USING THE SSBCI PROGRAM

TO IMPROVE ACCESS TO CAPITAL

IN UNDERSERVED COMMUNITIES

October 2014
Acknowledgements 

Through	2013,	states	report	that	SSBCI	funds	supported	more	than	3,500	new	small	business	loans	or	

investments	of	$1.5	billion	in	low‐	or	moderate‐income	tracts.		These	loans	or	investments	were	42	

percent	of	the	total	number	and	37	percent	of	the	total	amount	of	SSBCI‐supported	loans	or	investments.		

While	these	data	are	encouraging,	Treasury	sought	a	deeper	understanding	of	how	states	use	SSBCI	funds	

to	expand	access	to	capital	for	underserved	communities.		

SSBCI	thanks	the	Center	for	Regional	Economic	Competitiveness	for	developing	this	report.		In	particular,	

we	thank	David	McGrady,	George	Surgeon,	Ron	Kelly,	and	Diane	Casey‐Landry	for	their	contributions.		

This	document	resulted	from	many	constructive	discussions	and	editing	sessions	of	the	working	group	

which	consisted	of:	

Co‐Chairs

• Holly	Hunt,	Georgia	Department	of	Community	Affairs		

• Herb	Kulow,	Montana	Board	of	Investments		

		

Case Study and Working Group Participants

• Cory	Phelps,	Idaho	Housing	and	Finance	Association	

• Stan	Luboff,	Illinois	Department	of	Commerce	and	Economic	Opportunity	

• Ed	Serrano,	Kansas	Department	of	Commerce	

• Imagene	Harris	and	Cory	Mohn,	Network	Kansas	

• Steve	Cohen,	Rachael	Dubin,	Empire	State	Development	Corporation	

• Jane	Swanson	and	Sean	Meehan,	Washington	Department	of	Commerce

• John	Berdes,	Craft	3	

• Michelle	O’Connor	and	Andrew	Zulauf,	West	Virginia	Jobs	Investment	Trust	Board	

• Jonathan	Hardy,	Amy	Bridan,	and	Mike	Plaizier,	Utah	Department	of	Workforce	Services,	Division	

of	Housing	and	Community	Development	

• Brook	Pace	and	Jennifer	Schrader,	Florida	Department	of	Economic	Opportunity	

• Craig	Petrasic,	Pennsylvania	Department	of	Community	and	Economic	Development	

Working Group Participants

• T.J.	Jennings,	Arizona	Commerce	Authority	

• Rachael	Mears,	Delaware	Economic	Development	Office	

• Nicole	Warren,	Iowa	Economic	Development	Authority	

• Don	Goodin,	Kentucky	Cabinet	for	Economic	Development	

• Brenda	Guess,	Louisiana	Department	of	Economic	Development	

• Mike	Flanagan,	Michigan	Economic	Development	Corporation	

• Susan	Muller,	Maryland	Department	of	Business	and	Economic	Development	

• Stew	Jobes,	Nebraska	Department	of	Economic	Development	

• Susan	Mania,	New	Jersey	Economic	Development	Authority	

• John	Brooks,	New	Mexico	Finance	Authority	

• Tom	Wall,	North	Carolina	Rural	Economic	Development	Center	

• Natalie	Burley,	Ohio	Development	Services	Agency	

• Glen	VanValkenburgh,	Ohio	Development	Services	Agency	

• Terry	Hegle,	Business	Oregon	

• Edwin	Lesley,	Business	Development	Corporation	of	South	Carolina	

• Lamont	Price,	Tennessee	Department	of	Economic	and	Community	Development	

• Carolyn	Ridpath,	Vermont	Economic	Development	Authority	
I	would	also	like	to	thank	Deputy	Director	Jeff	Stout,	who	led	this	project	for	the	SSBCI	Office.		SSBCI	also	

thanks	Terry	Valladares,	Dennis	Downer,	Dan	Cruz,	and	Katherine	Brandes,	for	their	assistance	in	

producing	this	document.	

Clifton G. Kellogg 

Director 

State Small Business Credit Initiative 

	 	
Table of Contents

Purpose of the Report 	......................................................................................................................................................................	1

Background on SSBCI in Underserved Communities	.....................................................................................................	1

Increasing Impact in Underserved Communities: Common Themes	...................................................................	3

Case Study Approach		........................................................................................................................................................................	8

Appendix: State Case Studies		.......................................................................................................................................................	9

Florida	.............................................................................................................................................................................................	10	

Georgia	............................................................................................................................................................................................	14	

Idaho	................................................................................................................................................................................................	18	

Illinois	.............................................................................................................................................................................................	21	

Kansas	.............................................................................................................................................................................................	24	

Montana	.........................................................................................................................................................................................	28	

New	York	.......................................................................................................................................................................................	31	

Pennsylvania	................................................................................................................................................................................	35	

Utah	..................................................................................................................................................................................................	38	

Washington	...................................................................................................................................................................................	41	

West	Virginia	................................................................................................................................................................................	45	
‐ 1 ‐ 

Using the SSBCI Program to Improve Access to

Capital in Underserved Communities

Purpose of the Report

As	states	implemented	the	State	Small	Business	Credit	Initiative	(SSBCI)	program,	

they	developed	a	variety	of	strategies	and	approaches	to	increase	the	program’s	impact	in	

underserved	communities.		To	learn	more	about	these	strategies	and	approaches,	the	

Department	of	the	Treasury’s	SSBCI	staff	facilitated	the	creation	of	a	working	group	

focused	on	SSBCI	in	underserved	markets.1	This	report	summarizes	the	observations	of	the	

working	group	as	to	both	common	and	unique	approaches	taken	by	state	SSBCI	programs	

in	addressing	their	underserved	markets.	It	also	includes	a	series	of	case	studies	with	

examples	of	program	features	that	have	increased	deployment	of	funds	to	those	markets.		

Background on SSBCI in Underserved Communities

As	part	of	its	SSBCI	application,	each	state	detailed	its	plan	for	expanding	access	to	

credit	to	small	businesses	in	four	areas:	(1)	in	low‐	and	moderate‐income	communities,	(2)	

in	minority	communities,	(3)	in	other	underserved	communities,	and	(4)	to	women‐	and	

minority‐owned	small	businesses.		This	requirement	was	intended	to	address	capital	

access	issues	that	often	faced	by	business	owners	from	or	in	underserved	communities.		

For	example,	a	recent	issue	brief	released	by	the	SBA	Office	of	Advocacy	documented	that:	

 Controlling	for	variables	such	as	business	credit	scores,	personal	wealth,	and	

revenues,		minority	small	business	owners,	particularly	African‐American	and	

Hispanic,	are	disproportionately	denied	credit;		

 Minority	small	business	owners	are	nearly	twice	as	likely	to	feel	discouraged	from	

applying	for	credit	when	compared	to	non‐minority	owners	and	are	denied	credit	

at	approximately	21⁄2	times	the	rate	of	non‐minority	owners;		

 Women	are	half	as	likely	as	men	to	start	or	acquire	a	small	business	with	a	

business	loan	from	a	bank;	and	

                                                            

1	The	states	that	are	the	subjects	of	the	case	studies	in	the	appendix	of	this	report	are	members	of	the	working	

group	and	provided	substantial	time	and	assistance.	Two	states’	SSBCI	programs	in	particular	–	Georgia	and	

Montana	–	provided	assistance	in	fine	tuning	a	set	of	questions	pertaining	to	SSBCI	and	underserved	

communities	and	in	developing	a	template	for	the	case	studies.	

		
‐ 2 ‐ 

 The	rate	of	home	ownership	is	substantially	lower	among	minority	business	

owners,	reducing	a	potential	source	of	collateral	or,	through	home	equity,	a	source	

of	relatively	low‐cost	capital.2

Many	states	included	rural	areas	as	underserved	communities,	with	a	plan	to	focus	on	

facilitating	widespread	geographic	distribution	of	SSBCI	capital	within	their	states.	

	 The	SSBCI application’s	reference	to	underserved	communities	gave	each	state	the	

latitude	to	identify	specific	underserved	markets	that	reflect	the	state’s	priorities.	This	

latitude	is	consistent	with	the	flexibility	of	the	SSBCI	program	in	giving	each	state	the	

opportunity	to	tailor	their	individual	programs	to	that	state’s	unique	markets	and	

conditions.	Thus,	states	took	a	variety	of	approaches	to	expand	access	to	credit.	For	

example,	some	states	built	on	existing	state	programs	that	focused	on	lending	in	minority,	

rural	or	low‐income	communities	in	their	states.	Others	focused	on	partnering	with	

Community	Development	Financial	Institutions	(CDFIs)3	or	local	or	regional	economic	

development	agencies.	Several	states	developed	marketing	strategies	that	targeted	specific	

underserved	communities.	Others	developed	finance	programs	or	incorporated	product	

features	that	would	be	particularly	compelling	to	underserved	communities,	such	as	the	

smaller	average	loan	sizes	offered	by	capital	access	programs.	

	 The	attached	case	studies	should	be	read	in	the	context	of	two	over‐arching	

observations:	

 There is no single approach that applies in all states. There	is	no	one	product	

feature,	partnership,	or	strategy	that	will	ensure	increased	access	to	capital	in	

underserved	communities.		States	define	underserved	communities	differently,	and	

what	is	effective	in	addressing	one	underserved	market	may	not	be	as	effective	in	

addressing	a	different	underserved	market.		States	also	differ	in	factors	such	as	

program	design,	demographics,	business,	banking,	capital	formation,	philanthropic	

and	small	business	environment.	Economic	and	community	development	history,	

infrastructure,	and	strategies	also	vary	from	state	to	state.		Additional	differences	

among	states	include	expertise	of	implementing	staff	members,	strengths	and	

weaknesses	of	regional	and	local	economies	and	agencies,	and	stage	of	economic	

recovery.		The	case	studies	highlight	approaches	that	have	been	successful	in	

individual	states	and	place	that	success	in	the	context	of	that	state’s	particular	SSBCI	

products	and	environment.	

                                                            

2	U.S.	Small	Business	Administration,	Office	of	Advocacy.	January	29,	2014.	Access	to	Capital	for	Women‐	and	

Minority‐owned	Businesses:	Revisiting	Key	Variables,	Issue	Brief	Number	3.	Available	at	

http://www.sba.gov/sites/default/files/Issue	percent20Brief	percent203	percent20Access	percent20to	

percent20Capital.pdf.	Hereinafter	“Issue	Brief	3.”	 3	CDFIs	are	organizations	that	have	the	mission	of	serving	economically	distressed	communities	by	providing	

credit,	capital,	and	financial	services	that	are	often	unavailable	from	conventional	financial	institutions.	
‐ 3 ‐ 

 Programs in underserved communities are more likely to increase access to

capital if the state’s overall SSBCI program is successful. Product	or	program	

features	that	make	a	state’s	SSBCI	program	more	attractive	in	underserved	

communities	are	most	effective	when	a	state’s	SSBCI	programs	and	products	are	

well‐structured	and	address	clear	capital	gaps,	are	easy	to	understand,	are	

appropriately	staffed,	have	access	(either	on	staff	or	through	consultants)	to	

experienced	lenders	or	investors,	and	are	responsive	to	the	needs	of	the	state’s	

lending	and	investing	communities.	While	the	potential	to	make	loans	that	can	help	

financial	institutions	meet	their	Community	Reinvestment	Act	obligations	may	be	

helpful	in	marketing	the	SSBCI	program,	institutions	still	will	require	those	loans	to	

meet	their	credit	and	profitability	standards.	No	one	product	or	program	feature	

will	fix	an	otherwise	poorly	designed	or	executed	product	or	program.			

Increasing Impact in Underserved Communities: Common Themes

Based	on	the	attached	case	studies,	some	notable	approaches	to	assist	states	in	

increasing	access	to	capital	in	underserved	markets	are:

 Focus marketing on organizations active in underserved communities. All	states	

interviewed	emphasized	the	importance	of	having	a	systematic	and	thorough	

marketing	outreach	program	to	organizations	that	are	active	in	supporting	small	

businesses	in	underserved	communities.	For	example,	many	states	have	African‐

American	and	Latino	chambers	of	commerce	or	similar	organizations	that	are	

advocates	for	small	businesses	in	their	communities.	The	number	and	focus	of	those	

advocacy	organizations	vary	from	state	to	state	and	locality	to	locality,	but	they	are	

relatively	easy	to	identify	and	catalogue.	While	it	can	be	difficult	and	expensive	to	

market	directly	to	small	businesses,	intermediary	groups	can	be	effective	conduits	

of	information	to	local	small	businesses.		

 An exclusive focus on underserved communities can give a state’s SSBCI

program a clear identity with borrowers and bankers.	States	can	design	and	

position	their	SSBCI	program	as	one	that	primarily	serves	small	businesses	in	

underserved	communities.	For	example,	the	Utah	loan	program’s	marketing	

materials	and	website	state	that	the	program	targets	small	businesses	located	in	

low‐	and	moderate‐income	neighborhoods	and	other	underserved	communities	as	

well	as	women‐	and	minority‐owned	businesses.		Utah	focuses	its	marketing	efforts	

on	groups	and	networks	active	in	those	communities.	This	gives	the	program	a	clear	

identity	in	the	marketplace	making	it	more	likely	to	trigger	an	association	with	

bankers	between	the	program	and	borrowers	from	underserved	communities.	Such	
‐ 4 ‐ 

an	approach,	however,	narrows	the	potential	market	and	audience	for	the	state’s	

SSBCI	program.

 Distribution and marketing networks can increase geographic dispersion.		One	

of	the	strengths	of	the	SSBCI	program	is	that	it	allows	states	to	build	public‐private	

partnerships.		Taking	advantage	of	this	opportunity,	several	states	marketed	or	

distributed	their	SSBCI	products	through	existing	networks	of	development	

agencies,	CDFIs,	technical	assistance	providers,	or	similar	organizations	active	in	

underserved	communities.	In	many	cases,	these	states	were	focused	on	making	the	

SSBCI	program	easily	accessible	throughout	the	state,	particularly	in	rural	areas.	In	

some	cases,	the	network	was	pre‐existing;	in	other	cases,	a	new	network	was	

developed	in	response	to	the	advent	of	the	SSBCI	program.	For	example,	Network	

Kansas,	which	administered	Kansas’s	SSBCI	program,	was	the	pre‐existing	hub	and	

information	broker	whose	mission	is	to	connect	entrepreneurs	and	small	business	

owners	with	more	than	500	business	development	organizations	and	educational	

institutions	in	Kansas.	Marketing	the	SSBCI	program	throughout	the	state	was	a	

natural	extension	of	Network	Kansas’	mission.	On	the	other	hand,	West	Virginia	

developed	a	new	network	of	eight	geographically	dispersed	organizations,	primarily	

local	or	regional	development	agencies,	through	which	that	state	distributed	its	

SSBCI	capital.	Pennsylvania	developed	a	similar	distribution	network	of	CDFIs	

through	a	Request	for	Qualifications	(RFQ)	process.	The	lesson	from	these	states	is	

that	formal	marketing	or	distribution	networks	can	be	useful	tools	in	deploying	

SSBCI	funds	broadly	but	these	networks	are	useful	only	to	the	extent	their	members	

are	committed	and	effective.		The	type	of	entities	that	are	effective	network	

members	varied	from	state	to	state.		For	example,	Kansas	found	certified	

development	companies	to	be	highly	effective	network	members;	other	states	did	

not.	Some	states	found	small	business	development	centers	to	be	effective	in	

reaching	minority	business	owners;	others	did	not.	Any	state	that	considers	the	use	

of	a	distribution	or	marketing	network	should	inventory	the	strengths	and	

weaknesses	of	potential	network	members	in	their	state	and	consider	financial	

incentives	to	encourage	participation	in	the	SSBCI	program.4		Distribution	and	

marketing	networks	also	require	ongoing	management	and	oversight,	with	regular	

communication	and	meetings	and,	particularly	for	distribution	networks,	

compliance	coordination.

                                                            

4	One	incentive	that	varied	among	distribution	networks	is	that	some	states	(e.g.,	Montana	and	West	Virginia)	

allocated	their	SSBCI	capital	to	the	first	network	members	that	identified	and	underwrote	loans	to	qualified	

SSBCI	borrowers,	while	other	states	(e.g.,	Pennsylvania)	allocated	capital	among	network	members	using	an	

RFQ	process.	States	using	the	former	approach	experienced	relatively	rapid	deployment,	while	the	latter	

approach	slowed	deployment	but	increased	coverage	throughout	the	state’s	underserved	communities.	
‐ 5 ‐ 

 Distribution networks can offer unique products.		In	developing	their	distribution	

networks,	some	states	included	organizations	that	offer	products	in	underserved	

markets	that	many	states	found	to	be	too	costly	to	offer	directly.	For	example,	some	

of	the	CDFIs	selected	to	participate	in	the	Pennsylvania	SSBCI	program	make	very	

small	loans	to	businesses.5		These	micro‐loans	carry	high	transaction	costs	relative	

to	their	size	and	are	difficult	to	obtain	from	for‐profit	lenders.		

 Linkages to formal technical assistance programs can reach borrowers in

underserved communities. West	Virginia,	received	funding	from	a	foundation	to	

provide	SSBCI	loan	applicants,	through	third‐party	contractors,	technical	or	

operating	assistance	to	help	businesses	apply	for	SSBCI	funds	or	to	improve	their	

company’s	performance.		Technical	assistance	is	especially	important	to	businesses	

in	underserved	communities	that	do	not	have	a	strong	small	business	support	

network	as	well	as	to	small	business	owners	who	are	not	experienced	

entrepreneurs.

 Choice of program administrator can increase program accessibility in

underserved communities.		States	could	designate	a	contracting	entity	to	

administer	one	or	more	SSBCI	programs.	Some	states	chose	to	have	at	least	one	

program	administered	by	a	CDFI	or	other	organization	with	an	established	history	

of	successfully	underwriting	loans	and	providing	capital	in	underserved	

communities.6		By	contracting	with	an	organization	already	offering	multiple

programs	in	those	communities,	the	marketing	of	the	SSBCI	program	can	piggyback	

on	the	organization’s	other	efforts	and	thus	be	more	consistent	and	sustainable	over	

time.		For	example,	the	State	of	Washington	chose	to	apportion	part	of	its	allocation	

to	a	direct	lending	program	administered	by	Craft3.	Craft3	is	a	non‐profit	CDFI	that	

was	founded	in	1995	with	the	mission	to	strengthen	economic,	ecological,	and	

family	resilience	in	Pacific	Northwest	communities.		It	has	a	history	of	working	in	

                                                            

5	The	demand	for	smaller	loans	in	underserved	communities	can	be	explained	in	part	by	the	disparity	in	

median	household	wealth.	According	to	Issue	Brief	3,	the	median	net	worth	of	African‐American	households	

in	2009	was	5%	of	the	median	net	worth	of	white	households,	and	Hispanic	households	were	6%	of	the	white	

household	median.

6	States	often	face	the	administrative	decision	of	whether	to	work	with	a	single	partner	or	network	of	

partners	in	marketing	and	deploying	SSBCI	capital.	A	network	of	partners	can	provide	broader	and	deeper	

geographic	coverage,	more	product	variety,	and	the	potential	to	work	directly	with	organizations	based	in	

underserved	communities.	On	the	other	hand,	networks	can	be	difficult	and	expensive	to	maintain,	and	

partners	may	be	of	varying	strengths	and	weaknesses.	Working	with	a	single	partner	can	be	more	cost	

effective	and	produce	more	consistent	quality	of	work,	but	may,	depending	on	the	organization,	lead	to	less	

depth	and	breadth	of	coverage.	State	should	base	their	decision	on	whether	to	work	with	a	single	partner	or	

network	on	the	strengths	and	weakness	of	their	state’s	existing	organizations,	resources,	and	development	

infrastructure.	
‐ 6 ‐ 

underserved	communities,	with	a	diverse	lending	staff	and	substantial	historical	

loan	volume	to	minority,	women,	immigrant,	veteran,	rural	enterprises	as	well	as	

businesses	in	high	poverty	areas.		The	SSBCI	program	administered	by	Craft3	

achieved	both	rapid	deployment	and	substantial	impact	in	underserved	

communities,	including	several	loans	in	rural	communities	and	to	Native	American‐

controlled	enterprises.	This	structure	also	has	the	added	benefit	of	potentially	

leveraging	SSBCI	capital	at	the	fund	(i.e.,	Craft3)	level	as	well	as	the	individual	

transaction	level.

 Some programs contractually require outputs or establish goals with respect to

underserved communities. Some	states	require	contracting	entities	to	achieve	

certain	outputs	in	underserved	communities.	For	example,	equity	investments	by	

New	York’s	SSBCI	program	are	made	through	seven	investment	funds	that	were	

competitively	selected.	The	limited	partnership	agreement	with	each	of	the	seven	

selected	funds	requires	that,	by	the	end	of	the	investment	period,	each	fund	must	

invest	at	least	12	percent	of	its	allocation	in	beneficiary	companies	that	at	the	time	

of	the	investment	are	either	located	in	low‐	or	moderate‐income	communities	or	

employ	individuals	who	reside	in	those	communities.	Instead	of	a	contractual	

requirement,	some	states	establish	clear	goals	in	their	contracts	with	administering	

entities.	For	example,	Craft3	has	a	best	efforts	obligation	with	the	State	of	

Washington	to	widely	disperse	SSBCI	funds	between	the	state’s	eastern	and	western	

regions,	with	at	least	20	percent	to	minority‐	or	women‐owned	enterprises.

 Industry focus can increase participation of minority‐	and women‐owned

businesses.			Some	states	have	increased	their	volume	of	lending	in	underserved	

communities	by	focusing	at	least	part	of	their	SSBCI	program	on	an	industry	or	

market	segment	that	has	a	relatively	high	percentage	of	rural	or	minority‐	or	

women‐owned	businesses.	For	example,	Florida	chose	to	focus	one	of	its	programs	

on	its	export	industry,	which	includes	a	relatively	high	percentage	of	Hispanic‐

owned	businesses.	One	of	New	York’s	SSBCI	programs	partially	guarantees	surety	

bonds	for	state	and	local	government	contractors,	an	industry	that	includes	

substantial	and	growing	representation	from	both	minority‐	and	women‐owned	

businesses.	An	industry‐focused	strategy,	however,	comes	with	an	important	caveat	

–	such	a	focus	means	the	number	of	potential	borrowers	will	by	definition	be	

smaller	than	if	the	SSBCI	program	focuses	on	small	business	borrowers	generally.	

An	industry‐focused	strategy	will	be	successful	only	if	it	defines	a	market	that	is	

large	enough	for	SSBCI	capital	to	be	deployed	on	a	timely	basis	and	if	the	SSBCI	

product	is	designed	to	address	specific	capital	gaps	in	that	industry.
‐ 7 ‐ 

 Product features can help reach minority and women‐owned businesses.		Some	

states	have	developed	product	or	program	features	that	potentially	increase	their	

usage	in	underserved	communities.	Several	states	emphasized	the	importance	of	

having	no	or	low	minimum	loan	amounts	in	their	SSBCI	programs,	with	minority‐	

and	women‐owned	or	rural	businesses	frequently	requesting	smaller	loan	amounts.	

Some	state	programs,	such	as	California’s	capital	access	program,	have	achieved	

substantial	volume	from	the	state’s	non‐bank	CDFI	micro‐lenders.	Other	states	

focused	on	designing	programs	that	supported	working	capital	loans,	an	attractive	

product	for	lower‐wealth	small	business	owners.	Kansas	has	lower	leveraging	

requirements	for	minority‐	and	women‐owned	businesses.	Other	states	emphasized	

the	importance	of	flexibility	in	applying	underwriting	guidelines	to	loans	in	

underserved	communities,	e.g.,	the	ability	to	waive	requirements	for	an	otherwise	

creditworthy	loan.	Finally,	other	product	features	offered	by	one	or	more	states	

include	below‐market	interest	rates	and	fees,	larger	amounts	of	subordinated	debt,	

and	lower	owner’s	equity	requirements.7

Case Study Approach

The	case	studies	in	the	Appendix	illustrate	the	various	approaches	states	have	taken	to	

increase	access	to	capital	in	underserved	communities	using	SSBCI.	Each	study	focuses	

on	the	particular	state	SSBCI	program	that	is	most	active	in	underserved	communities,		

the	means	by	which	that	program	is	delivered,	the	particular	practices	or	product	

features	that	enhance	access,	other	elements	of	success	that	the	state	has	identified	as	

being	critical	to	its	effectiveness,	and	specific	SSBCI	outputs	in	underserved	

communities	in	that	state.		Each	state	designed	its	SSBCI	program	to	take	advantage	of	

their	state’s	unique	resources,	environment,	and	opportunities.	Taken	together,	the	case	

studies	provide	a	variety	of	tools	that	a	state	can	consider	using	to	enhance	broader	

access	to	SSBCI	resources.	

                                                            

7	States	are	mixed	in	whether	they	offer	interest	rate	subsidies	as	a	substantial	incentive	for	borrowers	in	

underserved	communities.	In	the	current	low	interest	rate	environment,	a	lower	interest	rate	on	smaller	

loans	provides	only	marginal	improvement	in	cash	flow	or	in	credit	quality	through	improved	debt	service	

coverage	ratios.	Also,	because	that	subsidy	is	relatively	small,	below‐market	rates	are	not	as	significant	a	

driver	of	loan	volume	as	when	interest	rates	are	higher.	Some	states,	however,	emphasized	that	subsidized	

interest	rates	can	provide	an	important	“attention‐getter”	when	marketing	the	SSBCI	program,	particularly	in	

rural	areas.	
A‐1

APPENDIX:

State Case Studies

	 	
A‐2

Florida

Summary

The	Florida	SSBCI	program	improves	access	to	capital	by	allowing	CDFIs	to	enroll	smaller	

transactions	in	some	of	its	programs.	Florida’s	export	guarantee	program	focuses	on	a	

specific	market	sector	in	which	minority‐	and	women‐owned	businesses	are	substantially	

represented.	

Description of the Florida Program

Florida	received	a	$97.6	million	allocation.	Florida	apportioned	its	allocation	among	a	

capital	access	program,	a	venture	capital	program,	and	the	Florida	Small	Business	Loan	

Support	Program.	The	Loan	Support	Program	includes	several	different	products,	including	

loan	participations,	loan	guarantees,	direct	loans,	SBA	504	bridge	loans,	and	export	loan	

guarantees.	This	case	study	focuses	primarily	on	the	loan	participation	and	export	loan	

guarantee	programs:	

 The Florida Loan Participation Program.	The	typical	loan	participation	ranges	

between	5	percent	and	20	percent	of	the	total	required	financing,	with	

participations	of	up	to	50	percent	on	an	exception	basis.	Loan	participations	are	

targeted	for	transactions	ranging	from	$250,000	to	$5,000,000,	and	the	maximum	

loan	term	is	five	years.	Interest	rates	and	fees	are	negotiable.	The	participation	can	

be	subordinated.		

 The Florida Export Support Program.	This	program	typically	guarantees	lines	of	

credit	that	are	financing	one	or	more	foreign	purchase	orders	from	a	Florida	

company.		Guarantees	are	made	up	to	$500,000,	with	larger	transactions	permitted	

in	exceptional	circumstances.	The	maximum	term	permitted	is	12	months,	and	fees	

are	negotiable.	

Program Delivery

The	Florida	Department	of	Economic	Opportunity	(DEO)	is	the	state’s	lead	agency	for	the	

SSBCI	program.		Enterprise	Florida,	Inc.	(EFI)	administers	the	venture	capital,	loan	

participation,	loan	guarantee,	and	direct	loan	programs.		The	Florida	Export	Finance	

Corporation	(FEFC)	administers	the	export	guarantee	program.		

EFI	is	a	not‐for‐profit	partnership	between	Florida’s	businesses	and	state	government	and	

is	the	principal	economic	development	organization	for	the	State	of	Florida.	EFI’s	mission	is	

to	diversify	Florida’s	economy	and	create	better‐paying	jobs	for	its	citizens	by	supporting,	
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attracting	and	helping	to	create	businesses	in	innovative,	high‐growth	industries.	EFI’s	

board	of	directors	is	chaired	by	Florida's	governor	and	includes	top	business,	economic	

development	and	government	leaders	from	throughout	the	state.		EFI	originates	and	

underwrites	the	loan	participation	program,	primarily	based	on	a	review	of	the	lead	

financial	institution’s	underwriting	analysis.		

DEO	and	EFI	market	Florida’s	SSBCI	programs	through	an	established	network	of	economic	

partner	organizations.	Network	participants	that	were	particularly	effective	in	reaching	

underserved	communities	and	minority‐and	women‐owned	businesses	include	the	state’s	

system	of	Small	Business	Development	Centers,	the	Hispanic	Business	Initiative	Fund,	the	

Black	Business	Investment	Fund,	the	state’s	Black	Business	Investment	Corporations,	

community	development	corporations,	the African‐American	Chamber	of	Commerce,	the	

Rural	Economic	Development	Forum,		the	National	Association	Women	Business	Owners,	

and	the	Urban	League.	DEO	hired	four	consultants	to	act	as	regional	marketing	

representatives	for	the	state’s	SSBCI	program,	with	a	charge	to	focus	on	underserved	

communities.		SSBCI	information	is	disseminated	through	roundtables,	one‐on‐one	

meetings,	presentations,	webinars,	a	web	presence,	and	a	quarterly	newsletter.		

FEFC	is	a	not‐for‐profit	corporation	with	a	mandate	to	expand	employment	and	income	

opportunities	by	supporting	the	export	of	goods	and	services	from	the	state.		FERC	has	

been	offering	an	export	guarantee	product	since	1994.	FEFC’s	board	of	directors	includes	

the	President	of	EFI,	the	Florida	Secretary	of	State,	the	Florida	Chief	Financial	Officer,	a	

senior	official	of	the	U.	S.	Department	of	Commerce,	and	representatives	of	foreign	and	

local	banks.		The	SSBCI	export	guarantee	program	commenced	March	2014.	

Aspects that Improve Capital Access in Underserved Communities

The	Florida	SSBCI	program	has	at	least	two	notable	features	that	improve	access	to	capital	

in	underserved	communities:	

 Allows Small Loans to Participate in the Program.		Florida’s	loan	guarantee	and	

participation	programs	have	a	stated	$250,000	minimum.		EFI,	however,	has	made	

exceptions	for	CDFIs	that	want	to	participate	in	the	loan	participation	and	loan	

guarantee	programs,	particularly	for	loans	in	underserved	communities.			This	

smaller	loan	size	fits	the	needs	of	many	of	the	state’s	minority‐owned	businesses.	

 Targets a Specific Sector in which Minority‐	and Women‐Owned Businesses are

Substantially Represented. Florida	recently	modified	its	export	guarantee	program	

to	allow	a	90	percent	guarantee	rate,	comparable	to	other	government	programs.	
A‐4

The	program	is	positioned	to	be	a	bridge	product	for	small	and	start‐up	companies	

that	can	potentially	lead	to	loans	made	or	backed	by	the	Small	Business	

Administrations	(SBA)	or	Export‐Import	Bank	or	traditional	bank	loans.	Based	on	

data	FEFC	has	gathered	from	previous	applications	for	its	export	guarantee	

programs,	much	of	the	demand	for	small	export	guarantees	comes	from	minority‐

owned	businesses.	Minority‐owned	businesses	also	represent	a	significant	

percentage	of	the	Florida	businesses	participating	in	the	export	market.	

Outputs

Data	from	the	Florida	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

•	 As	of	December	31,	2013,	the	Florida	SSBCI	programs	have	supported	61	loans	or	

investments	totaling	$153.1	million.	

•	 As	of	the	same	date,	approximately	34	percent	of	the	program’s	loans	and	

investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).	

•	 As	of	the	same	date,	14	of	Florida’s	55	transactions,	or	over	25	percent	were	made	

to	women‐	or	minority‐owned	businesses.	

•	 Using	the	flexibility	to	make	small	loans,	two	of	Florida’s	CDFIs	have	submitted	nine	

applications	to	EFI	for	the	loan	participation	program.		These	CDFIs	focus	on	lending	

to	African‐American	owned	businesses.		Of	those	nine	applications,	four	had	been	

approved	as	of	December	31,	2013.		These	loans	were	either	lines	of	credit	to	

finance	accounts	receivable	or	working	capital	associated	with	construction	

contracts.	

•	 In	developing	a	modified	export	guarantee	program	that	would	provide	up	to	a	90	

percent	guarantee,	Florida	reviewed	eighteen	businesses	that	were	eligible	to	

participate	in	the	program	and	would	qualify	for	SSBCI	financing.		Of	those	eighteen	

businesses,	33	percent	were	Hispanic‐owned	and	33	percent	were	women‐owned.	

This	validated	Florida’s	assumption	that	the	revised	export	guarantee	program	will	

increase	its	volume	of	lending	to	minority‐	and	women‐owned	businesses.

	 	
A‐5

Georgia

Summary

The	Georgia	SSBCI	program	improves	access	to	capital	in	underserved	communities	

through	a	network	of	experienced	CDFI	lenders.	

Description of the Georgia Program

Georgia	received	a	$47.8	million	allocation.	Georgia	apportioned	its	allocation	among	

CDFIs,	a	loan	participation	program,	a	loan	guarantee	program,	and	a	capital	access	

program.	This	case	study	focuses	primarily	on	the	funding	for	CDFIs:	

 The Georgia Funding for CDFIs Program.	The	Georgia	Department	of	Community	

Affairs	(DCA)	entered	into	a	performance‐based	contract	(in	the	form	of	a	Program	

Participation	Agreement)	with	CDFIs	in	the	state.	Those	CDFIs	market	the	SSBCI	

program,	recruit	potential	bank	participants	and	identify	potential	borrowers.	Non‐

profit	CDFIs	may	participate	as	direct	lenders,	with	the	State	advancing	the	money	

to	the	CDFI,	which	then	makes	the	loan	directly	to	the	small	business.	Repayments	

of	loans	are	retained	by	the	CDFI	and	revolved	into	new	SSBCI‐eligible	projects	in	

their	communities.	For‐profit	CDFIs	may	participate	as	loan	originator	or	servicers,	

with	DCA	making	the	SSBCI	loan	directly	to	a	small	business,	repayments	being	

remitted	to	the	State	and	revolved	into	new	SSBCI‐eligible	projects,	and	the	CDFI	

receiving	a	servicing	fee.	Loans	can	be	for	working	capital,	equipment	and	

machinery,	real	estate,	and	other	eligible	activities	under	Treasury	guidelines.	The	

CDFI’s	loan	may	be	subordinated.	The	CDFI’s	interest	rate	will	be	slightly	lower	

than	a	bank	rate	for	a	similar	product.	

Program Delivery

The	DCA	is	Georgia’s	designated	lead	agency	for	the	SSBCI	program.	The	Georgia	Housing	

and	Finance	Authority	(GHFA)	is	the	contracting	entity	that	administers	the	program.	GHFA	

is	part	of	DCA,	and	all	of	its	operations	are	performed	by	DCA	personnel.		

At	the	time	Georgia’s	SSBCI	application	was	submitted,	there	were	more	than	twenty	CDFIs	

in	Georgia.	CDFIs	were	chosen	as	a	primary	conduit	for	SSBCI	capital	due	to	their	history	

and	experience	in	mission‐based	lending	as	well	as	their	location	in,	and	service	to,	

Georgia’s	underserved	communities.	DCA	and	GHFA	collaborated	closely	with	the	state’s	

CDFIs	to	develop	an	SSBCI	credit	support	program	that	would	increase	access	to	capital	for	

Georgia’s	underserved	markets.	DCA	also	reached	out	to	many	players	in	the	small	

business	and	lending	communities,	with	two	of	the	most	helpful	being	the	Georgia	
A‐6

Department	of	Banking	and	Finance	and	the	Georgia	Bankers	Association.	The	Georgia	

Department	of	Banking	and	Finance	appeared	with	DCA	at	two	DCA‐sponsored	SSBCI	

seminars,	enhancing	the	credibility	of	the	Georgia	SSBCI	program,	and	increasing	the	

comfort	level	for	banks	and	other	private	lenders.		

Aspects that Improve Capital Access in Underserved Communities

The	Georgia	program	has	at	least	two	notable	features	that	improve	access	to	SSBCI	capital	

in	underserved	communities:	

 The Program Provides Strong Incentives for CDFIs to Deliver SSBCI Capital to

Underserved Communities. A	delegated	lending	model	allows	CDFIs	and	private	

lenders	to	make	key	decisions	in	marketing,	underwriting,	and	processing	the	loans,	

focusing	on	their	existing	clients	and	local	businesses.	The	program	also	gives	non‐

profit	CDFIs	the	ability	to	retain	SSBCI	loan	payments	and	revolve	them	into	future	

loan	projects	in	their	communities.	CDFIs	can	also	earn	and	retain	the	interest	and	

fees	on	loans	to	cover	SSBCI	administrative	expenses.	

 CDFIs Provide Full Geographic Coverage. Through	six	participating	CDFIs,	the	

state’s	SSBCI	program	is	able	to	cover	the	entire	State	of	Georgia,	leading	to	

geographic	dispersion	of	loans.	

Other Elements of Success

In	addition	to	the	program	design	and	delivery	system	described	above,	other	factors	to	

which	Georgia	attributes	its	success	in	serving	underserved	communities	include:	

 Delivery through Experienced Partners. DCA	has	extensive	experience	in	

administering	multiple	loan	and	small	business	incentive	programs,	an	active	credit	

review	team,	and	a	staff	with	experience	in	both	private	sector	lending	and	public	

sector	financial	monitoring.		Georgia	CDFIs	also	already	had	substantial	

infrastructure	in	place,	including	history	and	experience	in	providing	technical	

assistance	and	financing	to	woman‐	and	minority‐owned	businesses	and	small	

businesses	in	low‐income	and	other	underserved	communities.	

 Implementation of an Expansive Marketing Program. DCA	created	unique	

branding	and	a	logo	for	the	Georgia	SSBCI	program,	separate	from,	but	

complementary	to,	the	DCA	branding	and	logo.	DCA	also	developed	a	dedicated	

website	offering	program	details,	lender	application	packages,	related	links	and	

news	articles,	and	announcements	for	upcoming	Georgia	SSBCI	learning	

opportunities.	DCA	sponsored	two	SSBCI	training	sessions	in	2012,	one	in	north	
A‐7

Georgia	and	the	other	in	south	Georgia.		Because	the	DCA‐CDFI	partnership	created	

an	extensive	marketing	network,	there	have	been	frequent	SSBCI	presentations	at	

local	economic	development	events	(chamber	meetings,	bank‐sponsored	lunch‐and‐

learn	series,	etc.)	throughout	the	state	as	well	as	one‐on‐one	meetings	with	

interested	lenders.	

Outputs

Data	from	the	Georgia	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

 As	of	December	31,	2013,	the	Georgia	SSBCI	program	had	supported	155	

transactions	totaling	$88.6	million.	

 As	of	the	same	date,	approximately	46	percent	of	the	program’s	loans,	guarantees	

and	investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	

communities	within	the	state	(LMI	being	defined	as	individuals	and	geographies	

having	a	median	income	less	than	80	percent	of	the	area	median	income).

 DCA	collects	and	analyzes	data	on	borrowers	to	measure	loan	activity	to	woman‐	

and	minority‐owned	businesses,	low‐to‐moderate	income	business	owners,	

businesses	in	low‐to‐moderate	income	areas,	and	businesses	that	are	creating	jobs	

for	low‐to‐moderate	income	persons.	

 For	the	year	ending	December	2013,	the	Georgia	Funding	for	CDFIs	program	had	

provided	42	loans	totaling	$16	million	in	SSBCI	funds	to	underserved	businesses	

and	communities.		Cumulatively,	the	CDFIs	generated	59	loans	through	the	SSBCI	

program	totaling	$19.1	million,	leveraging	$79.6	million	in	private	capital.

 SSBCI	loans	have	been	made	to	small	businesses	in	20	of	the	most	economically	

challenged	counties	in	Georgia	based	on	unemployment	and	poverty	rate.	

	 	
A‐8

Idaho

Summary

The	Idaho	SSBCI	program	improves	access	to	capital	in	underserved	communities	by	

offering	a	simple	product	with	no	minimum	loan	size.		The	product	is	marketed	through	a	

bank	network	that	has	a	strong	presence	in	rural	areas.	

Description of the Idaho Program

Idaho	received	a	$13.2	million	allocation.	Idaho	used	its	allocation	for	one	program:	

 The Idaho Collateral Support Program (CSP).	The	CSP	pledges	cash	collateral	

accounts	with	participating	lending	institutions	to	enhance	loan	collateral	for	

qualified	small	business	borrowers	who	would	not	otherwise	be	able	to	obtain	

financing	on	acceptable	terms	and	conditions.	The	CSP	targets	a	variety	of	small	

business	loan	types	and	maturities,	including	operating	loans,	credit	lines,	bridge	

loans,	construction	loans,	and	mid‐	and	longer‐term	loans.	Collateral	deposits	are	

established	on	an	individual	loan	basis	and	are	available	to	cover	loan	losses	in	the	

event	of	default	by	the	borrower.		Upon	loan	maturity,	deposits	are	returned	to	the	

CSP	for	recycling	to	other	qualified	small	business	borrowers.	Initially,	no	fees	were	

charged	to	provide	the	collateral	support;	the	CSP	subsequently	implemented	a	

small	fee	when	supporting	longer‐term	loans.		The	mission	of	the	program	is	to	

expand	economic	opportunities	in	the	state	and	to	create	and	retain	jobs	in	the	

State	of	Idaho.		

Program Delivery

The	Idaho	Department	of	Commerce	is	the	state’s	designated	lead	agency	for	the	SSBCI	

program.		The	Idaho	Housing	and	Finance	Association	(IHFA)	is	the	contracting	entity	that	

administers	the	CSP.	

Although	IHFA	is	a	quasi‐state	agency,	it	is	a	self‐supporting	corporation	that	must	

generate	revenue	sufficient	to	cover	the	cost	of	its	operations.	The	CSP	is	a	new	program	

for	IHFA,	but	the	organization	was	able	to	develop	the	CSP	using	its	experience	financing	

housing	projects	and	its	relationships	with	lenders.	Because	IHFA	did	not	have	substantial	

experience	implementing	small	business	financing	programs,	it	hired	an	experienced	

banker	to	oversee	and	to	implement	the	CSP.	

The	CSP	was	initially	designed	in	consultation	with	Idaho’s	SSBCI	Advisory	Council,	

composed	of	key	economic	development	players	in	the	state,	including	the	president	of	

Idaho’s	bankers	association,	the	director	of	the	state’s	department	of	finance,	and	
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representatives	of	financial	institutions	(primarily	banks).	From	the	outset,	IHFA	planned	

to	hire	only	one	person	to	manage	the	program,	and	thus	it	was	imperative	that	the	

program	be	streamlined	and	not	require	extensive	staffing.	Participating	lenders	are	

responsible	for	their	own	credit	underwriting	decisions	and	originating	loans.	IHFA’s	

responsibility	is	ensuring	compliance	with	CSP	requirements,	establishing	and	managing	

collateral	support	accounts,	and	reporting	to	Treasury.		

Aspects that Improve Capital Access in Underserved Communities

The	Idaho	program	has	at	least	two	unique	features	that	improve	access	to	SSBCI	capital	in	

underserved	communities:	

 No Minimum Loan Size Increases Relevance to Rural Markets. Because	the	

program	has	no	minimum	loan	size,	it	can	support	a	broader	range	of	small	business	

borrowers	in	Idaho’s	lower‐cost	rural	areas,	where	small	loans	are	a	larger	

percentage	of	overall	business	loan	demand.	The	CSP	has	provided	collateral	

support	for	several	very	small	loans	(e.g.,	$7,500).		

 Statewide Marketing Focus Improves Geographic Coverage.	The	CSP’s	marketing	

focus	from	inception	has	been	to	ensure	widespread	coverage	throughout	the	state,	

particularly	in	rural	areas.	The	Idaho	Bankers	Association	hosted	the	program	roll‐

out	meeting,	with	all	but	three	member	banks	participating.	The	Association’s	

president	personally	called	each	member	bank	to	encourage	participation.	The	CSP’s	

staff	person	traveled	to	all	areas	of	the	state	to	meet	with	banks	at	both	the	senior	

management	and	loan	officer	levels,	focusing	on	getting	the	chief	decision‐maker	to	

sign	off	on	the	program.	After	initial	meetings,	the	CSP	focused	its	marketing	efforts	

on	approximately	twelve	banks	that	have	been	the	primary	drivers	of	program	

volume.	Active	users	of	the	program	have	primarily	been	community	banks,	which	

have	also	been	the	most	effective	at	reaching	rural	areas	of	the	state.		

Other Elements of Success

In	addition	to	having	no	minimum	loan	size	and	the	marketing	focus	described	above,	

another	factor	to	which	Idaho	attributes	its	success	in	serving	underserved	communities	is:	

 Simplicity. Idaho	believes	that	the	key	to	its	success	in	all	areas,	including	

underserved	communities,	is	keeping	its	product	and	procedures	simple	and	easy	

for	bankers	to	understand.	The	program	states	that	it	will	provide	an	answer	to	an	

application	within	three	business	days	of	receiving	all	information	requested.	Idaho	

does	not	re‐underwrite	the	transaction.	IHFA	reviews	the	applications	to	determine	

if:	(1)	it	is	an	eligible	business	loan,	(2)	it	is	an	eligible	small	business,	and	(3)	the	
A‐10

amount	of	collateral	support	requested	is	reasonable.	At	closing,	the	financial	

institution	provides	a	certification	document	and	deposit	account	information.	Post‐

closing,	the	financial	institution	provides	a	loan	status	report,	and	IHFA	must	be	

informed	when	any	borrower	is	sixty	days	or	more	delinquent.	

Outputs

Data	from	the	Idaho	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

 As	of	December	31,	2013,	the	Idaho	SSBCI	program	had	supported	142	loans	

totaling	$94.4	million.	

 As	of	the	same	date,	approximately	23	percent	of	the	program’s	loans	(by	dollar)	

have	been	in	low‐	and	moderate‐income	(LMI)	communities	within	the	state	(LMI	

being	defined	as	individuals	and	geographies	having	a	median	income	less	than	80	

percent	of	the	area	median	income).

 IHFA	reports	that,	as	of	December	31,	2013,	25	percent	of	its	collateral	deposit	

accounts	have	been	in	the	most	rural	areas	of	the	state	(those	with	populations	of	

10,000	or	less).

	 	
A‐11

Illinois

Summary

The	Illinois	SSBCI	program	has	capitalized	on	prior	relationships	with	community	and	

regional	banks	as	well	as	community‐based	support	organizations	to	improve	access	to	

capital	and	provide	credit	to	underserved	communities	throughout	the	state.	

Description of the Illinois Program

The	Illinois	Department	of	Commerce	and	Economic	Opportunity	(DCEO)	received	a	$78.4	

million	allocation.	DCEO	apportioned	its	allocation	primarily	to	two	primary	lending	

programs:	

 Loan Participation Program. This	program	is	designed	to	enable	small	businesses	

to	obtain	medium	to	long‐term	financing	in	the	form	of	term	loans,	to	help	them	

grow	and	expand	their	businesses.	DCEO	participation	is	subordinated	to	the	lender	

and	has	a	below	market	interest	rate.		DCEO	has	segmented	its	Loan	Participation	

Program	into	a	series	of	sub‐programs	to	appeal	to	different	lenders	and	borrowers.	

 Collateral Support Program. This	program	is	designed	to	supplement	loan	

collateral	of	small	businesses	and	entrepreneurs	to	enhance	the	equity	and	loan	

collateral	levels	of	these	potential	borrowers.	The	program	supplies	pledged	

collateral	accounts	to	participating	lending	institutions.

Program Delivery

The	Illinois	Department	of	Commerce	and	Economic	Opportunity	(DCEO)	is	the	state’s	

designated	lead	agency	for	the	SSBCI	program.	Advantage	Illinois	is	a	program	run	by	

DCEO	and	designed	to	deploy	SSBCI	funds.	

In	its	legacy	programs,	it	was	common	for	Advantage	Illinois	to	use	CDFIs	as	delivery	

channels,	and	they	have	continued	to	be	valuable	partners	in	reaching	the	underserved	

market.	The	program	was	marketed	using	a	mix	of	directly	calling	on	financial	institutions	

and	attending	meetings	arranged	by	community‐based	support	organizations,	chambers	of	

commerce,	etc.	Advantage	Illinois	managers	have	found	that	meeting	with	partners	face‐to‐

face	where	they	are	located	continues	have	been	the	best	way	to	promote	SSBCI	programs.	

At	present,	the	delivery	channel	for	SSBCI	funds	is	primarily	through	financial	institutions,	

in	particular	community	and	small	regional	banks.	DCEO	has	also	enjoyed	a	strong	

relationship	with	Chicago	Community	Loan	Fund	(CCLF)	and	Rockford	Local	Development	

Corporation	(RLDC),	both	of	which	are	CDFIs	(see	more	below).	
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Aspects that Improve Capital Access in Underserved Communities

The	Illinois	program	has	two	notable	features	that	improve	access	to	SSBCI	capital	in	

underserved	communities:		

 Outreach Targets Underserved Groups. Advantage	Illinois	defines	the	

underserved	as	anyone	who	is	an	ethnic	minority	(i.e.,	not	Northern	European),	

women,	disabled	(loss	of	one	major	bodily	capability	or	mental	disability),	or	a	

veteran	(anyone	discharged	(other	than	dishonorably)	from	the	U.S.	military).	

Presentations	are	made	throughout	the	state,	focusing	on	African‐American,	Latino,	

and	female	economic	development	organizations	like	Woman’s	Business	

Development	Center.		The	hiring	of	a	Spanish‐speaking	staffer	and	the	translation	of	

pamphlets	into	Spanish	is	helping	in	outreach	to	the	Hispanic	community.	

 Importance of Effective Partners.		Advantage	Illinois	has	a	strong	relationship	with	

Northern	Illinois	Community	Development	Corporation	(NICDC)	and	RLDC,	which	

are	deeply	linked	to	the	local	minority	communities	and	have	strong	relationships	

with	local	banks.	When	NICDC	and	RLDC	learn	about	transactions	that	banks	appear	

hesitant	to	support,	they	often	pro‐actively	approach	the	banks	to	try	to	structure	

the	deals	in	ways	that	makes	the	banks	feel	more	comfortable	(such	as	taking	a	

subordinate	position	on	collateral).	CCLF	and	Green	Choice	Bank	are	becoming	more	

active	in	developing	such	partnerships	in	Chicago	and	have	been	increasingly	good	

referral	partners	for	Advantage	Illinois.		

Other Elements of Success

In	addition	to	the	program	design	and	delivery	channels	described	above,	other	factors	to	

which	Advantage	Illinois	management	attributes	their	success	in	serving	underserved	

communities	include:	

 Flexibility in Complicated Transactions. Advantage	Illinois	believes	that	it	is	

important	to	not	give	up	easily	on	good	deals.		The	transactions	done	through	the	

program	are	often	complicated	in	financing	structure	and	time‐consuming	to	close.		

 Political Support. Illinois	has	been	consistent	in	its	support	of	underserved	

communities,	providing	the	political	will	for	the	program	to	take	on	complex	

transactions.		Political	leadership	in	the	state	has	publicly	provided	support	and	

highlighted	program	successes.		For	example,	Governor	Quinn	referenced	the	

success	of	Urban	Juncture	–	a	complex	transaction	in	the	heart	of	Chicago’s	

Bronzeville	neighborhood	–	in	his	2013	State	of	the	State	address.	This	sort	of	
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acknowledgement	raises	the	visibility	of	the	program	and	demonstrates	the	

commitment	of	the	state	to	the	program’s	success.			

Outputs

Data	from	the	Illinois	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

 As	of	December	31,	2013,	the	Illinois	SSBCI	program	had	supported	132	loans	or	

investments	totaling	$273.3	million.		

 As	of	the	same	date,	approximately	29	percent	of	the	program’s	loans	and	

investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).

 DCEO	reports	that,	as	of	December	31,	2013,	22.6	percent	(by	number)	and	21.9	

percent	(by	dollar)	of	its	SSBCI	loans	have	been	to	a	minority‐,	women‐,	veteran‐	or	

disabled‐owned	business.

	 	
A‐14

Kansas

Summary

The	Kansas	SSBCI	program	improves	access	to	capital	in	underserved	communities	by	

focusing	primarily	on	working	capital	loans	and	developing	a	strong	network	of	

experienced,	geographically	dispersed	lending	partners.	

Description of the Kansas Program

Kansas	received	a	$13.2	million	allocation.	Kansas	apportioned	its	allocation	between	a	

venture	capital	fund	and	a	loan	program.	This	case	study	focuses	primarily	on	the	loan	

program:	

 The Kansas Capital Multiplier Loan Fund.	The	Loan	Fund	makes	a	direct	loan	to	a	

small	business	in	an	amount	of	up	to	9	percent	of	matching	private	capital.	

Matching	private	capital	can	include	loans	from	financial	institutions,	certified	

development	companies	and	other	private	lenders	as	well	as	equity	invested	by	the	

entrepreneur	or	angel	investors.		A	common	transaction	is	one	in	which	the	Loan	

Fund	makes	a	working	capital	loan	in	conjunction	with	bank	financing	for	new	

equipment	or	facilities.	The	Loan	Fund’s	minimum	loan	is	only	$25,000,	and	the	

maximum	is	$500,000;	interest	rates	are	between	3	percent	and	5	percent,	

depending	on	loan	term.		The	purpose	of	this	program	is	to	help	build	an	

entrepreneurial	environment	in	the	state	by	cultivating	resources	to	start	and	grow	

small	businesses.	

Program Delivery

The	Kansas	Department	of	Commerce	is	the	state’s	designated	lead	agency	for	the	SSBCI	

program.	The	Kansas	Center	for	Entrepreneurship	(doing	business	as	NetWork	Kansas)	is	

the	contracting	entity	that	administers	the	Loan	Fund	and	Venture	Fund.	

NetWork	Kansas	is	a	501(c)(3)	non‐profit	organization	established	to	further	

entrepreneurship	and	small	business	growth.	With	a	network	of	more	than	500	

participants	(described	below),	NetWork	Kansas	is	designed	to	provide	a	central	portal	

that	connects	entrepreneurs	and	small	business	owners	with	the	appropriate	business	

development	organizations	and	educational	institutions	serving	that	market.		

Network	Kansas	markets	its	SSBCI	programs	through	its	participating	organizations	

statewide.	Loans	are	underwritten,	closed,	and	serviced	under	contract	by	one	of	the	state’s	
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Certified	Development	Companies	(CDCs)8	serving	the	area	in	which	the	borrower	is	

located.	Loans	and	investments	are	also	approved	by	a	NetWork	Kansas	review	board.	

Aspects that Improve Capital Access in Underserved Communities

The	Kansas	program	has	at	least	three	unique	features	that	improve	access	to	SSBCI	capital	

in	underserved	communities:	

 Breadth and Depth of Delivery System Improves Geographic Coverage. With	

more	than	500	partners	statewide,	NetWork	Kansas	used	its	pre‐existing	structure	

to	develop	a	marketing	network	for	the	SSBCI	program	that	reaches	all	corners	and	

communities	of	the	state.	Partners	in	the	network	include	the	Kansas	Department	of	

Commerce,	CDCs,	University	Centers	of	Excellence,	state	entrepreneurial	centers,	

the	Kansas	Bioscience	Authority	(KBA),	Main	Street	Kansas	organizations,	chambers	

of	commerce,	SBA,	USDA,	economic	development	agencies,	and	other	non‐profit	

organizations	charged	with	assisting	for‐profit	businesses	in	Kansas.	Similarly,	

NetWork	Kansas’	use	of	the	state’s	CDC	network	to	underwrite,	service	and	close	

loans	gives	the	SSBCI	program	a	local	presence	throughout	the	state.	NetWork	

Kansas	used	a	number	of	strategies	to	market	to	and	through	its	partners,	including	

brochures,	electronic	communication,	press	releases,	and	lender	roundtables.	

Particularly	active	partners	receive	more	in‐depth	communications,	including	FAQs,	

sample	success	stories,	and	statistical	summaries	of	program	outputs.		

 Product Design Supports Working Capital Loans. The	design	of	the	Kansas	SSBCI	

loan	product	is	such	that	it	is	often	used	to	finance	working	capital	for	small	

businesses,	typically	a	higher‐risk	loan.	Yet,	working	capital	loans	are	a	vital	part	of	

the	financing	needed	by	growing	small	businesses,	and	are	often	particularly	

difficult	to	obtain	by	a	low‐wealth	business	owner	who	lacks	the	resources	needed	

to	capitalize	fully	their	business.	The	higher	risk	associated	with	that	working	

capital	loan,	however,	is	somewhat	mitigated	by	the	substantial	matching	leverage	

required	by	NetWork	Kansas	from	other	private	capital	sources.	This	structure	

means	that	NetWork	Kansas	is	making	its	higher‐risk	loan	to	a	business	that	is	also	

being	fully	underwritten	by	traditional	credit	or	other	capital	providers,	such	as	a	

bank	that	is	financing	new	equipment	or	real	estate	for	the	business	as	part	of	the	

same	transaction.		

                                                            

8 Certified development companies are non‐profit corporations certified and regulated by the SBA that work with

participating lenders to provide financing to small businesses. CDCs are most commonly associated with their

involvement with the SBA’s 504 program, but many work with other loan programs as well, including SSBCI. Kansas

has ten CDCs that work in the state.
A‐16

 Product Design Targets Specific Underserved Markets. NetWork	Kansas	has	

implemented	some	specific	incentives	in	its	SSBCI	program	that	benefit	

underserved	communities.	Under	its	Minority	and	Women	Business	Multiplier	

program,	the	state’s	SSBCI	program	will	provide	up	to	20	percent	of	private	capital	

in	a	deal.	To	be	eligible	for	the	incentive,	the	business	must	be	certified	(or	at	least	

eligible	to	be	certified)	by	the	Kansas	Department	of	Commerce	as	a	Disadvantaged	

Business	Enterprise,	a	Minority	Business	Enterprise	or	a	Women	Business	

Enterprise.	This	is	a	new	incentive,	and	NetWork	Kansas	made	its	first	award	in	

January	2014	through	this	targeted	program.	

Other Elements of Success

In	addition	to	the	program	design	and	delivery	system	described	above,	other	factors	to	

which	Kansas	attributes	its	success	in	serving	underserved	communities	include:	

 SSCBCI Program Leverages Pre‐Existing Network. The	state’s	SSBCI	program	was	

built	on	an	established	delivery	system	(NetWork	Kansas)	with	strong	ties	

throughout	the	state.	The	CDC	network	in	Kansas	had	pre‐existing	experience	in	

identifying,	underwriting	and	closing	loans	to	small	businesses	throughout	the	state.	

The	Kansas	SSBCI	programs	were	based	in	part	on	two	financing	programs	

previously	operated	by	NetWork	Kansas.	Thus,	crucial	systems	and	links	to	

underserved	communities	did	not	have	to	be	built	from	scratch.	

 Partners are Experienced Lenders.		Some	of	NetWork	Kansas’	most	effective	

marketing	partners	in	underserved	communities	have	been	CDCs.	Most	of	Kansas’	

CDCs	are	active	in	packaging	and	originating	small	business	loans.	Their	experience	

means	they	are	effective	in	identifying	and	screening	potential	transactions	in	

underserved	communities.	Thus,	it	is	important	that	marketing	partners	not	only	

have	a	presence	in	underserved	communities,	but	also	be	effective	in	understanding	

and	communicating	the	SSBCI	program.	

Outputs

Data	from	the	Kansas	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

 As	of	December	31,	2013,	the	Kansas	SSBCI	program	had	supported	46	loans	or	

investments	totaling	$136.3	million.	

 As	of	the	same	date,	approximately	48	percent	of	the	program’s	loans	and	

investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	
A‐17

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).

 NetWork	Kansas	reports	that,	as	of	December	31,	2013,	73	percent	of	its	SSBCI	loans	

(by	$)	have	been	in	rural	counties	(defined	by	NetWork	Kansas	as	counties	with	less	

than	100,000	in	population),	and	26	percent	of	its	venture	investments	have	been	in	

rural	counties.	Overall	59	percent	of	Kansas’	SSBCI‐supported	loans	and	

investments	have	been	in	rural	counties.

 As	of	year‐end	2013,	the	Kansas	SSBCI	loan	program	had	experienced	no	

delinquencies	or	defaults,	including	loans	in	rural	and	LMI	communities.	NetWork	

Kansas	believes	that,	beyond	initial	deployment	of	capital,	the	ultimate	measure	of	

success	of	a	credit	support	program	in	an	underserved	community	is	the	extent	to	

which	the	businesses	being	financed	remain	ongoing	contributors	to	local	job	and	

economic	growth.		

	 	
A‐18

Montana

Summary

Montana	attributes	its	success	in	reaching	underserved	communities	to	leveraging	existing	

operational	models,	building	on	long‐standing,	positive,	and	trusting	relationships	among	

state	and	local	economic	development	organizations	and	lenders.	It	is	providing	strong	

incentives	to	originators	throughout	the	state	to	identify	and	close	high	quality	loans	in	a	

timely	fashion.		

Description of the Montana Program

Montana	received	a	$12.7	million	allocation.	Montana	apportioned	all	of	its	allocation	to	a	

loan	participation	program:	

 The Montana SSBCI Program.	Montana’s	loan	participations	may	share	collateral	

or	be	subordinate	to	the	lead	lender.		The	interest	rates	are	below‐market,	typically	

in	the	range	of	1	percent	to	1.5	percent	fixed,	plus	a	servicing	fee	of	0.50	percent.	

Additionally,	Montana	discounts	interest	rates	based	on	the	number	of	qualifying	

jobs	created	by	the	borrower	as	a	result	of	the	supported	transaction.		

Program Delivery

The	Montana	Governor’s	Office	of	Economic	Development	is	the	state’s	designated	lead	

agency	for	the	SSBCI	program.		The	Montana	Department	of	Commerce	and	the	Montana	

Board	of	Investments	(MBOI)	administer	the	program.		

MBOI	administers	a	variety	of	financial	assistance	and	investment	programs.		These	

programs	are	designed	to	stimulate	economic	development	by	assisting	the	private	sector	

and	local	governments	in	financing	new	or	expanded	businesses	as	well	as	infrastructure	

development.		

The	Montana	program	determined	that	its	top	SSBCI	priorities	were	fast	delivery	of	credit	

support	and	geographic	coverage,	particularly	to	underserved	rural	markets.	To	focus	on	

these	priorities,	the	Montana	team	based	its	SSBCI	program	on	a	state	loan	participation	

program	that	has	been	operated	by	MBOI	for	approximately	35	years	and	also	decided	to	

take	advantage	of	an	established	network	of	economic	development	organizations	from	

across	the	state	that	are	long‐standing	partners	with	the	state	in	economic	development	

activities.		Montana	chose	three	CDFIs	and	six	non‐CDFI	Revolving	Loan	Funds	(RLFs)	as	

loan	originators	and	servicers.	These	originators	were	given	a	strong	incentive	to	deploy	

funds	due	to	the	state’s	decision	to	grant	all	SSBCI	funds	under	management	to	the	

participating	organizations	in	2017	upon	expiration	of	the	federal	SSBCI	program.	This	
A‐19

further	serves	the	state’s	objectives	by	having	the	funds	revolve	locally	in	perpetuity	for	

worthy	economic	development	projects	and	activities.	

In	the	Montana	program,	the	participating	CDFIs	and	RLFs	identify	and	underwrite	loan	

participation	opportunities	with	qualified	lenders	following	MBOI‐mandated	credit	

standards.		MBOI	performs	a	compliance	review	before	approving	each	transaction.	Once	

approved	by	a	loan	review	committee	consisting	of	the	state	agency	partners,	Montana	

funds	the	purchase	of	a	participation	in	the	bank	loan	and	the	CDFI‐RLF	services	the	

transaction.		Montana	does	not	require	a	standard	collateral	position	but,	in	its	policies,	

states	that	“collateral	must	have	sufficient	equity	to	support	the	debt	and	will	be	shared	

proportionately	with	the	Lender	by	the	CDFI‐RLF.”		Montana’s	CDFI‐RLF	partners	retain	

principal	and	interest	repayments	and	may	relend	those	funds.	

Aspects that Improve Capital Access in Underserved Communities

The	Montana	program	has	at	least	two	notable	features	that	improve	access	to	SSBCI	

capital	in	underserved	communities:	

 Building on Existing Networks of Relationships to Enhance Geographic

Coverage. Building	on	the	long‐standing	engagement	of	the	state’s	agencies	in	

economic	development	issues,	agency	staff	met	with	all	potential	qualified	CDFIs	

and	RLFs	and	had	one‐on‐one	meetings	with	key	lenders	within	the	state.	Montana’s	

CDFI‐RLF	partners	used	their	existing	networks	to	identify	transactions.		In	

addition,	prior	to	SSBCI,	MBOI	had	developed	strong	relationships	with	lenders	

throughout	the	state.	This	level	of	familiarity	and	trust	allowed	Montana	to	bypass	

the	lengthy	sales	and	marketing	effort	that	some	states	faced	in	ramping	up	SSBCI	

programs.	Similarly,	Montana	leveraged	existing	staff	expertise	and	processes	to	

operate	the	program	and	oversee	the	CDFI‐RLF	partners.		These	factors	all	

contributed	to	the	SSBCI	program	achieving	a	marketing	reach	far	beyond	what	the	

State	could	accomplish	on	its	own.	

 Alignment of Interests with Network Members Helps Ensure Quick and

Widespread Distribution. Aligning	the	priorities	of	the	state’s	SSBCI	program	with	

the	interests	of	the	CDFI‐RLFs	proved	to	be	a	key	element	of	success.		CDFI‐RLFs	

throughout	the	state	were	motivated	to	identify	transactions	quickly	because	the	

funds	were	available	on	a	first‐come,	first‐served	basis.		The	CDFIs‐RLFs	were	

similarly	motivated	to	identify	quality	transactions	because	losses	on	SSBCI	loans	

would	equate	to	lost	future	grant	income.		The	state’s	selection	criteria	included	

identifying	CDFI‐RLF	partners	that	had	a	long‐term	track	record	of	successfully	

lending	to	support	community	and	economic	development	in	underserved	
A‐20

communities.	This	selection	criterion	helps	ensure	these	local	organizations	will	

continue	to	recycle	SSBCI	funds	into	small	business	loans	after	the	federal	program	

expires	in	2017.	

Outputs

Data	from	the	Montana	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

•	 As	of	December	31,	2013,	the	Montana	SSBCI	program	had	supported	44	loans	

totaling	$84.6	million.	

•	 As	of	the	same	date,	approximately	25	percent	of	the	program’s	loans	(by	dollar)	

have	been	in	low‐	and	moderate‐income	(LMI)	communities	within	the	state	(LMI	

being	defined	as	individuals	and	geographies	having	a	median	income	less	than	80	

percent	of	the	area	median	income).	

•	 In	less	than	8	months,	Montana	was	able	to	commit	enough	of	its	allocation	to	

request	its	third	tranche	of	funds.	Through	December	31,	2013,	Montana	had	

deployed	(funded	and	committed)	88	percent	of	its	entire	SSBCI	allocation	in	loans	

to	small	businesses.		As	of	December	31,	2013,	borrowers	reported	that	the	

transactions	will	create	822	jobs	and	retain	185	jobs	that	were	at	risk	of	loss.		Eight	

of	the	nine	participating	CDFI‐RLFs	used	the	SSBCI	program	funds,	distributing	the	

funds	throughout	the	state.		Loans	have	been	made	to	businesses	in	fifteen	

communities	in	twelve	counties,	including	two	to	businesses	located	on	Indian	

reservations.	

	 	
A‐21

New York

Summary

The	New	York	SSBCI	program	improves	access	to	capital	in	underserved	communities	by	

focusing	its	loan	guarantee	program	on	an	industry	where	the	market	share	of	minority‐	

and	women‐owned	businesses	is	substantial	and	growing.		The	state’s	equity	program	

improves	access	by	providing	capital	to	funds	that	focus	on	different	regions	within	the	

state	and	by	contractually	requiring	specific	outputs	by	those	funds	in	underserved	

communities	or	by	hiring	low‐	or	moderate‐income	persons.		

Description of the New York Program

New	York	received	a	$55.4	million	allocation.	New	York	apportioned	its	allocation	among	

three	programs:	an	equity	fund	and	capital	access	and	bond	guarantee	programs.	This	case	

study	focuses	primarily	on	the	bond	guarantee	program,	although	certain	aspects	of	the	

equity	program	are	also	discussed:	

 The New York State Surety Bond Assistance Program (NYSBAP). 	NYSBAP	

provides	credit	support,	training,	and	technical	assistance	to	help	small	and	

Minority‐	or	Women‐owned	Business	Enterprises	(MWBE)	secure	surety	bonds.	

Contractors	are	eligible	to	receive	a	guarantee	of	up	to	30	percent	to	secure	a	surety	

bond	line,	a	bid	bond,	or	a	performance	and	payment	bond	on	state	and	city	

projects.	Applicants	must	be	a	New	York	State	small	business	or	MWBE	with	at	least	

two	years	of	business	operations.	Maximum	bond	line	or	project	size	is	$2	million.	

The	business	must	have	minimum	average	gross	revenues	of	$400,000	in	the	last	

two	years.	Maximum	gross	revenues	cannot	exceed	$5	million	in	the	most	recent	

year.	The	borrower	also	must	have	a	minimum	credit	score	of	600	as	well	as	

previous	experience	completing	similar	work	to	the	contract	opportunity	being	

pursued.	The	guarantees	for	bond	lines	and	bid	bonds	are	issued	by	Empire	State	

Development,	which	manages	the	state’s	SSBCI	programs,	with	zero	fees	or	costs.		

Program Delivery

The	New	York	Department	of	Economic	Development	(DED)	is	the	state’s	designated	lead	

agency	for	the	SSBCI	program.	Empire	State	Development	Corporation	(ESD)	is	the	

contracting	entity	that	administers	the	state’s	SSBCI	programs.

ESD	represents	the	consolidated	operations	of	three	state	agencies	focused	on	economic	

development	in	the	state:	DED,	New	York	State	Urban	Development	Corporation	(UDC)	and	

New	York	Job	Development	Authority	(JDA).		
A‐22

NYSBAP	is	a	bond	guarantee	program	that	builds	on	lessons	learned	from	an	earlier	pilot	

program	in	New	York	State	as	well	as	a	program	in	Louisiana.		NYSBAP	is	marketed	

primarily	through	direct	contact	with	businesses	that	are	current	or	potential	state	or	local	

government	contractors,	focusing	on	MWBEs.	There	are	currently	more	than	7,000	

certified	MWBEs	in	the	state.	Marketing	networks	include	various	contractor	alliances,	

state	and	local	agencies,	and	advocacy	organizations	supporting	small	and	minority	and	

women‐owned	businesses.	

NYSBAP	guarantees	are	approved	based	on	underwriting	by	the	issuing	surety	company,	

an	independent	consultant,	and	ESD’s	own	credit	assessment.	Participating	surety	

companies	will	make	a	credit	determination	in	accordance	with	their	internal	underwriting	

standards,	as	the	surety	company	will	be	at	risk	for	at	least	70	percent	of	the	contract	

amount.		

Aspects that Improve Capital Access in Underserved Communities

NYSBAP	has	at	least	one	notable	feature	that	improves	access	to	SSBCI	capital	in	

underserved	communities:	

 Targets a Specific Sector in which Minority‐	and Women‐Owned Businesses Have

a Substantial and Growing Market Share. While	NYSBAP	is	open	to	any	small	

business	contractor,	marketing	of	the	program	has	focused	on	minority‐	and	

women‐owned	businesses	that	are	current	or	potential	contractors	on	state	and	city	

projects.	The	program	is	limited	to	state	and	city	contracts	and	focuses	on	

construction‐related	activities.	A	disparity	study	commissioned	by	DED	identified	

several	barriers	that	have	impaired	access	by	MWBEs	to	state	contracts,	

highlighting,	among	others,	obstacles	in	credit	and	bonding.	The	bond	guarantee	

program	is	designed	to	provide	companies,	particularly	MWBEs,	with	access	to	an	

initial	surety	bond	line	or	to	an	increased	surety	bond	line	to	allow	the	company	to	

compete	for	larger	projects.	
A‐23

Other Contributors to Success

In	addition	to	NYSBAP’s	sector	focus	described	above,	certain	aspects	of	New	York’s	equity	

program,	the	Innovate	NY	Fund,	are	also	unique	in	improving	access	to	capital	in	

underserved	communities.		New	York	selected	seven	funds	to	invest	in	early	stage	

technology	companies	and	other	high	growth	companies	throughout	New	York	State.	

Aspects	of	the	Innovate	NY	Fund	designed	to	improve	access	to	capital	in	underserved	

communities	include:	

 Created Regional Funds to Ensure Geographic Dispersion of Equity Investments.

Innovate	NY	Fund’s	investments	are	made	through	seven	investment	funds	that	

were	competitively	selected	to	invest	in	technology	companies	and	other	high	

growth	firms	throughout	New	York	State.	ESD	staff	members	selected	those	

investment	funds	and	oversee	investments	and	compliance	with	SSBCI	rules.	All	

contracted	investment	funds	are	required	to	secure	at	least	a	2:1	match	from	private	

sources	on	its	aggregate	portfolio	at	the	time	of	investment.		Innovate	NY	funding	

may	not	exceed	$500,000	per	investment	($750,000	in	the	case	of	biotechnology‐

related	companies).	Innovate	NY	Fund	selected	funds	that	focused	on	specific	

regions	of	the	state,	e.g.,	individual	funds	covered	areas	such	as	Ithaca,	the	Southern	

Tier	and	Western	and	Central	New	York	regions,	the	Finger	Lakes,	Long	Island,	and	

New	York	City.	One	of	the	fund	managers	also	focuses	explicitly	on	early	stage	

companies	that	have	at	least	one	woman	in	a	leadership	position.	

 Requires Specific Outcomes in Underserved Communities. ESD’s	limited	

partnership	agreement	with	each	of	the	seven	selected	funds	require	that,	by	the	

end	of	the	investment	period,	each	fund	must	invest	at	least	12	percent	of	its	

allocation	in	beneficiary	companies	that	at	the	time	of	the	investment	are	either	

located	in	low‐	or	moderate‐income	communities	or	employ	individuals	who	are	

low‐	or	moderate‐income	or	reside	in	low‐	or	moderate‐income	communities.	

Outputs

Data	from	the	New	York	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

 As	of	December	31,	2013,	the	New	York	SSBCI	program	had	supported	365	

transactions	totaling	$106.1	million.		

 As	of	the	same	date,	approximately	49	percent	of	the	program’s	loans,	guarantees	

and	investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	
A‐24

communities	within	the	state	(LMI	being	defined	as	individuals	and	geographies	

having	a	median	income	less	than	80	percent	of	the	area	median	income).

 NYSBAP	was	one	of	the	strategies	implemented	by	the	state	as	part	of	Governor	

Andrew	Cuomo’s	establishment	of	a	goal	of	20	percent	MWBE	participation	in	state	

contracting.		At	the	time	the	20	percent	goal	was	established	in	early	2011,	MWBE	

participation	in	the	state’s	contracting	and	procurement	process	was	at	9.2	percent.	

MWBE	participation	currently	stands	at	more	than	21	percent.	

	 	
A‐25

Pennsylvania

Summary

The	Pennsylvania	SSBCI	program	achieved	success	by	leveraging	a	wide	network	of	CDFIs	

across	the	state	through	RFQ	process	to	provide	capital	for	business	growth	and	job	

retention	to	entrepreneurs	in	underserved	communities.	

Description of the Pennsylvania Program

Pennsylvania	received	a	$29.2	million	allocation.	Pennsylvania	used	a	portion	of	its	

allocation	to	fund	two	lending	programs	that	specifically	target	underserved	communities:	

 Pennsylvania Economic Development Finance Authority Program.	This	program	

provides	loans,	including	for	projects	in	distressed	communities.	Loan	funds	are	

available	for	eligible	small	business	enterprises	at	competitive	interest	rates	with	

flexible	repayment	terms	that	meet	the	needs	of	the	business.

 Pennsylvania Community Development Bank Program.	This	program	provides	

debt	capital	for	deployment	by	CDFIs.	

Program Delivery

The	Pennsylvania	Department	of	Community	and	Economic	Development	(DCED)	is	the	

state’s	designated	lead	agency	for	the	SSBCI	program.	The	Pennsylvania	Economic	

Development	Financing	Authority	(PEDFA)	and	Pennsylvania	Community	Development	

Bank	(PCD	Bank)	programs	are	structured	to	pass	SSBCI	funds	to	DCED‐designated	Area	

Loan	Organizations	(ALOs)	and	CDFIs.	Those	ALOs	and	CDFIs,	in	turn,	lend	funds	to	

qualifying	small	and	micro	businesses.		

At	the	outset,	Pennsylvania	decided	to	use	a	RFQ	process	to	allocate	funds	to	partners	that	

demonstrated	both	a	commitment	and	capacity	to	implement	SSBCI.	The	most	underserved	

communities	in	Pennsylvania	fall	into	three	types:	small,	rural	farm	communities,	

communities	in	coal	mining	regions,	and	minority	businesses	in	urban	areas.	CDFIs	located	

across	the	state	provide	a	solid	network	to	reach	these	underserved	communities.	

Aspects that Improve Capital Access in Underserved Communities

The	Pennsylvania	program	has	three	unique	features	that	have	facilitated	access	to	SSBCI	

capital	in	underserved	communities:	
A‐26

 Breadth and Depth of Network. Rather	than	use	a	single	contracting	entity,	DCED	

uses	a	network	of	CDFIs	whose	service	areas	cover	most	of	the	state.	For	example,	

the	Economic	Opportunity	Fund	covers	inner‐city	Philadelphia	while	the	Progress	

Fund	serves	rural	Western	Pennsylvania.	The	CDFI	partners	are	creative	in	their	

loan	structuring,	often	engaging	in	layered	financing	strategies	that	bring	together	

capital	from	a	variety	of	conventional	and	alternative	sources.	Other	CDFI	

participants	use	SSBCI	capital	to	make	loans	that	reach	businesses	in	underserved	

communities,	including	micro‐loans.	

 Outreach and Engagement.		CDFIs	and	other	economic	development	professionals	

who	are	based	in	and	understand	local	market	conditions	and	local	small	business	

finance	needs	are	effective	sources	of	intelligence	and	effective	deployment	agents	

of	credit	to	underserved	communities.	DCED	took	great	pains	to	identify	the	right	

network	of	committed	CDFIs	to	participate	in	the	SSBCI	program.	These	efforts	

entailed	significant	start‐up	and	program	development	costs	on	the	front	end	and	

ongoing	challenges	of	overseeing	a	network	of	partners.	It	also	slowed	the	initial	

deployment	of	funds,	but	DCED	has	been	pleased	with	the	outcome.	

 RFQ Process. DCED	recommends	the	use	of	a	RFQ	process.	The	RFQ	process	

highlighted	the	intended	focus	on	underserved	communities.	Prior	relationships	

made	identifying	CDFIs	through	the	RFQ	process	easier.		The	expectation	of	a	10:1	

leverage	resulted	in	the	engagement	of	applicants	with	the	capacity	to	implement	

the	program.	

Outputs

Data	from	the	Pennsylvania	SSBCI	program	demonstrates	its	success	in	reaching	

underserved	communities:	

 As	of	December	31,	2013,	the	Pennsylvania	SSBCI	program	had	supported	86	

transactions	totaling	$78.9million.	

 As	of	the	same	date,	approximately	33	percent	of	the	program’s	loans	and	

investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).

 DCED	reports	that,	as	of	December	31,	2013,	17	percent	of	its	SSBCI	loans	(by	

dollar)	have	been	to	businesses	that	are	minority‐	or	women‐owned.	
A‐27

Utah

Summary

The	Utah	SSBCI	program	improves	access	to	capital	in	underserved	communities	by	

explicitly	targeting	its	core	program	to	specific	markets.	Its	marketing	focuses	on	banks	

and	their	officers	and	departments	active	in	underserved	communities,	and	Utah	will	make	

exceptions	to	standard	product	terms	for	loans	in	those	communities.		

Description of the Utah Program

Utah	received	a	$13.2	million	allocation.	Utah	apportioned	its	allocation	among	an	equity	

fund	and	two	loan	programs.	This	case	study	focuses	primarily	on	the	loan	programs:	

 The Utah Loan Guarantee Program (LGP).	The	LGP	will	guarantee	up	to	80	

percent	of	the	principal	amount	of	a	small	business	loan.	The	guarantee	can	be	for	

up	to	seven	years,	with	a	targeted	average	term	of	three	years.	The	guarantee	is	

subordinated,	i.e.,	carries	first	loss	risk.	Although	exceptions	can	be	made,	the	LGP	

targets	an	average	principal	amount	of	$100,000	to	$500,000.		Utah	charges	a	4	

percent	guarantee	fee.	The	guarantees	are	issued	on	behalf	of	State	of	Utah	and	are	

collateralized	by	a	10	percent	cash	reserve.	

 The Utah Loan Participation Program (LPP). 	The	LPP	includes	both	purchase	

participations	and	companion	loans.	The	program	also	targets	loans	from	$100,000	

to	$500,000.	The	LPP	will	provide	up	to	80	percent	of	the	total	financing	package,	

but	with	a	target	of	10	percent	to	30	percent.	For	purchase	transactions,	interest	

rates,	maturity,	collateral,	and	other	loan	terms	are	negotiated	between	the	

borrower	and	the	financial	institution	lender,	subject	to	LPP	approval.	For	

companion	loans,	both	LPP	and	the	financial	institution	lender	negotiate	interest	

rates,	maturity,	collateral,	and	loan	terms	with	the	borrower.	Typically	Utah's	loan	

is	subordinate	to	the	lender's	loan	in	terms	of	collateral	priority.	Fees	range	from	0	

percent	to	3	percent	of	the	loan	amount	and	are	negotiated	with	each	borrower.	

The	mission	of	the	loan	programs	is	to	create	jobs	and	stabilize	Utah's	neighborhoods	by	

providing	growing	businesses	with	access	to	capital.		

Program Delivery

The	Utah	Division	of	Housing	and	Community	Development	is	the	state’s	designated	lead	

agency	for	the	SSBCI	program.	The	Utah	Small	Business	Growth	Initiative	(USBGI),	a	private	

non‐profit,	is	the	contracting	entity	that	administers	all	three	SSBCI	programs.	
A‐28

USBGI	is	a	subsidiary	of	the	Utah	Center	for	Neighborhood	Stabilization	(UCNS).	UCNS	is	

the	umbrella	organization	for	three	non‐profits	—	the	Utah	Center	for	Affordable	Housing	

(UCAH),	Housing	Plus,	and	USBGI.	Using	$19.2	million	in	Neighborhood	Stabilization	

Program9	grant	funds,	UCAH,	founded	in	May	2009,	purchases	foreclosed	properties	for	

non‐profits	that	in	turn	rehabilitate	the	houses	and	sell	or	rent	them	to	low‐	to	moderate‐

income	families.	Those	who	cannot	purchase	a	home	may	be	eligible	to	rent	through	

Housing	Plus,	which	purchases	and	maintains	larger	projects,	such	as	condo	developments.	

The	UCNS	staff	has	35	combined	years	of	banking	and	financial	analysis	experience	and	

includes	a	loaned	executive	from	Zions	Bank	whose	salary	is	paid	by	Zions.	

USBGI	markets	its	SSBCI	programs	directly	to	banks,	small	businesses,	bank’s	Community	

Reinvestment	Act	(CRA)	program	managers,	targeted	loan	programs	within	banks,	small	

business	development	centers,	state	agencies	such	as	the	Division	of	Workforce	Services,	

advocacy	groups	such	as	the	Hispanic	Chamber	of	Commerce,	and	other	similar	

organizations	in	the	state’s	small	business	community.		Loans	are	reviewed	by	a	USBGI	loan	

committee	for	both	credit	underwriting	and	credit	compliance	purposes.	

Aspects that Improve Capital Access in Underserved Communities

The	Utah	program	has	at	least	three	unique	features	that	improve	access	to	SSBCI	capital	in	

underserved	communities:	

 Program Focuses Explicitly on Underserved Communities.	USBGI	explicitly	

positions	its	loan	programs	as	serving	primarily	underserved	communities,	not	just	

small	businesses.	On	its	website,	USBGI	states	that	the	programs	target	small	

businesses	with	one	or	more	of	the	following	characteristics:

 located	in	low‐	to	moderate‐income	neighborhoods

 located	in	underserved	communities

 women	and	minority	owned	businesses

This	positioning	focuses	the	program’s	marketing	efforts	and	gives	the	program	a	

clear	niche	and	identity	in	the	marketplace.	

 Marketing is Targeted to Underserved Communities.	As	a	result	of	its	explicit	

focus	on	underserved	communities,	USBGI	targets	its	marketing	to	groups	that	are	

already	active	in	those	communities.	For	example,	USBGI	has	marketed	the	program	

to	CRA	program	managers	within	banks.	Other	banks	have	specialized	units	

working	in	underserved	communities	that	are	natural	marketing	partners.	For	

example,	Zions	has	a	Diverse	Markets	group	that	focuses	on	the	Hispanic	and	

African	American	markets,	a	Women’s	Financial	Group,	and	the	Zions	Business	

                                                            

9 For more information on the Neighborhood Stabilization Program, go to http://www.huduser.org/portal/datasets/NSP.html.  
A‐29

Resource	Center,	which	provides	the	Utah	small	business	community	with	access	to	

tools	and	information	needed	to	help	strengthen	their	businesses.	USBGI	has	also	

found	small	business	development	centers	to	be	effective	marketing	partners	in	

rural	areas	of	the	state.

 Loan Terms are Flexible for Borrowers in Underserved Communities.	The	USBGI	

program	guidelines	state	explicitly	that	USBGI	will	consider	offering	favorable	

interest	rates	and	terms	if	one	of	its	credit	support	programs	is	utilized	in	

conjunction	with	a	CRA	qualified	transaction.	For	example,	USBGI	issued	a	

guarantee	for	a	$16,000	loan	to	a	women‐owned	business,	well	below	its	targeted	

minimum	of	$100,000.

Outputs

Data	from	the	Utah	SSBCI	program	demonstrates	its	success	in	reaching	underserved	

communities:	

•	 As	of	December	31,	2013,	the	Utah	SSBCI	program	had	supported	17	loans	or	

investments	totaling	$16.2	million.	

•	 As	of	the	same	date,	approximately	58	percent	of	the	program’s	loans	and	

investments	(by	dollar)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).	

•	 USBGI	reports	that,	as	of	December	31,	2013,	66	percent	(by	dollar)	and	38	percent	

(by	number)	of	its	SSBCI	loans	have	been	in	rural	counties	or	to	minority‐	or	

women‐owned	businesses.	
A‐30

		

Washington

Summary

The	State	of	Washington	’s	SSBCI	program	improves	access	to	capital	by	partnering	with	a	

CDFI	that	has	an	extensive	track	record	of	successfully	lending	in	underserved	

communities.	The	CDFI	partner	also	has	the	resources	to	sustain	targeted	SSBCI	marketing	

over	a	long	time	and	a	lending	staff	that	is	diverse	and	has	longstanding	ties	in	those	

communities.	

Description of the Washington Program

The	State	of	Washington		received	a	$19.7	million	allocation.	Washington	apportioned	its	

allocation	among	three	programs:	a	venture	fund,	a	capital	access	program	and	a	direct	

loan	program.	This	case	study	focuses	on	the	direct	loan	program:	

 Craft3 Fund.	Craft3	is	a	non‐profit	Community	Development	Financial	Institution	

(CDFI)	that	lends	to	small	businesses	in	underserved	communities	across	the	state.	

Through	its	SSBCI	program,	Craft3	will	make	loans	generally	from	$250,000	to	$5	

million.	Most	of	these	loans	are	direct	loans	to	businesses,	although	Craft3	will	also	

purchase	participations	in	bank	loans.	The	average	term	is	between	5	to	7	years,	

with	interest	rates	from	7	percent	to	9	percent,	and	fees	charged	between	1	percent	

and	2	percent.		

Program Delivery

The	Washington	Department	of	Commerce	is	the	state’s	designated	lead	agency	for	the	

SSBCI	program.	Craft3	is	the	contracting	entity	that	administers	the	Craft3	Fund.		

Craft3’s	mission	is	to	strengthen	economic,	ecological,	and	family	resilience	in	Pacific	

Northwest	communities.	Craft3	does	this	by	providing	loans	to	entrepreneurs,	non‐profits,	

individuals,	and	others	who	do	not	normally	have	access	to	financing.	Craft3	currently	

manages	more	than	$166	million	in	assets	devoted	to	community	development	finance.	

Craft3	markets	its	loans	programs,	including	SSBCI,	statewide.	Craft3	uses	a	diverse	range	

of	marketing	strategies,	including	public	presentations,	direct	banker	and	borrower	

contact,	brochures	and	flyers,	a	sophisticated	internet	and	social	media	presence,	and	a	

strong	referral	network	of	bankers,	local	and	state	government	and	development	agencies	

built	through	years	of	economic	and	community	development	lending.	Craft3	has	also	

actively	marketed	the	SSBCI	program	to	key	advocacy	organizations	in	underserved	
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communities,	including	Tabor	100	(an	association	of	entrepreneurs	and	business	advocates	

who	are	committed	to	economic	power,	educational	excellence	and	social	equity	for	

African‐Americans)	and	The	Affiliated	Tribes	of	Northwest	Indians.	The	Department	of	

Commerce	has	also	assisted	Craft3	in	promoting	the	SSBCI	loan	program.	Craft3	currently	

has	three	offices	in	the	state	and	is	opening	an	additional	two	offices	in	the	more	

underserved	eastern	region.	

The	Department	of	Commerce	does	not	underwrite	loans	funded	via	Craft3	other	than	for	

compliance.		Craft3	applies	its	own	credit	underwriting	standards	in	its	program.			

Aspects that Improve Capital Access in Underserved Communities

The	Washington	program	has	at	least	three	notable	features	that	improve	access	to	SSBCI	

capital	in	underserved	communities:	

 Partner with Experienced Provider of Capital. Craft3	is	a	financially	sound	non‐

bank	CDFI	that	has	a	history	of	low	loan	losses,	the	ability	to	disburse	funds	to	

underserved	or	distressed	communities,	and	a	track	record	of	raising	significant	

amounts	of	capital	for	those	purposes.	The	State	of	Washington		chose	to	contract	

with	a	single,	strong,	experienced	CDFI,	rather	than	with	a	network	of	CDFIs	or	

other	development	agencies	with	varying	degrees	of	experience.	This	structure	

eases	administration,	and	only	one	organization	has	to	build	expertise	in	SSBCI	

program	rules.	As	a	long‐term	lender	in	underserved	communities,	Craft3	has	the	

structure,	policies,	and	procedures	in	place	to	underwrite,	disburse,	and	monitor	

higher‐risk	loans.	The	state’s	contract	with	Craft3	includes	a	best	efforts	target	that	

the	SSBCI	funds	be	widely	dispersed	between	the	state’s	eastern	and	western	

regions,	with	at	least	20	percent	to	minority‐	or	women‐owned	enterprises.	Because	

the	SSBCI	funds	will	remain	on	Craft3’s	balance	sheet	after	the	end	of	the	program	

compliance	period,	the	funds	will	remain	available	for	deployment	in	underserved	

communities.		

 Ability and Capacity to Sustain Marketing Effort in those Communities. The	

Department	of	Commerce	developed	its	SSBCI	programs	based	on	the	assumption	

that	the	agency	would	not	have	significant	staff	to	deploy	the	SSBCI	funds.	The	

Department	was	concerned	that	a	program	dependent	on	large	staff	is	risky	due	to	

fluctuations	in	the	state	budget	and	program	allocation	for	operational	funding.	

Thus,	the	Department	chose	to	partner	with	Craft3	to	ensure	that	the	program	and	

its	associated	marketing	in	underserved	communities	would	be	consistently	

sustained	at	a	high	level	for	an	extended	period	of	time.	Consistent	and	sustained	

marketing	are	particularly	important	to	the	program	to	the	extent	it	is	more	costly,	
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in	terms	of	both	time	and	dollars,	to	reach	a	targeted	audience,	such	as	underserved	

communities,	when	compared	to	a	broader	market	of	small	businesses	generally.		

 Potential to Leverage SSBCI Capital at the Fund Level. The	State	of	Washington	’s	

collaboration	with	Craft3	is	unique	in	that	the	SSBCI	capital	potentially	acts	as	first	

loss	protection	for	investors	in	Craft3’s	SSBCI	fund.	This	enhances	Craft	3’s	ability	to	

raise	additional	private	capital	at	the	fund	level	in	addition	to	seeking	private	sector	

participation	in	each	individual	transaction.	

Other Elements of Success

In	addition	to	the	partnering	and	marketing	efforts	described	above,	another	factor	to	

which	Washington	attributes	its	success	in	serving	underserved	communities	is:	

 Staffing that is Reflective of the Targeted Market. Craft3	emphasizes	its	belief	that	

organizations	are	more	likely	to	be	successful	in	serving	underserved	communities	

if	they	have	a	diverse	staff	that	is	part	of	the	community	being	served.	Thus,	in	

addition	to	offices	in	rural	areas	of	the	state,	Craft3	has	a	lending	staff	that	includes	

members	of	Washington’s	African‐American,	Hispanic,	and	Native	American	

communities.		

Outputs

Data	from	the	Washington	SSBCI	program	demonstrates	its	success	in	reaching	

underserved	communities:	

 As	of	December	31,	2013,	the	Washington	SSBCI	program	has	made	a	total	of	24	

loans,	guarantees,	or	investments	totaling	$26.4	million,	leveraging	an	additional	

$33.8	million	in	financing	for	borrowers.	

 As	of	the	same	date,	approximately	54	percent	of	the	program’s	loans,	guarantees,	

and	investments	(by	$)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).

 Craft3	reports	that,	as	of	December	31,	2013,	more	than	40	percent	of	its	SSBCI	

program	loans	have	been	outside	of	the	Seattle	metro	area,	more	than	40	percent	

have	been	in	central	and	eastern	Washington,	and	more	than	40	percent	have	been	

to	minority‐owned	enterprises.	At	least	$1.8	million	has	been	loaned	to	Native	

American‐controlled	enterprises.
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West Virginia

Summary

The	West	Virginia	SSBCI	program	improved	access	to	capital	in	underserved	communities	

in	that	state	by	developing	a	network	of	experienced	and	geographically	dispersed	lending	

partners.	The	program	also	provides	1)	strong	incentives	for	those	partners	to	deploy	

SSBCI	capital	quickly	to	creditworthy	borrowers	and	2)	support	for	less	experienced	

borrowers	through	technical	assistance	funded	by	non‐SSBCI	sources.	

Description of the West Virginia Program

West	Virginia	received	a	$13.2	million	allocation.	The	West	Virginia	Capital	Access	Program	

(WVCAP)	apportioned	its	allocation	among	a	venture	capital	fund	and	three	loan	programs.	

This	case	study	focuses	on	the	loan	programs:	

 WVCAP Subordinated Debt Fund.	The	subordinated	loan	is	a	direct	loan	from	

WVCAP	to	the	borrower,	with	a	bank	or	other	lender	providing	the	senior	debt.	

Loan	proceeds	can	be	used	to	purchase	equipment	or	for	facility	expansion	or	

working	capital.	WVCAP	provides	up	to	50	percent	of	total	financing,	with	a	

maximum	loan	amount	of	$500,000.	The	loan	term	is	1	to	5	years,	and	WVCAP	

charges	a	1	percent	commitment	fee.	The	loan’s	interest	rate	is	at	or	below	

prevailing	market	rates.	This	has	been	by	far	WVCAP’s	highest‐volume	loan	

program.	

 WVCAP Collateral Support Fund.	WVCAP	provides	cash	collateral	for	a	loan	being	

made	by	a	bank	or	other	lender	for	up	to	20	percent	of	the	loan	amount,	with	a	

$250,000	maximum	in	cash	collateral	provided.	The	term	of	the	collateral	support	

is	1	to	5	years.	WVCAP	charges	a	fee	of	2	percent	of	the	loan	amount.	

 WVCAP Loan Guarantee Fund.	WVCAP	guarantees	are	up	to	20	percent	of	the	loan	

amount	for	working	capital	loans,	up	to	a	maximum	guarantee	of	$250,000.	The	

guarantee’s	term	is	1	to	5	years.	WVCAP	charges	a	fee	of	2	percent	of	the	loan	

amount.	

The	mission	of	the	WVCAP	program	is	to	assist	businesses	that	are	creditworthy,	but	may	

not	fit	traditional	lending	models.	The	overarching	goal	is	to	create	$130	million	of	new	

lending	and	investment	activity	in	the	state	and	as	a	result	spur	the	creation	of	new	jobs.	
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Program Delivery

West	Virginia’s	Office	of	the	Governor	is	the	state’s	designated	lead	agency	for	the	SSBCI	

program.	The	West	Virginia	Jobs	Investment	Trust	(WVJIT)	is	the	contracting	entity	that	

administers	the	program.	

WVJIT	is	a	public	venture	capital	fund	created	to	develop,	promote,	and	expand	West	

Virginia’s	economy	by	investing	in	early	stage,	later	stage,	and	mature	small	companies	that	

wish	to	expand.	WVJIT	makes	investments	that	are	expected	to	yield	a	financial	return	

proportionate	to	the	level	of	risk	it	assumes.	WVJIT	has	19	years	of	experience	in	early‐

stage	investment	in	small	businesses,	having	invested	$19.2	million	in	25	companies	that	

has	resulted	in	$350	million	in	private	financing.	

The	West	Virginia	loan	programs	are	structured	to	encourage	the	participation	of	economic	

development	(ED)	agencies	throughout	the	state.	Loans	made	through	the	WVCAP	program	

are	identified	and	funded	through	eight	ED	agencies,	with	WVJIT	being	one	of	those	

agencies.	Each	participating	ED	agency	is	responsible	for	project	identification,	transaction	

negotiations,	closing,	and	oversight	of	loans	made	by	them	through	the	program.	WVCAP	

generally	requires	(subject	to	leverage	ratios)	loans	funded	through	SSBCI	to	be	repaid	in	

two	years,	at	which	point	the	participating	ED	agency	has	to	return	the	funds	to	WVJIT	until	

it	identifies	a	replacement	loan.	When	the	program	restrictions	expire	on	the	SSBCI	funds,	

each	participating	ED	agency	will	capture	the	principal	of	the	SSBCI	funds	that	agency	has	

utilized.		

Aspects that Improve Capital Access in Underserved Communities

The	West	Virginia	program	has	at	least	two	unique	features	that	improve	access	to	SSBCI	

capital	in	underserved	communities:	

 Breadth and Experience of Delivery System Improves Geographic Coverage. With	

eight	originating	agencies	WVCAP	covers	all	regions	of	the	state.	Participating	

agencies	were	selected	based	on	geographic	coverage	as	well	as	track	record	and	

positioning,	e.g.,	level	of	staffing,	loan	volume,	portfolio	performance,	and	

availability	of	at	least	a	full‐time	lender.	Three	of	the	participating	ED	agencies	have	

a	statewide	presence,	three	are	regional,	one	is	a	single	county	agency,	and	another	

is	industry	specific	(healthcare).	All	are	experienced	lenders.		Only	one	agency	is	a	

certified	CDFI,	and	the	others	are	certified	development	companies,	local	or	regional	

development	authorities,	or	other	alternative	providers	of	debt.		Because	a	

participating	agency	will	eventually	retain	the	SSBCI	funds	it	deploys,	all	agencies	

have	a	strong	incentive	to	identify	transactions	that	will	result	in	full	repayment	as	

well	as	to	deploy	quickly.	Each	participating	agency	underwrites	their	own	
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transactions	based	on	their	loan	policies,	and	thus	determines	its	own	interest	rate	

and	collateral	position.	In	addition	to	creating	new	small	business	loan	programs,	

West	Virginia	views	SSBCI	as	an	opportunity	to	generate	long‐term	capital	for	the	

eight	participating	agencies,	with	those	agencies	eventually	using	the	SSBCI	funds	to	

leverage	additional	capital	from	other	sources	and	to	continue	to	support	economic	

development	lending	in	the	state.	

 Funding for Marketing Increases Presence in State.	WVCAP	also	received	non‐

SSBCI	funding	from	state	government	to	contract	with	a	marketing	liaison	that	was	

responsible	for	promoting	the	program	and	meeting	with	bankers	statewide.	

WVCAP	increased	its	geographic	coverage	through	that	marketing	resource.	

 Technical Assistance Funding Improves Likelihood of Borrower Success. Using	

funds	from	a	grant	from	the	Claude	Worthington	Benedum	Foundation,	WVCAP	can	

provide	loan	applicants	access	to	the	technical	or	operating	assistance	that	can	help	

them	be	better	prepared	to	apply	for	WVCAP	funds	or	to	improve	their	company’s	

performance.	Funding	is	available	to	support	business	plan	development,	financial	

modeling,	market	research,	product	branding,	executive	recruiting,	strategic	

planning,	marketing	materials,	marketing	strategy,	and	design	and	implementation	

of	accounting	systems.	The	technical	assistance	is	delivered	through	consultants	

contracted	for	this	project.	Technical	assistance	is	especially	important	to	

businesses	in	underserved	communities	that	do	not	have	a	strong	small	business	

support	network	as	well	as	to	small	business	owners	who	are	not	experienced	

entrepreneurs.	

Other Elements of Success

In	addition	to	the	delivery	system	and	supplemental	funding	described	above,	other	factors	

to	which	West	Virginia	attributes	its	success	in	serving	underserved	communities	include:	

 SSBCI Program Leverages Experienced Lenders. The	state’s	SSBCI	program	was	

built	on	a	network	of	experienced	lenders	that	were	located	in,	or	otherwise	served,	

all	areas	of	the	state.	These	lenders	had	pre‐existing	experience	in	identifying,	

underwriting	and	closing	loans	to	small	businesses	as	well	as	ties	to	local	bankers.	

Geographic	coverage	and	proven	lending	experience	were	driving	forces	in	partner	

selection.	WVJIT	was	chosen	to	administer	the	program	because	of	its	experience	in	

providing	financing	for	small	businesses	in	the	state	and,	as	a	quasi‐state	agency,	

has	access	to	other	resources	to	help	run	and	implement	the	state’s	SSBCI	program.	
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Outputs

Data	from	the	West	Virginia	SSBCI	program	demonstrates	its	success	in	reaching	

underserved	communities:	

 As	of	December	31,	2013,	the	West	Virginia	SSBCI	program	had	supported	39	

transactions	totaling	$70.2	million,	leveraging	an	additional	$20.2	million	in	

financing	for	borrowers.	

 As	of	the	same	date,	approximately	24	percent	of	the	program’s	loans	and	

investments	(by	$)	have	been	in	low‐	and	moderate‐income	(LMI)	communities	

within	the	state	(LMI	being	defined	as	individuals	and	geographies	having	a	median	

income	less	than	80	percent	of	the	area	median	income).

 WVCAP	reports	that,	as	of	December	31,	2013,	83	percent	of	the	financings	by	its	

SSBCI	programs	have	been	for	businesses	located	outside	of	the	state’s	metropolitan	

areas.

 Approximately	30	small	businesses	have	received	technical	assistance	through	

WVCAP’s	foundation‐funded	program,	the	majority	in	rural	areas.