August 8, 2024 - The State Small Business Credit Initiative (SSBCI) is a banking, lending, and equity program that was reauthorized and expanded by President Biden’s American Rescue Plan Act. Per the United States (U.S.) Department of the Treasury, the SSBCI “is a nearly $10 billion program supporting small businesses and entrepreneurship in communities across the U.S. by providing capital and technical assistance to promote small business stability, growth, and success. SSBCI represents a transformational investment in American small businesses and is expected to catalyze up to $10 of private investment for every $1 of SSBCI Capital Program funding to increase access to capital to small businesses and entrepreneurs, including those in underserved communities.”

The SSBCI funds each state, and the state then designs their own SSBCI Capital Program criteria to support various forms of credit and or equity/venture capital initiatives which are described below. These programs should not be confused with any Small Business Administration (SBA) programs that are available.

Here are the five available programs according to the U.S. Department of the Treasury:

• Capital access programs provide portfolio insurance in the form of a loan loss reserve fund to which the lender and borrower contribute.
• Collateral support programs provide cash collateral to improve small businesses’ ability to borrow funds to grow a business.
• Loan guarantee programs support private loans that may have otherwise been inaccessible or prohibitively expensive by agreeing to reduce the lender’s exposure on a loan.
• Loan participation programs provide credit support through the purchase of a portion of a loan made by a lender or through a direct loan alongside a private lender.
• Equity/venture capital programs provide capital in the form of equity investments to underserved startups and investors.

It is important to note that depending on your home state, they may or may not have all of these programs. Each state was allocated various levels of funds, and the states are deciding how to break up those funds within each of the above programs. Additionally, there are restrictions on how the funds can be used for each type of program, so it is crucial to understand each program available in your state and to see if what you want to use the money for qualifies for a particular program.

Franchisors may want to research this for your concept’s needs as well as provide some information to your franchisees about additional funding options that are available to them. These programs could provide additional funding to franchisors and franchisees that need to open new locations and pay for capital improvements, franchise fees, and working capital expenses.

Below are some helpful links for you to read and understand more about the SSBCI program and what it offers. In some states it may be helpful to reach out to the local government organization handling the program and for other states it may be more beneficial to find out which banks are participating in the programs and reach out directly to those banks.

Helpful links:

State Small Business Credit Initiative (SSBCI) | U.S. Department of the Treasury

Capital Program Summaries | U.S. Department of the Treasury