Last September, President Obama signed into law the Small Business Jobs Act of 2010. The act created the State Small Business Credit Initiative (SSBCI), an initiative designed to support lending to small businesses. Yesterday, Connecticut and Missouri announced that their applications to be part of the initiative were approved. This approval will provide both states with federal funding for programs to increase the lending and credit options available to small businesses.
Under SSBCI, all states are offered the opportunity to apply for federal funds for state-run programs that partner with private lenders to increase the amount of credit available to small businesses. States must show that a minimum of $10 in new private lending will result from every $1 in federal funding.
Connecticut’s plan will use its $13.3 million in SSBCI funding to support the Capital Access Program (CAP), which provides loan portfolio insurance to encourage private financial institutions to lend to creditworthy small businesses. The state expects that CAP will foster more than $133 million in additional small business lending statewide.
Missouri’s SSBCI plan dedicates $16.9 million of the funding to establish hi-tech Missouri IDEA Seed and Venture Capital Funds (IDEA Funds). The Missouri IDEA Funds support businesses in science and technology.
The funds provide financing to eligible businesses through the four stages of venture growth: (1) pre-seed capital stage financing; (2) seed capital stage financing; (3) venture capital stage financing; and (4) expansion stage debt. The state will also put $10 million of SSBCI funding into the Grow Missouri Loan Participation Fund to support business in industrial, commercial, agricultural, and recreational sectors. Grow Missouri provides loans of up to $3 million to businesses with under 500 employees to help attract new enterprises and expand existing companies. The state expects the new funding to lead to more than $269 million in new private lending statewide.