The Treasury Department has launched a $1.5 billion initiative to promote small businesses
at the state level that it hopes will prime the lending pump and send a $15 billion infusion into
the economy to help entrepreneurs expand their businesses and create new jobs.
The funding comes from the State Small Business Credit Initiative (SSBCI), a key component
of the Small Business Jobs Act that President Obama signed into law last month.
Under the SSBCI, states can apply for federal funds for programs that partner with private
lenders to extend greater credit to small businesses. States are required to demonstrate a
minimum "bang for the buck" of $10 in new private lending for every $1 in federal funding.
Washington hopes the $1.5 billion funding commitment that the federal government will make
for this program will generate $15 billion in additional private lending.
The states can use the funds to provide collateral support for small manufacturers,
guarantee small business loans or give a matching contribution to bank loans.
If a state does not have an existing small business lending program, officials can establish
one in order to access this funding. States must provide plans for utilizing their funding
allocations to Treasury for review and approval.
The amount of SSBCI funds a state is eligible to apply for is determined based upon
formulas in the Small Business Jobs Act that take into account each state's respective
unemployment rate and decline in employment relative to other states.
Topping the list of state allocations of SSBCI funding are California ($168 million),
Florida ($97 million), Michigan ($79 million) and Illinois ($78 million).
- How to Revive the American Dream:Â Interview with Former Clinton Advisor George MuÃ±oz
- SBA Lifts Lid on Small Business Loans
- Online Lending Site Greases Wheels of Credit Market