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The American Rescue Plan Act (“ARPA”) reauthorized State Small Business Credit Initiative (“SSBCI”) and allocated $10 billion toward funding the program for state and tribal governments.  The original SSBCI was a $1.5 billion program authorized through the Small Business Jobs Act of 2010 and aimed at strengthening state programs supporting financing small businesses and entrepreneurs. Administered by the Department of Treasury, the SSBCI allowed states to use the funds for a wide variety of debt and investment programs and provided the states many options to use financial entities to provide the financing to the small businesses. About one-third of the program’s funds were used for equity investments.

Over the course of three Treasury disbursements, SSBCI shifted over $8.4 billion­­―in just under 17,000 new loans and investments―that positively impacted every state, resulting in nearly 200,000 jobs created or retained by 2017, in a wide variety of sectors. More than half of all SSBCI loans or investments went to businesses less than five years old. According to an analysis from the US Treasury Department, 80% of SSBCI funds supported firms with ten or fewer employees, and by 2015, 42% of SSBCI-supported businesses were located in low to moderate income communities.

Under ARPA, states must use the federal funds for programs (1) that leverage private lending (2) to help finance creditworthy small businesses (3) that are not receiving the loans needed to expand and create jobs. The $10 billion in funding will be allocated as follows:

  • $6.5 billion to states based on declines in employment over the past two years, with an additional $500 million to tribal governments;
    • $1.5 billion to the states supporting socially and economically disadvantaged businesses;
    • $1 billion available as incentive payments to states proving particularly effectiveness in supporting these companies; and
    • $500 million for technical assistance funding prioritizing disadvantaged businesses

What portion of the total $10 billion Texas will receive is currently unknown.  In 2010, Texas was awarded almost $47 million by the Department of the Treasury. Texas allocated the funds to credit support programs including the Texas Small Business Venture Capital fund and the Texas Loan Guarantee program. Through these credit support programs, funds were dispersed across Texas to help struggling sectors, invest in entrepreneurs, and improve resources for low-income communities. For additional questions regarding how SSBCI or the ARPA may affect your business, please contact Rosenblatt Law Firm.

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