U.S. Treasury Department’s State Small Business Credit Program will increase access to capital for small business owners, covering more than 80% of loans
California to launch new program to create more inclusive venture capital ecosystem
SACRAMENTO – Today, Governor Gavin Newsom announced $1.1 billion in funding to support small businesses in California. The funding comes from the U.S. Treasury Department’s State Small Business Credit Initiative (SSBCI), which aims to provide an additional $18 billion in funding for California small businesses.
“California is home to the largest and most diverse small business community in the country,” Governor Newsom said. “We’re a state driven by small business innovation and entrepreneurship — that’s why we’ve invested billions to help our businesses recover from the pandemic and give more Californians the opportunity to achieve California DREAM. Thanks to this funding, underrepresented and underserved business owners will have greater access to the critical funding they need to succeed and thrive.”
California will receive $1.1 billion to help support small businesses as part of the 2021 federal U.S. Relief Program Act. The California Infrastructure and Economic Development Bank (IBank) and the California Pollution Control Financial Authority will distribute funds equally to fund the Small Business Credit Support Program – IBank will also launch a new program aimed at creating a fairer venture capital investment ecosystem.
This is the second time states have been able to apply to the federal program. The first was in 2010, when California applied for and received $168 million to operate three state credit support programs—the Small Business Loan Guarantee Program, the Mortgage Support Program, and the California Small Business Capital Access Program (CalCAP).
Small Business Loan Guarantee Program
As in 2010, IBank uses the majority of SSBCI funds for its Small Business Loan Guarantee Program, partnering with nonprofits and lenders to provide small business loan guarantees. These guarantees can repay lenders up to 80% of the outstanding small business loan if the small business cannot make payments. By securing loans, IBank gives lenders the confidence to make loans to small businesses that are struggling to get funding.
Lenders are encouraged to sign up
To quickly deploy funds and make them available to small businesses, IBank requires lenders — including community development financial institutions and minority depository institutions — to sign up to use its loan guarantee program. Certification requires only a one-page form. A list of participating lenders can be found on IBank’s participating lenders website.
venture capital plan
In addition to small business loan guarantees, IBank will use its approximately $200 million in SSBCI funding to launch a new venture capital program aimed at investing in underrepresented venture managers, underrepresented and underserved entrepreneurs and businesses Lord to create a more inclusive VC ecosystem and geographic regions that are socioeconomically disadvantaged or have access to very limited VC funding. The plan will also promote climate equity and climate justice.
“IBank is not only pleased to inject new capital into our successful Small Business Loan Guarantee Program, but we are especially pleased to launch this new venture capital program,” said Scott Wu, Executive Director of IBank. “Despite California’s dominance of the venture capital industry, many entrepreneurs still lack access to venture capital. Increased inclusion is critical to the state’s drive for equity, not only in who gets VC funding, but also in who manages VC funds .”
The first round of SSBCI was successful (2010)
During the first round of SSBCI, the State of California used its $168 million to support more than 10,000 loans that generated more than $1 billion in total financing and created or preserved more than 90,000 jobs for Californians.
“The California Pollution Control Finance Authority is pleased to partner with IBank to develop SSBCI 2.0, bringing capital to California to support small businesses,” said Shela Tobias-Daniel, Executive Director of CPCFA. The CPCFA and IBank programs complement each other and serve all aspects of the California small business community. We are excited to partner with IBank and the California Office of Small Business Advocates (CalOSBA) to reach more small businesses to serve small business owners through lenders and other small business-focused organizations such as chambers of commerce, regional small business development centers, and affinity groups . “