State Small Business Credit Initiative (SSBCI)

November 16, 2021
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SSBCI Overview

The American Rescue Plan Act of 2021 (ARPA) reauthorizes the State Small Business Credit 

Initiative (SSBCI) Program. 

Provides a combined $10 billion to states, the District of Columbia, territories, and Tribal 

governments (Eligible Jurisdictions) to help address the economic fallout of the pandemic 

and lay the foundation for a strong and equitable recovery by providing direct support to 

Eligible Jurisdictions for programs that increase access to credit for small businesses. Funds 

include:

 $2.5 billion for businesses owned by socially and economically disadvantaged individuals & incentives to reach 

these businesses

 $500 million directly to Tribal governments

 $500 million for technical assistance 

Eligible Jurisdictions may contract out to third parties to administer programs.

Tribal governments can apply in a consortium together with other Tribal governments.

Overview
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SSBCI Overview

SSBCI provides Eligible Jurisdictions funding for: 

 Small business financing programs, which includes venture equity programs, loan 

participations, loan guarantees, collateral support, and capital access programs; and 

 Technical assistance in the form of legal, accounting, and financial advisory services to small 

businesses applying for support under SSBCI capital programs and other government programs 

that support small businesses. 

Eligible Jurisdictions direct the programming within broad Federal parameters 

 Businesses with ≤ 500 employees for Capital Access Programs, ≤ 750 employees for all Other 

Credit Support Programs

 Transaction ≤ $5m for Capital Access Programs

 Transaction ≤ $5m on average, but must be ≤ $20m for all Other Credit Support Programs

 Requires private capital to be meaningfully at risk in each transaction

 Reasonable expectation of 10:1 leverage overall

What is SSBCI?
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SSBCI Overview

Small businesses face barriers to securing financing:

 Lack of collateral

 Short credit history

 Small dollar requests

 Seeking scarce early-stage equity capital

 Located in underserved geographies or markets

SSBCI financing programs are a targeted way to spur private sector lending and 

investing:

 Target local needs

 Leverage the best local partners

 Designed to support job creation and other local economy benefits, underserved communities, 

and small businesses owned by socially and economically disadvantaged individuals

Why SSBCI?
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SSBCI Overview Structure of SSBCI Capital Programs

5. Small Business

3. Provider / contractor

2. Eligible Jurisdiction

1. Treasury

e.g.:

• CDFI, Community Bank

• Quasi-public entities

• Investment Fund

• Private capital at risk per 

transaction

• 10:1 leverage goal over the 

life of the program
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SSBCI Overview

Equity capital program 

supporting innovative businesses 

with high-growth potential unable 

to access bank financing

Two structures are common: 

Private Fund and Direct

Venture Capital

Eligible Jurisdiction and lender 

loan partnership with focus on 

medium- to long-term financing

Two structures are common: 

Purchased Participation and 

Companion Loan

Loan Participation

DIRECT SUPPORT

Individual loan guarantee by 

an Eligible Jurisdiction or 

entity of an Eligible 

Jurisdiction to cover a portion 

of approved loans

Flexible structuring based on 

local market knowledge 

Loan Guarantee

Cash collateral from an 

Eligible Jurisdiction or entity 

of an Eligible Jurisdiction 

deposited with lender to 

secure a portion of individual 

loans

Highly targeted for collateral 

shortfalls due to decline in 

PP&E values

Collateral Support

Cash from an Eligible 

Jurisdiction deposited into 

reserve fund at each lender to 

secure the portfolio of CAP 

loans

Suitable for smaller, working 

capital loans and lines of 

credit 

Capital Access Program 

(CAP)

INDIRECT SUPPORT

Overview of the five major types of SSBCI capital programs
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SSBCI Overview Equity capital programs were a significant part of the SSBCI 1.0 Program

SSBCI 1.0

Allocation and Leverage Ratios by Program Type

Program Type

SSBCI 

Allocation 

($millions)

SSBCI Funds 

Expended 

($millions)

Total New Financing 

Leveraged including 

Subsequent Private 

Financing 

($millions) 

Total 

Subsequent 

Private 

Financing ($ 

millions) 

Leverage 

Ratio

Capital Access $40 $28 $640 $0 22.54:1

Collateral 

Support $269 $238 $1,325 $0 5.57:1

Loan 

Guarantee $246 $182 $1,395 $0 7.66:1

Loan 

Participation $474 $419 $3,157 $270 7.53:1

Venture 

Capital $431 $327 $4,171 $2,035 12.76:1

Total $1,460 $1,195 $10,688 $2,305 8.95:1

Source SSBCI: Summary of States’ 2016 Annual Reports 
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SSBCI Overview

Private Capital at Risk for equity investors:

Equity investors have a meaningful amount of capital resources at risk if these investors 

establish terms whereby the private capital is pari passu with, or junior to, the SSBCI investment 

in cash flow rights.

 Exception for Incubation Funding Model

 Equity investors using an Incubation Funding Model or Early-Stage Investor Model have a 

meaningful amount at risk if they establish terms where private capital is pari passu with the 

SSBCI investment in cash flow rights up to the repayment of the SSBCI investment. 

 If the equity investor is a fund or similar entity, the fund or entity manager must have exposure 

to the risk of its portfolio in a manner that is consistent with industry standards.

Venture Capital: Meaningfully at Risk
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SSBCI Overview

Context:

A lending program, for example, may also provide services to borrowers. For example, a CDFI might assist 

a potential small business applicant with preparing financials and making network connections to prepare 

the business to apply for a loan. Standard practice in loan contracting is to incorporate the cost of these 

services into the interest rate or in origination fees. 

For VC, the standard practice is embedded:

Venture Capital Services Cap:

VC funds often offer a variety of services to their portfolio companies (e.g., financial 

management, IT consulting, customer outreach, etc.). As this is a form of equity support, SSBCI 

funds may be used to pay for these services up to an annual average of 1.71% of the federal 

contribution to a venture capital fund over the life of the program. 

 Treasury derived the 1.71% cap based on industry studies. 

Venture Capital: Federal funds for services provided
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SSBCI Overview

How does “cause and result in” work in application?

Guidance: “As a part of the application, states must describe how their OCSPs will in fact ‘cause

and result in’ private financing. For example, for OCSPs involving venture capital funds, states 

may specify such safeguards as limiting investments to anchor investments, prohibiting SSBCI 

participation after a fund's initial close, or restricting investments in funds for which private 

capital is likely to be catalyzed by SSBCI participation based on the funds' age, size, or 

experience.”

Venture Capital Programs: “cause and result in”