans worth $4.8 billion in SSBCI funding. “This is an historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally underserved communities,” said Secretary of the Treasury Janet L. Yellen. “I’m excited to see how these SSBCI funds will promote equitable economic growth across the country.”
The American Rescue Plan reauthorized and expanded SSBCI, which was originally established in 2010 and was highly successful in improving access to capital for small businesses and entrepreneurs. The new SSBCI builds on this model by providing nearly $10 billion to states, the District of Columbia, territories and Tribal governments to increase access to capital and promote entrepreneurship, especially in traditionally underserved communities as they recover from the COVID-19 pandemic. SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI capital funding, magnifying the effects of this funding and providing small business owners with the resources they need to grow and thrive.
In 2021, Americans applied to start 5.4 million new businesses, 20% more than any other year on record. Small businesses with fewer than 50 workers created 2.8 million jobs in 2021, the highest rate of small business job creation ever recorded in a single year. The Treasury intends to continue approving state plans on a rolling basis.
Iowa was one of the 11 states and was approved for up to $96.1 million. It will operate four programs, including two venture capital programs, which will be allocated $53 million. The programs are designed to invest in seed/early-stage startups raising seed through Series A investment rounds and provide low-interest loans to pre-seed, seed and early-stage startups raising equity capital from primarily angel investors but also VC (venture capital) investors. One of the goals of the programs is to help retain high-potential Iowa startups that might otherwise move to areas with greater access to VC investment. Iowa will also run a collateral support program that has been allocated $15.1 million and is focused on facilitating loans for underserved small businesses. This loan participation program has been allocated $28 million by the state and provides small manufacturers with funding for automation, robotics and specialized hardware to increase productivity. This program is particularly vital to rural-area manufacturers, which make up over half of the manufacturers in the state.