The State Small Business Credit Initiative (SSBCI) is a $10 billion federal program that provides funding via state and tribal governments for small business lending and equity investment programs. The objective is to support small businesses and entrepreneurship in communities across the United States. Described as a transformational investment, SSBCI is expected to substantially increase access to capital for small businesses and entrepreneurs.

Fund Allocation and Deployment

Each state receives a funding allocation. State allocations are released in three tranches as funds are deployed within individual programs defined by the state. Most states divide their allocation between small business lending programs and equity/venture capital programs. Across the country, roughly 60% is dedicated to lending programs and 40% to equity/venture capital programs. The state allocation is then made available to small businesses via a variety of lending and investment programs and partners. 

How are funds being deployed? The US Department of Treasury, which administers SSBCI, recently released a quarterly report summarizing uses of funds to date. The report found:

  • 54 state and territory capital programs have been approved by Treasury
  • $2.6 billion has been disbursed to states, territories, and Tribal governments 
  • $1.1 billion has been deployed (expended, obligated or transferred) by jurisdictions receiving funding

The pace of deployment varies widely across states and other jurisdictions. Large states, such as California and Florida, have deployed the most money, but other states have deployed a greater percentage of their total allocation – meaning they are moving money to businesses faster. As of December 2023, the top five states by percentage of allocated funds deployed are:

  1. Montana – 63%
  2. Maine – 57%
  3. Vermont – 56%
  4. New Hampshire – 55%
  5. West Virginia – 29%

The percentage of funds deployed drops rapidly past the top four states. Twenty-three states and territories have deployed less than 10% of allocated funds, with six under 1%. 

SSBCI Reporting and Performance

SSBCI funding is not an incentive, but we are interested in watching SSBCI performance for a couple of reasons. First, we’d like to know how SSBCI funding will affect ongoing state small business support programs. Our work has found that most state small business programs are quite small and work with relatively few businesses. How is SSBCI interacting with or leveraging other small business support efforts? What will the effect be on incentives for entrepreneurial firms? Will the scale and scope of SSBCI lead to significant change in the state small business and entrepreneur financing landscape? 

Second, SSBCI program data and evaluations should provide us with important new insights into the key elements that drive effective and responsible small business lending and investment programs. What is the right mix of lending and investment programs? Which programs work best? How are jurisdictions making sure they are reaching the entire range of small businesses in their communities, including those in historically underserved communities? What program design and management lessons can we identify and share? 

For more information about SSBCI, please see the Treasury Department SSBCI home page. SSTI also wrote a nice summary of state uses of funds that can be accessed here.  

** Ellen Harpel, Founder, Smart Incentives, is a Subject Matter Expert working with the Center for Regional Competitiveness to provide advisory and technical support services to the US Department of Treasury pertaining to the SSBCI program.