SSBCI Capital Program National Compliance Standards

November 17, 2022

SSBCI Capital Program

National Compliance Standards

November 17, 2022
SSBCI Capital Program National Compliance Standards

November 17, 2022

Table of Contents

Section 1. Introduction and Purpose.........................................................................................................1

Section 2. Recommended Compliance and Oversight Risk Management Framework........................2

2.1 Designate a Compliance and Oversight Coordinator................................................. 3

2.2 Identify Key Compliance and Oversight Risks ......................................................... 3

2.3 Assess the Likelihood and Severity of Risks............................................................. 4

2.4 Develop a Risk Monitoring and Mitigation Plan....................................................... 5

2.5 Conduct Periodic Testing........................................................................................... 7

2.6 Take Corrective Action As Needed ........................................................................... 8

Section 3. Key Compliance and Oversight Risks.....................................................................................8

3.1 Program Operations Risks......................................................................................... 8

a. Risk: Inadequate Oversight of Implementing and Contracted Entities........................8

b. Risk: Inadequate Lender/Investor Adherence to Requirements.................................11

c. Risk: Inadequate Control and Retention of Records..................................................11

d. Risk: Inadequate Certifications..................................................................................12

e. Risk: Conflicts of Interest in General.........................................................................15

3.2. Financial Management Risks................................................................................... 16

a. Risk: Fraud, Waste, and Abuse ..................................................................................16

b. Risk: Improper Use of and Accounting for SSBCI Funds, including 

Administrative Costs..................................................................................................16

3.3. Reporting Risks.......................................................................................................... 18

a. Risk: Failure to Submit Timely and Accurate Quarterly and Annual Reports...........18

b. Risk: Failure to Document and Accurately Report Funds Expended for SEDI-Owned 

Businesses and Very Small Businesses (VSBs).........................................................19

Appendix A - Capital Program Sample Certifications..................................................A-21
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Section 1. Introduction and Purpose

The American Rescue Plan Act of 2021 reauthorized and amended the Small Business Jobs Act 

of 2010 (as amended, the SSBCI statute) (12 U.S.C. §§ 5701 et seq.) to provide $10 billion to 

fund the State Small Business Credit Initiative (SSBCI) as a response to the economic effects of 

the COVID-19 pandemic. SSBCI is a federal program, administered by the U.S. Department of 

the Treasury (Treasury), that was created to support programs that provide capital to small 

businesses. SSBCI allows U.S. states, the District of Columbia, territories, and Tribal 

governments (collectively, “participating jurisdictions”) the opportunity to build upon or create 

successful models of small business programs. 

The purpose of these SSBCI Capital Program National Compliance Standards (Compliance 

Standards) is to set forth recommended practices to support participating jurisdictions in 

implementing their SSBCI capital programs.

1 These Compliance Standards are a complement to, 

but not a substitute for, the requirements set forth in the SSBCI statute, the Allocation

Agreement, the SSBCI Capital Program Policy Guidelines (Guidelines), and other SSBCI rules 

and guidance, including SSBCI Frequently Asked Questions (SSBCI FAQs) and the SSBCI 

Capital Program Reporting Guidance (Reporting Guidance). Each participating jurisdiction is

responsible for ensuring compliance with all applicable program requirements. These 

Compliance Standards are based on existing requirements set out in the SSBCI statute or in 

program rules or guidance, but they do not create new requirements, nor do they repeal or 

modify any requirements in the SSBCI statute, rules, or guidance.

2 Participating jurisdictions 

must comply with all applicable SSBCI rules and guidance Treasury may issue.

Section 2 contains a recommended framework for identifying, mitigating, managing, and 

monitoring compliance and oversight risks and provides an approach for designing and

implementing a comprehensive compliance and oversight system. Section 3 discusses

recommended practices regarding key compliance and oversight risks and provides further 

guidance on the mitigation of specific risks. These risks were identified based on an assessment 

of the relative impact and likelihood of each risk, as well as a review of questions from 

participating jurisdictions.

Treasury’s Office of the Inspector General (OIG) is authorized to conduct, supervise, and 

coordinate audits and investigations of the use of SSBCI funds, which includes reviewing

participating jurisdictions’ compliance with SSBCI program requirements.

1 Depending on the structure of a participating jurisdiction’s SSBCI capital program, certain recommendations in 

these Compliance Standards may be more directly applicable to the jurisdiction’s implementing entity or contracted 

entities, as such terms are defined in Section 1.1 of the SSBCI Allocation Agreement. For example, a jurisdiction’s 

level of oversight of an implementing entity may vary depending on whether the implementing entity is a 

department of the jurisdiction or if the implementing entity is a corporation or other entity authorized or supervised 

by a jurisdiction. 2 Section 3.1 of the Allocation Agreement, providing that a participating jurisdiction is responsible for compliance

with “Treasury’s SSBCI regulations, guidance, and other requirements,” should not be interpreted to mandate 

compliance with any provision in these Compliance Standards except to the extent that they re-state requirements 

that are set out in the SSBCI statute or in other SSBCI regulations or guidance.
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Please note this document may be updated periodically to reflect newly available guidance or 

information. Therefore, this document should not be relied upon to comprehensively describe 

all requirements of the SSBCI Capital Program. Participating jurisdictions should regularly 

consult the most recent SSBCI rules and guidance. Compliance with these Compliance 

Standards may not satisfy all applicable SSBCI program requirements. When these Compliance 

Standards are updated, Treasury intends to promptly notify the participating jurisdictions’ points 

of contact via e-mail. Participating jurisdictions may also visit Treasury’s SSBCI website

(http://www.treasury.gov/ssbci) to review and download the latest version. 

Section 2. Recommended Compliance and Oversight Risk Management Framework

The recommended Compliance and Oversight Risk Management Framework is intended to help 

participating jurisdictions identify, mitigate, monitor, and manage compliance and oversight 

risks. The recommended approach for designing and implementing a comprehensive compliance 

and oversight system is built upon the six key steps depicted in the graphic below:
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2.1 Designate – Designate a Compliance and Oversight Coordinator

Participating jurisdictions should designate a compliance and oversight coordinator. One way a 

jurisdiction may wish to coordinate compliance and oversight is through a centralized risk 

management and compliance function that includes experienced and knowledgeable staff with 

core competencies to manage the day-to-day risk management and compliance activities for the 

jurisdiction’s approved programs. The centralized risk management and compliance function 

should span all SSBCI program activities and coordinate all risk management and compliance 

activities.

3 Depending on the size and scope of a participating jurisdiction’s approved programs, 

the centralized risk management and compliance function may be performed by staff on a less 

than full-time basis – it is up to the jurisdiction to determine how to appropriately staff this 

function.

2.2 Identify – Identifying Key Compliance and Oversight Risks

Risk identification is essential for each participating jurisdiction’s successful management of its 

approved programs. The following key compliance and oversight risks have been identified by 

Treasury. Additional considerations and recommendations for these risks are included in 

Section 3 below. 

Program Operations Risks:

o Inadequate oversight of implementing entities and contracted entities.

o Inadequate lender/investor adherence to requirements.

o Inadequate control and retention of program records.

o Inadequate certifications.

o Conflicts of interest in general.

Financial Management Risks:

o Fraud, waste, and abuse of SSBCI funds.

o Improper use of and accounting for SSBCI funds.

Reporting Risks:

o Failure to submit complete, timely, and accurate quarterly and annual reports.

o Failure to submit complete and accurate data to support a participating jurisdiction’s

incentive allocation for business enterprises owned and controlled by socially and 

economically disadvantaged individuals (SEDI-owned businesses).

4

3 Participating jurisdictions should evaluate their overall risk management and compliance functions to verify that 

risk assessments and risk management are adequate, risk monitoring and responses are sufficient, and risk reporting

is timely. 4 The term “SEDI-owned business” and how funds may be expended to benefit these businesses are set out in 

greater detail in the SSBCI Capital Program Policy Guidelines.
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Participating jurisdictions should actively identify any other risks that are unique to the design of 

their particular approved programs. Identified risks can be inventoried into a risk register for 

tracking purposes.5

2.3 Assess – Assessing the Likelihood and Severity of Identified Risks 

Each participating jurisdiction should assess the likelihood and impact of all identified risks. A 

three-tiered risk rating of “high,” “medium,” or “low,” as shown in Figure 1, is recommended, 

though more granular scoring may be applied for more 

mature risk and compliance functions. To determine the risk 

rating, the participating jurisdiction should make an 

informed judgment about both the likelihood and impact of 

risks that may result in instances of non-compliance with 

SSBCI requirements. Participating jurisdictions should also 

consider how risks might arise more holistically throughout 

the chain of authorizations, certifications, and approvals 

among the jurisdiction’s implementing entity as defined in 

the Allocation Agreement (including the implementing 

entity’s employees and board members, if applicable), any 

contracted entities as defined in the Allocation Agreement, 

lenders and investors, and small business borrowers and

investees. 

A participating jurisdiction’s risk assessment should be ongoing throughout the SSBCI program 

and include regular assessments of the following: 

• The implementing entity and all contracted entities identified in the Allocation 

Agreement;

• All available internal and external testing results; and 

• Approved program descriptions and their respective eligibility/participation requirements. 

If the participating jurisdiction’s risk assessment identifies findings, material weaknesses, or 

significant deficiencies, the applicable risk rating should be adjusted. This is especially true if the 

finding, material weakness, or significant deficiency pertains to an identified risk category. 

Participating jurisdictions should also promptly develop and implement a corrective action plan 

to mitigate risk. Participating jurisdictions are encouraged to provide Treasury with testing, 

examinations, and/or reviews that contain findings, material weaknesses, or significant 

deficiencies, as well as the proposed response. 

5 There are several resources available to help jurisdictions identify and inventory risks, including the Association 

for Federal Enterprise Risk Management’s (AFERM) Federal ERM Areas of Practice Guidance

(https://www.aferm.org/areas-of-guidance/). 
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2.4 Plan - Developing a Risk Mitigation and Monitoring Plan

Each participating jurisdiction should develop a risk mitigation and monitoring plan that includes 

procedures for mitigating and monitoring compliance and oversight risks. One effective way for

participating jurisdictions to organize this plan is through a risk matrix. However, other 

approaches that trace the relationship between each risk and associated control objectives, 

control activities, and testing protocols may be equally effective. The risk matrix (or equivalent 

document) should include the risks that the participating jurisdiction identified as generally 

applicable to all approved programs and any additional risks that the participating jurisdiction

believes are jurisdiction- or program-specific. Participating jurisdictions should capture and 

monitor all identified risks in the risk matrix since many risks (and related control mechanisms) 

are interrelated.

Participating jurisdictions should document a specific plan to mitigate and monitor each risk by: 

1) Defining control objectives. A control objective is the specific target used to determine 

whether a control is operating effectively. It can also be thought of as a management goal 

focused on mitigating a specific compliance and oversight risk. For example, a control 

objective regarding reporting might be: “SSBCI quarterly or annual reports are submitted 

on time and are complete, accurate, and consistent with the jurisdiction’s general ledger 

entries and documentation.” 

2) Specifying control activities for each control objective. Control activities should be 

designed to help a participating jurisdiction manage control objectives. As stated by the 

U.S. Government Accountability Office (GAO) in the Standards for Internal Control in 

the Federal Government (the “Green Book”), “[c]ontrol activities are the policies, 

procedures, techniques, and mechanisms that enforce management’s directives to achieve 

the entity’s objectives and address related risks.”6 

3) Developing a testing plan with planned test methodologies, sample sizes, and testing 

frequencies for each control activity. Controls testing should be conducted at least 

annually. Active and continuous monitoring of the risks ranked high or medium is 

encouraged.

For risks rated high or medium, participating jurisdictions should consider expanding the sample 

size and/or conducting more frequent testing to mitigate compliance risk and to ensure a robust 

control environment. 

Participating jurisdictions should conduct testing for each control activity using a sampling 

technique that is consistent, justifiable, and documented.7

 The sample size should be based on 

6 See Principle 10, section 10.02 of the Green Book (GAO-14-704G), which is available on GAO’s website at 

https://www.gao.gov/products/gao-14-704g. While GAO’s explanation of control activities is directed at federal 

executive branch agencies, rather than participating jurisdictions, this section may be helpful to participating 

jurisdictions. 7 For most control activities, the universe of records to test will be the SSBCI-supported loans or investments

themselves. However, for some control activities, the universe of records may be other types of documents. For

example, to test compliance with the mandatory control activity for the “Inadequate oversight of implementing or 

contracted entities” risk, a participating jurisdiction could evaluate the written agreement with the applicable entities 

against minimum requirements. See section 3 for further details on mitigating this risk. 
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relevant factors, including the size of the population, acceptable margin of error, and desired 

confidence level.8 Participating jurisdictions should document the sampling technique, 

methodology, and rationale for the sample size and sample frequency of each test conducted. 

Figure 2: Sample Risk Matrix RISK IDENTIFICATION RISK MANAGEMENT 

Risk 

# 

Risk Category Program 

Risk

Risk 

Impact 

(High, 

Medium, 

Low)

Risk 

Likelihood

(Likely, 

Possible, 

Unlikely)

Risk 

Ranking 

Risk 

Mitigation 

Strategy 

Steps Taken to 

Mitigate and 

Monitor 

Identified Risk 

Risk Status 

(Open, 

Closed)

Risk Owner

1.1

1.2

1.3

Figure 2 is a sample risk matrix that includes: 

• Risk category – groups used to categorize program risks (e.g., inadequate documentation 

of administrative costs, improper accounting). 

• Program risks – risks to be mitigated (e.g., SSBCI administrative costs claimed are

inaccurate, unallowable, or not allocable to SSBCI). 

• Risk impact – an assessment of the impact/consequences of a program risk occurring 

(e.g., high, medium, low). 

• Risk likelihood – an assessment of the likelihood/probability of a program risk occurring 

(e.g., likely, possible, unlikely). 

• Risk ranking/rating – risk ranking based upon a risk’s likelihood of occurrence and risk 

impact. 

• Risk mitigation strategy – strategy to address identified risks. 

• Steps taken to mitigate and monitor the risk – specific steps to implement the risk 

mitigation strategy.

• Risk status – current implementation status of the risk mitigation strategy. 

• Risk owner – individual or organizational function (e.g., division, office, or similar 

subdivision) responsible for overseeing the risk. 

Other approaches that trace the relationship between each risk and associated control objectives, 

control activities, and testing protocols may be equally effective. Controls identified to address 

related risks can be organized into a corresponding control matrix (Figure 2.1), which could 

include, but is not limited to, control objectives, control type, control activity, control frequency, 

control owner, and control test strategy. Tests of controls identified to mitigate risks typically 

include, but are not limited to, test step(s), sample size, testing frequency, test results, and 

resolution of any corrective actions, if required. Controls relating to the risks identified and 

corresponding tests performed could subsequently be added to the risk matrix.

8 Participating jurisdictions may find it useful to use a statistical sample calculator to help to determine the 

appropriate sample size – there are several available on the internet. In addition, the U.S. Department of Health and 

Human Services Office of Inspector General has published a Statistical Sampling Toolkit for State Medicaid Fraud 

Control Units (MFCUs), which is available at https://oig.hhs.gov/fraud/medicaid-fraud-control-unitsmfcu/files/MFCU%20Sampling%20Guidance%20Final.pdf. 
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Figure 2.1 Sample Control Matrix 

CONTROL IDENTIFICATION CONTROL TESTING

Control 

# 

Control 

Objective

Control 

Type

Control 

Activity

Control 

Frequency

Control 

Owner

Test 

Methodology 

Test 

Step(s)

Sample 

Size

Testing 

Frequency

Test 

Results

Corrective 

Action 

Resolution

1.1

1.2

1.3

2.5 Implement – Conduct Periodic Testing

Participating jurisdictions should conduct periodic testing of a justifiable sample of their records 

to determine whether the participating jurisdiction is adhering to the control activities listed in 

their risk matrix (or equivalent document). Controls testing should be conducted at least 

annually, though active and continuous monitoring of the risks ranked as high impact is 

encouraged. Participating jurisdictions should make risk-based determinations as to whether 

more frequent controls testing is warranted. 

To ensure objectivity, controls testing should be conducted by an individual or organizational 

function that: 

• is not responsible for performing any of the control activities established by the 

participating jurisdiction; and 

• does not report to any individual responsible for performing or overseeing any of the 

participating jurisdiction’s risk mitigation activities. 

Typically, the individual or organizational function designated as responsible for overseeing risk 

management and compliance should also review test results.

Where a contracted entity operates an approved program, the participating jurisdiction should 

consider obtaining attestation reports (e.g., Statement on Standards for Attestation Engagements 

or SSAE Type II) as part of the internal controls. 

The participating jurisdiction should establish preventative controls to help ensure that ineligible 

loans or investments are not enrolled in an approved program. If a participating jurisdiction

becomes aware that an ineligible loan or investment has been enrolled in an approved program,

the participating jurisdiction should contact Treasury as soon as practicable and follow the 

process outlined in Section XII of the Guidelines to determine the appropriate corrective action.

If employees of a participating jurisdiction, implementing entity, or contracted entity identify any

instances of fraud, waste, or abuse, they should contact OIG immediately. See

https://oig.treasury.gov for information on how to contact OIG. 
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2.6 Track and Control – Take Corrective Action As Needed

If compliance and internal controls testing results indicate isolated and non-repeating instances 

of non-compliance, the participating jurisdiction should notify Treasury as soon as practicable

and take all necessary steps to bring the program into compliance.

If test results indicate systematic non-compliance with a particular control activity, the 

participating jurisdiction should notify Treasury as soon as practicable, assess the results to 

determine the cause, and take corrective actions. Corrective actions may include:

• Deep-dive analyses to determine the cause of non-compliance; 

• Temporary work-arounds while improved procedures are implemented; 

• Enhanced staff training;

• Enhanced training and technical assistance for lenders/investors, implementing entities, 

and contracted entities, as appropriate;

• Development of checklists to help remedy non-compliance;

• Development or enhancement of information technology systems to identify

non-compliant records; and/or

• Updates to policies and procedures.

Participating jurisdictions should document test results and assess the need for increasing the

frequency and/or scope of compliance and internal controls testing.

Section 3. Key Compliance and Oversight Risks

This section is organized around key compliance and oversight risks for most approved 

programs. 

3.1 Program Operations Risks

a. Risk: Inadequate Oversight of Implementing and Contracted Entities 

A participating jurisdiction designates an implementing entity to accept its SSBCI allocation and 

a participating jurisdiction or its implementing entity may contract with one or more contracted 

entities to implement or administer its approved programs. Depending on how a participating 

jurisdiction sets up its approved programs, an implementing entity or contracted entities may be 

responsible for:

• Overseeing the day-to-day financial management activities of the approved program, 

ensuring the accuracy of the accounting records, and ensuring internal controls are in 

place.

• Reviewing required certifications and records retention.

• Taking prompt action to correct identified instances of non-compliance.

Each participating jurisdiction should provide appropriate oversight over its implementing entity 

and any contracted entities.
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In accordance with Section 3.1 of the Allocation Agreement, each participating jurisdiction shall, 

and shall cause any entities with which it designates or contracts to implement Approved 

Programs, including the jurisdiction’s Implementing Entity and Contracted Entities, to comply 

with the SSBCI statute, as amended or replaced from time to time, and Treasury’s SSBCI 

regulations, guidance, and other requirements, as in effect from time to time. Participating 

jurisdictions should impose these requirements through a written agreement. 

Further, each participating jurisdiction should execute a written agreement applying the

following provisions of Article III of the Allocation Agreement to its implementing entity (if 

they are not already bound by these provisions under the Allocation Agreement) and its 

contracted entities, as applicable:

• Section 3.1 “Compliance with Laws,” 

• Section 3.2 “Nondiscrimination,”

• Section 3.3 “Use of SSBCI Funds, Returned Funds, and Program Income,”

• Section 3.5 “Internal Control and Financial Management System Requirements,”

• Section 3.6 “Reported Data Usage,”

• Section 3.7 “Notices of Certain Material Events,” and 

• Section 3.8 “Publication of Approved Program Contact Information.” 

In addition, Treasury calls special attention the following additional requirements from the 

Guidelines and Reporting Guidance that should be incorporated into the agreement with the 

implementing entity (if they are not already bound by these provisions under the Allocation 

Agreement) or contracted entities, as applicable:

• In accordance with Section VI “Record Retention and Increase of Frequency and Scope 

of Reporting” of the Reporting Guidance, before providing funding to a private entity 

using SSBCI funds, each participating jurisdiction must obtain the following: 

o The written agreement of the private entity, including any financial institution, to 

make available to the Treasury Inspector General and the Government Accountability 

Office all books and records related to the use of the SSBCI funds, subject to 

applicable privacy laws, including but not limited to 12 U.S.C. § 3401 et seq., 

including detailed loan and investment records, as applicable; 

o A certification from the private entity, if it is a financial institution, that the private 

entity is in compliance with the requirements of 31 C.F.R. § 1020.220, regarding 

customer identification programs; and 

o A certification from the private entity, including any financial institution, that the 

principals of such entity have not been convicted of a sex offense against a minor (as 

such terms are defined in section 111 of the Sex Offender Registration and 

Notification Act (42 U.S.C. 16911)).

• In accordance with Section VIII.i “Services to Portfolio Companies” of the Guidelines, if 

a contracted entity is a venture capital fund that will use the 1.71 percent allowance for 

services to portfolio companies, the agreement between the participating jurisdiction and 

the venture capital fund must require the venture capital fund to identify the services to 

be provided to portfolio companies and annually certify that these services were 
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provided. In addition, the agreements between the venture capital fund and portfolio 

companies should include disclosure of these services offered by the fund manager.

Depending on how the participating jurisdiction has set up its approved programs, recommended 

practices include:

• Inserting provisions into agreements with the implementing entity or contracted entities 

that:

o Specify requirements applicable to administrative costs in accordance with Section IX 

“Administrative Costs” of the Guidelines, including that administrative costs are 

defined and governed by the Uniform Cost Principles in 2 C.F.R. Part 200 Subpart E 

and that the entity must maintain appropriate substantiating documentation for 

administrative costs.

o Specify responsibilities regarding certifications;

o Specify all eligibility requirements for loans/investments for each applicable 

approved program;

o Incorporate the appropriate conflicts of interest applicable to lending programs 

(see Section VII.f “Borrower Restrictions” of the Guidelines, which are applicable to 

CAPs and Section VIII.f of the Guidelines, which are applicable to loan OCSPs) and 

equity/venture capital programs (see Section VIII.f “Equity/Venture Capital 

Programs: Conflict-of-Interest Standards of the Guidelines), and prohibit, or require 

disclosure of, underwriting or approving a loan to, or an investment in, any business

in which the implementing or contracted entity or any of its principals or affiliates has

a direct or indirect financial interest;

o Specify responsibilities with respect to data collection and reporting (the agreement 

should specify the respective roles of the implementing or contracted entity and the 

participating jurisdiction in meeting all data collection and reporting responsibilities, 

and include the participating jurisdiction’s transaction enrollment form, if applicable);

o Specify consequences for non-compliance with the terms and conditions of the

agreement;

o Identify remedies to be performed in the event of a default as specified under 

Article V of the Allocation Agreement; and

o Specify the process and/or responsibilities for un-enrolling and replenishing

transactions identified as non-compliant use of funds. 

• Reviewing the implementing entity or contracted entities for findings, material 

weaknesses, or significant deficiencies, and requiring the implementing or contracted

entity to take corrective actions.

• Performing site visits, requiring periodic status update reports, and/or conducting regular 

conference calls with the implementing entity or contracted entities to monitor progress 

and provide early warning of any implementation challenges.

The above recommendations are not exhaustive. Participating jurisdictions should consider 

incorporating any additional activities or practices that can provide additional mitigating controls 

associated with this risk.
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b. Risk: Inadequate Lender/Investor Adherence to Requirements

Prior to enrolling any loan originated by a private lender, and prior to enrolling any investment, 

the participating jurisdiction (or its implementing entity or contracted entity, as appropriate)

should execute a signed lender/investor participation agreement to clarify lender/investor

responsibilities and reduce the likelihood of non-compliance. This agreement should specify:

• Eligibility requirements for loans/investments for each applicable approved program and 

prohibit the lender or investor from enrolling a transaction that violates SSBCI’s 

restrictions on the use of proceeds;

• Restrictions on use of proceeds and requirements regarding conflicts of interest, including 

required certifications;

• Responsibilities regarding sex offender certifications;

• Responsibilities for data collection and reporting; 

• Responsibilities for making all books and records related to the use of SSBCI funds 

available to the OIG, and/or the GAO; and

• Consequences for non-compliance with the terms of the agreement.

In addition, in accordance with Section VIII.i “Services to Portfolio Companies” of the 

Guidelines, if a venture capital fund will use the 1.71 percent allowance for services to portfolio 

companies, as required by the Guidelines, the agreement between the participating jurisdiction 

(or implementing or contracted entity, as appropriate) and the venture capital fund must require 

the venture capital fund to identify the services to be provided to portfolio companies and 

annually certify that these services were provided. 

In addition, the agreements between the venture capital fund and portfolio companies should 

include disclosure of these services offered by the fund manager.

Recommended additional provisions may include: 

• Use of a transaction enrollment form that includes the lender’s or investor’s review of the 

transaction purpose before enrolling the transaction in an approved program;

• Acquiring, logging, and maintaining relevant detail for each transaction; and 

• Specifying any required data reporting elements from the lender or investor to the 

participating jurisdiction, implementing entity, or contracted entity. 

The above recommendations are designed to assist in tracking the use of SSBCI funds and 

gathering data required for SSBCI quarterly and annual reports. Participating jurisdictions, 

implementing entities, and contracted entities, as appropriate, should consider incorporating any 

additional activities or practices that can help provide additional mitigating controls associated 

with this risk.

c. Risk: Inadequate Control and Retention of Records

As set forth in Section VI “Reporting Retention and Increase of Frequency and Scope of 

Reporting” of the Reporting Guidance, participating jurisdictions must retain all financial 
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records, supporting documents, statistical records, and all other records pertinent to its SSBCI 

allocation for a period of three years from the date of submission of the final quarterly report 

under Section II.a, except as otherwise provided in 2 C.F.R. § 200.334.

This should include, but is not necessarily limited to: any transaction enrollment forms; all loan 

and investment agreements; loan or investment commitment letters; all sex offender and use of

proceeds/conflict-of-interest certifications retained by the participating jurisdiction; any 

SEDI-owned business certifications retained by the participating jurisdiction; any 1.71 percent

allowance certifications of venture capital funds regarding services to portfolio companies 

retained by the participating jurisdiction; all general ledger entries pertaining to SSBCI funds; all 

statements for accounts containing SSBCI funds, including bank statements if applicable; any

contracts or memoranda of agreement (MOA) with implementing or contracted entities; records 

of all transfers of funds to implementing or contracted entities; all invoices and receipts for 

administrative expenses; and documentation of private leverage and subsequent private

financing.

If implementing or contracted entities, lenders, or investors are required to retain records on 

behalf of the participating jurisdiction, rather than submitting these records to the participating 

jurisdiction or implementing or contracted entity, the participating jurisdiction should have a 

written agreement in place requiring the retention of these records until at least January 30, 2031

and the participating jurisdiction should exercise oversight to verify compliance with this 

requirement. One means of exercising oversight would be to conduct periodic testing, 

examinations, and/or reviews of a random sample of each entity’s records.9 Participating 

jurisdictions should consider adding any additional activities that may be useful to provide 

additional controls associated with records retention.

d. Risk: Inadequate Certifications 

The Guidelines require certifications from lenders, investors, borrowers, and investees for each

SSBCI-supported transaction. Appendix A summarizes the applicable certifications required in 

various circumstances and provides sample certifications that may be used by participating 

jurisdictions. Participating jurisdictions (or, as applicable, implementing or contracted entities, 

lenders, or investors) may design their own certification forms but the requirements established

in the Guidelines must be met. Certifications may be combined into one form where applicable.

While Treasury does not require participating jurisdictions (or implementing or contracted 

entities, lenders, and investors, if so designated) to independently verify the representations made

by the authorized representative of the small business borrower or investee, participating 

jurisdictions should, as part of their compliance monitoring procedures and as appropriate to the 

requirements of a specific certification, establish a process to determine whether these required

certifications have been properly documented. 

9 As noted in Section 2.5, participating jurisdictions should make risk-based determinations as to the frequency of 

testing (e.g., annual, semi-annual, quarterly, as needed, etc.). 
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Participating jurisdictions could meet this expectation by:

• Obtaining, reviewing, and maintaining a copy of each borrower’s and investee’s

certification10 or

• Executing an agreement that permits the implementing or contracted entity, or each 

lender or investor (as applicable), to obtain, review, and maintain a copy of each

borrower’s or investee’s certification.

Participating jurisdictions should exercise appropriate oversight of the implementing or 

contracted entity, lender, or investor tasked with this responsibility. One means of exercising this 

oversight is to conduct periodic testing, examinations, and/or reviews of each relevant entity’s 

transaction files to verify the required certifications are on file and properly executed.

It is the participating jurisdiction’s responsibility to ensure that required certifications are 

collected, either electronically or in paper copy. Certifications should be collected prior to the 

closing of a loan or investment. 

• For use of proceeds/conflict-of-interest certifications: Participating jurisdictions 

should ensure that use of proceeds/conflict-of-interest certifications are collected for each 

transaction from the borrower or investee and from the lender or investor, as appropriate. 

It is not sufficient for borrowers or investees and lenders or investors to provide a onetime use of proceeds/conflict-of-interest certification. Use of proceeds/conflict-of-interest 

certifications are not required from lenders and co-investors that do not provide, 

administer, or receive direct support through SSBCI funds. See also SSBCI Sample 

Certifications 1 and 2. 

• For sex offender certifications: Participating jurisdictions should ensure that borrower 

or investee sex offender certifications covering all principals of a borrower or investee 

and all principals of a lender or investor are collected prior to enrolling a loan or 

investment. Certification can be made by single authorized representative of the small 

business and authorized representative of the lender or investor originating the loan or 

investment.

In accordance with section 3011(c)(2) of the SSBCI statute (12 U.S.C. § 5710(c)(2)) and 

Section VII.f “Lender Assurances” (applicable to CAPs) and Section VIII.f “Lender 

Assurances” (applicable to OSCPs) of the Guidelines, participating jurisdictions must 

obtain certification from the private entity, including any financial institution, that the 

principals of such entity have not been convicted of a sex offense against a minor (as 

such terms are defined in section 111 of the Sex Offender Registration and Notification 

Act (42 U.S.C. 16911)). These certifications should cover all lenders or investors 

enrolling a loan or investment in an SSBCI approved program, as well as for-profit or 

non-profit implementing or contracted entities that make loans or investments directly to 

borrower/investees through an approved direct lending program, loan participation 

10 Certifications, whether in paper or electronic (e.g., PDF) form, should contain a wet ink or electronic 

signature. 
SSBCI Capital Program National Compliance Standards

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14

program, or jurisdiction-run venture capital program, and private lenders and investors 

that provide SSBCI funds to a borrower or investee or that receive direct SSBCI support 

through a loan participation, loan guarantee, collateral support, or CAP reserve fund. This 

means that when a contracted entity operates an approved direct loan or loan participation 

program on behalf of a participating jurisdiction, two certifications generally are 

required: one from the borrower and one from the relevant contracted entity that is 

administering the program as the lender. Similarly, if a contracted entity operates an 

approved direct equity/venture capital program on behalf of a participating jurisdiction, 

two certifications generally are required: one from the investee and one from the relevant 

contracted entity as the investor. 

Participating jurisdictions should:

o Require newly executed sex offender certifications covering all principals of a 

lender or investor prior to enrolling each loan or investment in an approved 

program; or, 

o Require sex offender certifications covering all principals of a lender or investor 

prior to enrolling any loans or investments originated by that lender or investor in 

the approved programs and require a written agreement with the lender or investor 

(which may be part of a larger lender or investor participation agreement) that 

clearly specifies that the lender or investor must notify the participating 

jurisdiction if and when an event occurs that renders the prior certifications 

obsolete. Such event could be a change in principals or a conviction of an existing 

principal for a sex offense against a minor. The participating jurisdiction may also 

consider adding a requirement to this written agreement for a periodic 

resubmission of the certifications, perhaps on an annual basis, even absent a 

material event.

While Treasury does not require participating jurisdictions (or implementing or 

contracted entities, as appropriate) to independently verify the certified sex offender 

status of covered principals, participating jurisdictions should ensure the certification is 

collected, either electronically or in paper copy and documented before funds are 

transferred to a lender, investor, borrower, or investee, as appropriate. See also

SSBCI Sample Certifications 3 and 4.

• For SEDI-owned business certifications: Participating jurisdictions should ensure that 

SEDI-owned business information is requested for each transaction and that SEDI-owned 

business certifications are retained for any transactions where the participating 

jurisdiction states that funds are expended for SEDI-owned businesses. 

See also SSBCI Sample Certification 5. 

• For the required certification where a venture capital fund provides services to 

portfolio companies: Participating jurisdictions should ensure that when a venture 

capital fund uses the 1.71 percent allowance to provide services to portfolio companies, 

that the venture capital fund certifies annually that the services identified in the 
SSBCI Capital Program National Compliance Standards

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15

agreement between the jurisdiction and the venture capital fund were provided. 

See also SSBCI Sample Certification 6. 

• For OCSP transactions where a Tribal enterprise lends to or invests in another 

Tribal enterprise: Participating jurisdictions should ensure that the lender or investor 

and borrower and investee certify that the transaction is in accordance with the Tribal 

conflict-of-interest policy. See also Sample Certifications 7 and 8. 

In accordance with Section 3.1 of the Allocation Agreement, each participating jurisdiction shall, 

and shall cause any entities with which it designates or contracts to implement Approved 

Programs, including the jurisdiction’s implementing entity and contracted entities, to comply 

with the SSBCI statute and Treasury’s SSBCI regulations, guidance, and other requirements, as 

in effect from time to time. If the participating jurisdiction delegates any SSBCI responsibilities 

to an implementing or contracted entity, therefore, the participating jurisdiction should exercise 

appropriate oversight to verify compliance. One means of exercising this oversight would be to 

conduct periodic testing, examinations and/or reviews of the certifications to verify that the 

documents exist and are being maintained pursuant to the records retention requirements 

(discussed under Records Management Risk and Program Operations Risk).

e. Risk: Conflicts of Interest in General 

Preventing conflicts of interest in underwriting, enrollment, contracting, and lender/investor 

participation decisions is important to prevent the misuse of funds as well as any appearance of 

impropriety. The Guidelines address certain conflicts-of-interest issues.11 However, additional

conflicts of interest could arise, and participating jurisdictions should carefully assess whether 

other conflicts of interest should be identified, mitigated, monitored, and managed.

Participating jurisdictions should consider developing the following conflict-of-interest controls:

• For all approved programs: 

o Require all individuals involved in the participating jurisdiction’s procurement 

process to disclose any potential or actual conflicts of interest, in accordance with the 

participating jurisdiction’s written conflict of interest policy, and to recuse him or 

herself if a conflict of interest occurs.

o Require all individuals involved in the transaction underwriting or approval process 

in an approved program to disclose any potential or actual conflicts of interest, in 

accordance with the participating jurisdiction’s written conflict of interest policy, and 

to recuse him or herself if a conflict of interest occurs.

• For equity/venture capital OCSPs: 

o Develop a list of “SSBCI insiders” and reviewing quarterly for completeness. 

11 See Section VII.f “Borrower Restrictions” of the Guidelines applicable to CAPs and Section VIII.f of the 

Guidelines applicable to loan OCSPs). See Section VIII.f “Equity/Venture Capital Programs: Conflict-of-Interest 

Standard” of the Guidelines applicable to equity/venture capital OCSPs. See section VIII.f “Tribal Programs: 

Conflict-of-Interest Standards” of the Guidelines applicable in the context of a Tribal OCSP program if a 

Tribal enterprise lends to or invests in another Tribal enterprise. 
SSBCI Capital Program National Compliance Standards

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16

o Require disclosure and review of lists of current and potential equity owners 

(e.g., stock options or warrants recipients) on a small businesses’ capitalization table 

and cross-checking with list of SSBCI insiders.

The above recommendations are not exhaustive. Participating jurisdictions and implementing or

contracted entities, as appropriate, should consider incorporating any additional activities or 

practices that may serve as mitigating controls associated with this risk.

3.2. Financial Management Risks

a. Risk: Fraud, Waste, and Abuse

Preventing fraud, waste, and abuse is an important part of preventing the misuse of SSBCI funds. 

Participating jurisdictions, implementing entities, and contracted entities should consider the 

following controls:

• Requiring loans or investments to be approved by a board or committee, with meeting

minutes documenting the basis for the underwriting/enrollment decision.

• Requiring contracts to be awarded pursuant to an open, competitive, and fair procurement

process.

• Maintaining strict controls over access to bank accounts.

• Maintaining strict controls over access to documents, reports, records, and assets.

• Maintaining strict information technology (IT) security protocols to prevent unauthorized

access to IT systems and unauthorized manipulation of data.

• Requiring staff to complete anti-fraud and ethics training.

• Requiring staff overseeing implementing and contracted entities to verify that work

was performed before paying any invoice from an implementing or contracted entity.

• Maintaining segregation of duties (e.g., employees who perform cash functions should

not reconcile bank account statements).

• Reconciling invoices to purchase orders and contracts.

• In the event of cash transactions, comparing cash receipt transactions to a cash receipt

log and bank deposit records to minimize the possibility of theft, fraud or abuse.

The above recommendations are not exhaustive. Participating jurisdictions and implementing or

contracted entities, as appropriate, should consider incorporating any additional activities or 

practices that may serve as mitigating controls associated with this risk.

b. Risk: Improper Use of and Accounting for SSBCI Funds, including 

Administrative Costs

Section 3.3 of the Allocation Agreement establishes that the participating jurisdiction shall only 

use SSBCI Funds, Returned Funds, or Program Income, as those terms are defined in the 

Allocation Agreement, to carry out approved programs and specifies certain other limitations. 

Section XI of the Guidelines specifies requirements applicable to administrative costs, including 

that the Cost Principles set out as Subpart E to 2 C.F.R. part 200 apply to administrative costs. 
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17

Administrative costs must be allowable, allocable, reasonable, and all indirect costs be in 

accordance with the negotiated indirect cost rate agreement with the participating jurisdiction’s

cognizant agency for indirect costs.

The Allocation Agreement includes Schedule A, which specifies implementing and contracted 

entities and the approved programs authorized by Treasury, and Section XI of the Guidelines

specifies maximum percentages available to the participating jurisdiction to pay for 

administrative costs (for the first tranche, 5 percent of allocated funds; for the second and third 

tranches, 3 percent of allocated funds). 

Therefore, participating jurisdictions should not expend, obligate, or transfer these funds for

purposes other than carrying out the approved programs specified in Schedule A of the 

participating jurisdiction’s Allocation Agreement, as well as the approved application.

Furthermore, Section 3.5 of the Allocation Agreement requires participating jurisdictions to 

comply with the standards of financial management systems including internal controls specified 

at 2 C.F.R. §§ 200.302 and 200.303. Treasury draws participating jurisdictions’ attention to the 

accounting requirements set forth in 2 C.F.R. § 200.302, which would generally require

jurisdictions to keep detailed records of the receipt of SSBCI funds and be able to trace the use of 

these funds to specific expenditures, obligations, or transfers for the purposes of carrying out an

approved program.

SSBCI funds that have been disbursed to the participating jurisdiction, but not yet expended, 

obligated, or transferred for allowable program purposes, should be maintained as cash or cash 

equivalents as specified in the SSBCI FAQs. The movement of SSBCI funds in and out of the 

implementing entity’s account must be tracked separately from the remainder of the funds in this

account.

Participating jurisdictions should consider developing the following controls:

• Segregating SSBCI funds in a separate account.

• Requiring dual control for the approval of all expenditures, obligations, or transfers of 

SSBCI funds. For example, one individual may prepare and track these expenditures, 

transfers, or obligations, and a second individual may approve them. These employees 

should not be in each other’s supervisory chain of command.

• Conducting a monthly reconciliation of all invoices, receipts, loan and investment 

agreements, and other documentation of SSBCI expenditures, obligations, and transfers; 

general ledger entries; and bank account statements. Verify that all deposits and 

withdrawals of SSBCI funds match general ledger entries, and that these general ledger 

entries are supported with substantiating documentation. To ensure segregation of duties, 

this reconciliation should be performed by an employee that is neither the individual 

responsible for cash transactions, nor in the supervisory chain of the individual 

responsible for cash transactions.
SSBCI Capital Program National Compliance Standards 

November 17, 2022 

18

• Requiring that payments for services to portfolio companies charged by venture capital 

funds are verified for accuracy, reconciled against agreements, and do not exceed the 

maximum percentage permitted by the Guidelines.12

• Requiring an employee other than the employee recording and tracking administrative 

expenses to verify that each direct expense is accompanied by an invoice or receipt, that 

the amount shown on the invoice or receipt matches the expense recorded, and that the 

service or item purchased is directly related to an approved program. 

• Requiring all employees to maintain time records showing the number of hours spent on 

approved programs each pay period. 

• Requiring that purchase requests and contracts be approved only after staff verify that the 

purchase or contract will not cause total administrative expenses to exceed the maximum 

percentages as set forth in Section XI of the Guidelines.

13

The above recommendations are not exhaustive. Participating jurisdictions and implementing or 

contracted entities, as appropriate, should consider incorporating any additional activities or 

practices that may serve as mitigating controls associated with this risk.

3.3. Reporting Risks 

a. Risk: Failure to Submit Timely and Accurate Quarterly and Annual Reports 

Sections IV and V of the Reporting Guidance and Section VIII of the Guidelines set forth 

SSBCI’s reporting requirements. Failure to submit complete and timely reports is an event of 

default, as described in Section 5.1 of the Allocation Agreement.

In order to improve the accuracy of the underlying data reported in these reports, before enrolling 

a loan or investment in an approved program, the participating jurisdiction, implementing entity, 

or contracted entity, as appropriate, should collect relevant transaction detail for each loan or 

investment from the lender or investor (or directly from the small business borrower or investee, 

if the participating jurisdiction, implementing entity, or contracted entity makes direct loans or 

investments). The participating jurisdiction should verify that all required data fields outlined in 

the Reporting Guidance have been provided, including funds expended for SEDI-owned 

businesses, and small business borrower-provided estimates of job creation and retention. 

Participating jurisdictions should consider developing the following controls to mitigate the

potential for inaccurate reporting: 

12 In accordance with Section VIII.i “Services to Portfolio Companies” of the Guidelines, up to an annual average of 

1.71 percent of the federal contribution to a venture capital funds over the life of the jurisdiction’s venture capital 

program may be used to pay for services to portfolio companies. In addition, a participating jurisdiction may elect to 

use its administrative cost funds for equity/venture capital programs, including venture capital fund operating 

expenses, subject to the Uniform Cost Principles in 2 C.F.R. Part 200 Subpart E. 13 Administrative costs are capped by statute (see 12 U.S.C. §§ 5702(c)(3)(C)-(D)). Specifically, for the first tranche, 

administrative costs are not to exceed 5 percent of allocated funds, and for the second or third tranches, 

administrative costs are not to exceed 3 percent of allocated funds. 
SSBCI Capital Program National Compliance Standards

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19

• Review the accuracy of transaction enrollment forms by conducting periodic testing, 

examinations and/or reviews of an appropriately sized sample and confirming that the 

data on the form matches the data on the underlying loan or investment documents.

• Perform a quality control check in which an employee not responsible for the 

participating jurisdiction’s reporting function compares individual transactions listed on 

the annual report to the transaction enrollment forms and/or underlying loan or 

investment documents.

The above recommendations are not exhaustive. Participating jurisdictions and implementing or

contracted entities, as appropriate, should consider incorporating any additional activities or 

practices that may serve as mitigating controls associated with this risk.

b. Risk: Failure to Document and Accurately Report Funds Expended for SEDI-Owned 

Businesses and Very Small Businesses (VSBs)

Participating jurisdictions must submit data on the total amount of their SSBCI funds expended 

for SEDI-owned businesses and VSBs. There are two separate allocations related to SEDIowned businesses: the first is the SEDI-owned business allocation that must be expended on 

SEDI-owned businesses and the second is the SEDI-owned business incentive allocation that a 

participating jurisdiction can access if Treasury determines the jurisdiction has demonstrated 

“robust support” for SEDI owned businesses. In addition, there is a VSB allocation that must be 

expended for businesses with fewer than 10 employees. 

Section IV of the Guidelines sets out requirements applicable to the SEDI-owned business 

allocations: 

• Section IV.a addresses the allocation that must be expended for SEDI-owned businesses, 

including how Treasury interprets the requirement that SSBCI funds be “expended for” 

SEDI-owned businesses; and 

• Section IV.b specifies how the SEDI-owned business incentive allocation will be 

calculated. 

Section V of the Guidelines sets out requirements applicable to the VSB allocation. In addition, 

the SSBCI FAQs relevant to Sections IV and V further clarify the requirements for these 

allocations. These allocations are new to SSBCI.

As specified in the Guidelines and SSBCI FAQs, participating jurisdictions are not required to 

establish a separate program for these allocations but must maintain records of the total amounts 

of its SSBCI funds expended for these businesses. Participating jurisdictions should ensure that 

implementing entities and contracted entities understand how to document funds expended for 

SEDI-owned businesses: 

• For purposes of documenting funds expended for SEDI-owned businesses, if the business 

falls into the SEDI-owned business categories (1) – (3) as set out in the Guidelines, 

documentation is through a certification from the borrower or investee. Treasury has 

provided a sample certification that may be used by participating jurisdictions to obtain

these certifications from a SEDI-owned business. 
SSBCI Capital Program National Compliance Standards

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20

• For SEDI-owned business category (4) set out in the Guidelines, participating 

jurisdictions may reasonably rely on the business’s address from the relevant transaction 

application, which should be reported to Treasury in the jurisdiction’s annual report 

through the “business street address” data element in Table 7 of the Reporting Guidance. 

See also 3.1.e “Inadequate Certifications” above.

To document expenditures for VSBs, participating jurisdictions should require that implementing 

entities, contracted entities, lenders, and investors, as appropriate, document that a business has 

fewer than 10 employees at the time of the transaction. The number of employees of a business 

should be reported to Treasury in the annual report through the “full time equivalent employees” 

data element set out in Table 7 of the Reporting Guidance. 
Appendix A - Capital Program Sample Certifications 

U.S. Department of the Treasury

State Small Business Credit Initiative

Capital Program Sample Certifications 

July 20221

The State Small Business Credit Initiative (SSBCI) Capital Program Policy Guidelines (as they 

may be amended from time to time, the Guidelines) require certifications in various 

circumstances from lenders, investors, and small business borrowers and investees participating 

in SSBCI capital programs of participating jurisdictions.

2 Treasury is providing sample 

certifications that may be used by participating jurisdictions for their capital programs. These 

sample certifications are provided for illustrative purposes only and are not intended to replace or 

supersede any internal controls participating jurisdictions have in place. Participating 

jurisdictions (or, as applicable, implementing entities, contracted entities, lenders, or investors) 

may design their own certification forms to meet the assurance and certification requirements in 

the Guidelines. The table lists the sample certifications and how they apply to different types of 

SSBCI capital programs, which include Capital Access Programs (CAPs), loan/credit Other 

Credit Support Programs (OCSPs), and venture capital/equity OCSPs. 

Sample Certification CAPs Loan/Credit 

OCSPs

Venture 

Capital/Equity 

OCSPs

1. Borrower/Investee Use of Proceeds 

and Conflict of Interest Certification

  

2. Lender/Investor Use of Proceeds and 

Conflict of Interest Certification

  

3. Sex Offender Lender/Borrower 

Certification (Loan/Credit Program)

 

1 Capital Program Sample Certifications were initially released on June 2, 2022. The document was updated on 

July 27, 2022 to include Sample Certifications 7 and 8. 2 The record retention requirements of Section VI of the SSBCI Capital Program Reporting Guidance apply to all 

records pertinent to a participating jurisdiction’s SSBCI capital allocation, including certifications of compliance 

with SSBCI requirements. 
Sample Certification CAPs Loan/Credit 

OCSPs

Venture 

Capital/Equity 

OCSPs

4. Sex Offender Investor/Investee 

Certification (Venture Capital/Equity 

Program)



5. Borrower/Investee Certification 

Related to Business Enterprises 

Owned and Controlled by Socially 

and Economically Disadvantaged 

Individuals (SEDI-Owned 

Businesses)3

  

6. Certification Regarding Venture 

Capital Fund Services to Portfolio 

Companies 



7. Certification Borrower/Investee Use 

of Proceeds and Conflict of Interest 

Certification for a Tribal Enterprise 

Lending to or Investing in Another 

Tribal Enterprise4

 

8. Certification Lender/Investor Use of 

Proceeds and Conflict of Interest 

Certification for a Tribal Enterprise 

Lending to or Investing in Another 

Tribal Enterprise5

 

3 SSBCI funds count toward fulfilling the “expended for” requirement for the $1.5 billion SEDI allocation and 

toward qualifying for initial eligible amounts under the $1.0 billion SEDI incentive allocation if the SSBCI funds 

have been expended for loans, investments, or other credit or equity support to any of the four groups of businesses 

set forth in Section IV.a of the Capital Program Policy Guidelines. While a participating jurisdiction may reasonably 

identify group (4) businesses (i.e., those located in Community Development Financial Institution (CDFI) 

Investment Areas) based on businesses’ addresses from the relevant loan, investment, and credit or equity support 

applications, certification is required with regard to groups (1) through (3).

4 This certification can be used to obtain the borrower/investee use of proceeds and conflict of interest certification 

for a loan or investment that is part of a Tribal government OCSP and involves a Tribal enterprise lending to or 

investing in another Tribal enterprise. For transactions where a Tribal enterprise is not lending to or investing in 

another Tribal enterprise, use Sample Certification 1.

5 This certification can be used to obtain the lender/investor use of proceeds and conflict of interest certification for a 

loan or investment that is part of a Tribal government OCSP and involves a Tribal enterprise lending to or investing 

in another Tribal enterprise. For transactions where a Tribal enterprise is not lending to or investing in another Tribal 

enterprise, use Sample Certification 2.
Sample Certification 1 – Page 1

Sample Certification 1. Borrower/Investee Use of Proceeds and Conflict of Interest 

Certification

This sample certification may be used by a participating jurisdiction to obtain the applicable 

borrower or investee use of proceeds and conflict of interest certifications. This sample 

certification is provided for illustrative purposes only and is not intended to replace or supersede 

any internal controls a participating jurisdiction has in place. 

Funds from the State Small Business Credit Initiative (SSBCI) may only be used for certain 

purposes and in circumstances where the applicable conflict of interest standards are satisfied. 

Legal name of borrower ☐ or investee ☐: __________________________________________

The borrower or investee hereby certifies the following to the lender or investor:

1. The loan or investment proceeds will be used solely for a business purpose. A business 

purpose includes, but is not limited to, start-up costs; working capital; franchise fees; and 

acquisition of equipment, inventory, or services used in the production, manufacturing, or 

delivery of a business’s goods or services, or in the purchase, construction, renovation, or 

tenant improvements of an eligible place of business that is not for passive real estate 

investment purposes. SSBCI funds may be used to purchase any tangible or intangible assets 

except goodwill. The term “business purpose” excludes acquiring or holding passive 

investments in real estate; the purchase of securities except as permitted in certification 2.d 

below; and lobbying activities (as defined in Section 3(7) of the Lobbying Disclosure Act of 

1995, P.L. 104-65, as amended (2 U.S.C. § 1602(7)).

2. The loan or investment proceeds will not be used to:

a. repay delinquent federal or jurisdiction income taxes unless the borrower or investee has

a payment plan in place with the relevant taxing authority;

b. repay taxes held in trust or escrow (e.g., payroll or sales taxes);

c. reimburse funds owed to any owner, including any equity investment or investment of 

capital for the business’s continuance; or

d. purchase any portion of the ownership interest of any owner of the business, except for 

the purchase of an interest in an employee stock ownership plan qualifying under 

section 401 of Internal Revenue Code, worker cooperative, or related vehicle, provided 

that the transaction results in the employee stock ownership plan or other 

employee-owned entity holding a majority interest (on a fully diluted basis) in the 

business.

3. The borrower or investee is not:

a. a business engaged in speculative activities that profit from fluctuations in price, such as 
Sample Certification 1 – Page 2

wildcatting for oil and dealing in commodities futures, unless those activities are 

incidental to the regular activities of the business and part of a legitimate risk 

management strategy to guard against price fluctuations related to the regular activities of 

the business or through the normal course of trade;1

b. a business that earns more than half of its annual net revenue from lending activities, 

unless the business is (1) a CDFI that is not a depository institution or a bank holding 

company, or (2) a Tribal enterprise lender that is not a depository institution or a bank 

holding company;

c. a business engaged in pyramid sales, where a participant’s primary incentive is based on 

the sales made by an ever-increasing number of participants;

d. a business engaged in activities that are prohibited by federal law or, if permitted by 

federal law, applicable law in the jurisdiction where the business is located or conducted

(this includes businesses that make, sell, service, or distribute products or services used in 

connection with illegal activity, unless such use can be shown to be completely outside of 

the business’s intended market); this category of businesses includes direct and indirect 

marijuana businesses, as defined in Small Business Administration (SBA) Standard 

Operating Procedure (SOP) 50 10 6;2 or

e. a business deriving more than one-third of gross annual revenue from legal gambling 

activities, unless the business is a Tribal SSBCI participant, in which case the Tribal 

SSBCI participant is prohibited from using SSBCI funds for gaming activities, but is not 

restricted from using SSBCI funds for non-gaming activities merely due to an 

organizational tie to a gaming business.3 For purposes of Tribal SSBCI programs, 

“gaming activities” includes only “class II gaming” and “class III gaming” as these terms 

are defined under the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2703.

For a borrower participating in a loan/credit program:

4. The borrower is not:

a. an executive officer, director, or principal shareholder of the lender;

b. a member of the immediate family of an executive officer, director, or principal 

shareholder of the lender; or

c. a related interest or immediate family member of such an executive officer, director, or 

principal shareholder of the lender.

1 A construction loan permitted under the guidance on passive real estate investment in the SSBCI Capital Program 

Policy Guidelines will not be considered a speculative business for purposes of SSBCI. 2 See chapter 3.A.8.b of SBA SOP 50 10 6 (effective October 1, 2020), which specifies the following with respect to 

marijuana-related businesses: “Because federal law prohibits the distribution and sale of marijuana, financial 

transactions involving a marijuana-related business would generally involve funds derived from illegal activity. 

Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana 

may be ineligible for SBA financial assistance.”

3 Under this standard, a gaming Tribal enterprise could apply for SSBCI funds for a new gas station, for example, 

even if the Tribal enterprise’s revenues from gaming were greater than 33 percent.
Sample Certification 1 – Page 3 

For the purposes of the above conflict of interest certification, the terms “executive officer,” 

“director,” “principal shareholder,” “immediate family,” and “related interest” refer to the 

same relationship to the lender as the relationships described in 12 C.F.R. part 215. 

For an investee participating in a venture capital/equity program: 

5. The investee is compliant with the venture capital program conflict of interest standards set 

forth in Section VIII.f of the SSBCI Capital Program Policy Guidelines. Briefly, these 

standards provide that no SSBCI insider, or a family member or business partner of an 

SSBCI insider, has a personal financial interest in the investee unless an exception specified 

in Section VIII.f of the SSBCI Capital Program Policy Guidelines applies. The terms “SSBCI 

insider,” “family member,” “business partner,” and “personal financial interest” have the 

meanings set forth in Section VIII.f of the SSBCI Capital Program Policy Guidelines. 

If an exception applies, it must be specified here:

The undersigned is an authorized representative of the borrower or investee. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 2 – Page 1 

Sample Certification 2. Lender/Investor Use of Proceeds and Conflict of Interest 

Certification

This sample certification may be used by a participating jurisdiction to obtain the applicable 

lender or investor use of proceeds and conflict of interest certifications. This sample certification 

is provided for illustrative purposes only and is not intended to replace or supersede any internal 

controls a participating jurisdiction has in place. 

Funds from the State Small Business Credit Initiative (SSBCI) may only be used for certain 

purposes and in circumstances where the applicable conflict of interest standards are satisfied. 

Legal name of lender ☐ or investor ☐: ____________________________________________ 

The lender or investor hereby certifies the following to the participating jurisdiction:

1. The SSBCI-supported loan or investment is not being made in order to place under the 

protection of the approved program prior debt that is not covered under the approved 

program and that is or was owed by the borrower/investee to the lender/investor or to an 

affiliate of the lender/investor. 

2. If the SSBCI-supported loan is a refinancing, it complies with all applicable SSBCI 

restrictions and requirements in Sections VII.f and VIII.f of the SSBCI Capital Program 

Policy Guidelines regarding refinancing and new extensions of credit, including that the 

SSBCI-supported loan is not a refinancing of a loan previously made to the borrower by the 

lender or an affiliate of the lender. 

3. The lender or investor is not attempting to enroll any portion of an SBA-guaranteed loan. 

4. For an SSBCI-supported venture capital or equity investment, the investment complies with 

the venture capital program conflict of interest standards as set forth in Section VIII.f of the 

SSBCI Capital Program Policy Guidelines.

The undersigned is an authorized representative of the lender or investor. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 3 – Page 1 

Sample Certification 3. Sex Offender Lender/Borrower Certification

(Loan/Credit Program) 

This sample certification may be used by a participating jurisdiction to obtain the applicable 

lender or borrower sex offender certification. This sample certification is provided for 

illustrative purposes only and is not intended to replace or supersede any internal controls a 

participating jurisdiction has in place. 

Under the State Small Business Credit Initiative (SSBCI), lenders and borrowers must certify 

that their principals have not been convicted of a sex offense against a minor. 

Legal name of lender ☐ or borrower ☐: 

The lender or borrower hereby certifies the following to the participating jurisdiction: 

No principal of the entity listed above has been convicted of a sex offense against a minor (as 

such terms are defined in 34 U.S.C. § 20911). For the purposes of this certification, “principal” 

means the following: if a sole proprietorship, the proprietor; if a partnership, each partner; if a 

corporation, limited liability company, association, development company, or other entity, each 

director, each of the five most highly compensated executives, officers, or employees of the 

entity, and each direct or indirect holder of 20 percent or more of the ownership stock or stock 

equivalent of the entity. 

The undersigned is an authorized representative of the lender or borrower. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 4 – Page 1 

Sample Certification 4. Sex Offender Investor/Investee Certification

(Venture Capital/Equity Program) 

This sample certification may be used by a participating jurisdiction to obtain the applicable 

investor or investee sex offender certification. This sample certification is provided for 

illustrative purposes only and is not intended to replace or supersede any internal controls a 

participating jurisdiction has in place. 

Under the State Small Business Credit Initiative (SSBCI), investors and investees must certify 

that their principals have not been convicted of a sex offense against a minor. 

Legal name of investor ☐ or investee ☐: 

The investor or investee hereby certifies the following to the participating jurisdiction: 

No principal of the entity listed above, has been convicted of a sex offense against a minor (as 

such terms are defined in 34 U.S.C. § 20911). For the purposes of this certification, “principal” is 

defined as if a sole proprietorship, the proprietor; if a partnership, each managing partner and 

each partner who is a natural person and holds 50 percent or more ownership interest of any class 

of the partnership interests; if a corporation, limited liability company, association, development 

company, or other entity, each director, each of the five most highly compensated executives or 

officers of the entity, and each natural person who is a direct or indirect holder of 50 percent or 

more of any class of equity interest in the entity; and if a partnership where the managing partner 

is a corporation, limited liability company, association, development company, or other entity, 

each director and each of the five most highly compensated executives or officers of the entity. 

The undersigned is an authorized representative of the investor or investee. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 5 – Page 1 

Sample Certification 5. Borrower/Investee Certification Related to Business Enterprises 

Owned and Controlled by Socially and Economically Disadvantaged Individuals 

(SEDI-Owned Businesses)

This sample certification may be used by a participating jurisdiction to obtain the applicable 

SEDI-owned business certification. This sample certification is provided for illustrative purposes 

only and is not intended to replace or supersede any internal controls a participating jurisdiction 

has in place. 

This transaction is supported with funding provided through the State Small Business Credit 

Initiative (SSBCI), a federal program that supports small business lending and investment 

programs in states, the District of Columbia, territories, and Tribal governments (collectively 

known as participating jurisdictions). SSBCI programs are designed to expand access to capital, 

promote economic resiliency, and create new jobs and economic opportunity. SSBCI provides 

funding for participating jurisdictions to support businesses owned and controlled by socially and 

economically disadvantaged individuals (SEDI-owned businesses).1

 This certification provides 

documentation that an SSBCI loan or investment supported a SEDI-owned business. The 

information collected from this certification can only be used for purposes of the SSBCI program 

and must not be used for any other purposes (e.g., marketing, sale to third parties). The 

information collected must also not be used in a manner that violates any applicable antidiscrimination laws, including, but not limited to, the laws specified in Section IX.b of the 

Capital Program Policy Guidelines (Compliance with Civil Rights Requirements). 

The borrower or investee is not required to provide this certification. The borrower or investee 

may identify all categories in groups (1) through (3) below that apply, including all subcategories 

in group (1) that apply. 

Legal name of borrower ☐ or investee ☐: 

The borrower or investee hereby certifies to the lender or investor that it is a: 

1. Business enterprise that is owned and controlled2

 by individuals who have had their access to 

credit on reasonable terms diminished as compared to others in comparable economic 

circumstances, due to their: 

☐ membership of a group that has been subjected to racial or ethnic prejudice or cultural 

bias within American society; 

1 SSBCI funds count toward fulfilling the “expended for” requirement for the $1.5 billion SEDI allocation and 

toward qualifying for initial eligible amounts under the $1.0 billion SEDI incentive allocation if the SSBCI funds 

have been expended for loans, investments, or other credit or equity support to any of the four groups of businesses 

set forth in Section IV.a of the SSBCI Capital Program Policy Guidelines. While a participating jurisdiction may 

reasonably identify group (4) businesses (i.e., those located in Community Development Financial Institution 

(CDFI) Investment Areas) based on businesses’ addresses from the relevant loan, investment, and credit or equity 

support applications, certification is required with regard to groups (1) through (3).

2 The term “owned and controlled” means, if privately owned, 51 percent is owned by such individuals; if publicly 

owned, 51 percent of the stock is owned by such individuals; and in the case of a mutual institution, a majority of 

the board of directors, account holders, and the community of which the institution services is predominantly 

comprised of such individuals.
Sample Certification 5 – Page 2 

☐ gender; 

☐ veteran status; 

☐ limited English proficiency; 

☐ disability; 

☐ long-term residence in an environment isolated from the mainstream of American 

society; 

☐ membership of a federally or state-recognized Indian Tribe; 

☐ long-term residence in a rural community; 

☐ residence in a U.S. territory; 

☐ residence in a community undergoing economic transitions (including communities 

impacted by the shift towards a net-zero economy or deindustrialization); or 

☐ membership of another underserved community.3

 

2. ☐ Business enterprise that is owned and controlled by individuals whose residences are in 

CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii).

4

 

Individual(s)’ Address(es) in CDFI Investment Areas: 

3. ☐ Business enterprise that will build, open, or operate a location in a CDFI Investment Area, 

as defined in 12 C.F.R. § 1805.201(b)(3)(ii). 

Business Address in CDFI Investment Area:

3 “Underserved communities” are populations sharing a particular characteristic, as well as geographic communities, 

that have been systematically denied a full opportunity to participate in aspects of economic, social, and civic life, as 

exemplified by the list in the definition of equity. Equity is consistent and systematic fair, just, and impartial 

treatment of all individuals, including individuals who belong to underserved communities that have been denied 

such treatment, such as Black, Latino, and Indigenous and Native American persons, Asian Americans and Pacific 

Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual, transgender, and queer 

(LGBTQ+) persons; persons with disabilities; persons who live in rural areas; and persons otherwise adversely 

affected by persistent poverty or inequality.

4 Treasury has provided a mapping tool for the borrower or investee to use to identify whether the relevant address is 

in a CDFI Investment Area at https://home.treasury.gov/policy-issues/small-business-programs/state-small-businesscredit-initiative-ssbci/2021-ssbci/cdfi-fund-investment-areas. For each calendar year, Treasury will use the list of 

CDFI Investment Areas identified by the CDFI Fund as of January 1 of the calendar year. If the CDFI Fund’s list is 

updated during that calendar year, the new list will not be adopted for purposes of SSBCI until the next calendar 

year, thus providing advance notice to jurisdictions. Further, Treasury has determined that American Samoa, Guam, 

the Northern Mariana Islands, and the U.S. Virgin Islands in their entirety constitute CDFI Investment Areas for 

purposes of the SSBCI, because each of these territories has a poverty rate of at least 20 percent. 
Sample Certification 5 – Page 3 

The undersigned is an authorized representative of the borrower or investee. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 6 – Page 1 

Sample Certification 6. Certification Regarding Venture Capital Fund Services to 

Portfolio Companies 

This sample certification may be used by a participating jurisdiction to obtain the applicable 

certification regarding venture capital fund services to portfolio companies. This sample 

certification is provided for illustrative purposes only and is not intended to replace or supersede 

any internal controls a participating jurisdiction has in place. 

Under the State Small Business Credit Initiative (SSBCI), if the participating jurisdiction uses up 

to an annual average of 1.71 percent of the federal contribution to pay for services to portfolio 

companies over the life of the jurisdiction’s venture capital program, then the venture capital fund 

must annually certify that such services were provided. 

Legal name of venture capital fund: 

The venture capital fund hereby certifies that services to portfolio companies as identified in the 

agreement between the above venture capital fund and the participating jurisdiction were 

provided in __________ (year). 

The undersigned is an authorized representative of the venture capital fund. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 7 – Page 1 

Sample Certification 7. Borrower/Investee Use of Proceeds and Conflict of Interest 

Certification for a Tribal Enterprise Lending to or Investing in Another Tribal Enterprise

This sample certification may be used by Tribal governments to obtain the applicable borrower 

or investee use of proceeds and conflict of interest certifications for a loan or investment that is 

part of a Tribal OCSP and involves a Tribal enterprise lending to or investing in another 

Tribal enterprise. For Tribal government OCSP transactions where a Tribal enterprise is not 

lending to or investing in another Tribal enterprise, refer to Sample Certification 1. This sample 

certification is provided for illustrative purposes only and is not intended to replace or supersede 

any internal controls a Tribal government has in place.

Funds from the State Small Business Credit Initiative (SSBCI) may only be used for certain 

purposes and in circumstances where the applicable conflict of interest standards are satisfied.

Legal name of Tribal enterprise borrower ☐ or investee ☐: _____________________________ 

The Tribal enterprise borrower or investee hereby certifies the following to the Tribal enterprise 

lender or investor: 

1. The loan or investment proceeds will be used solely for a business purpose. A business 

purpose includes, but is not limited to, start-up costs; working capital; franchise fees; and 

acquisition of equipment, inventory, or services used in the production, manufacturing, or 

delivery of a business’s goods or services, or in the purchase, construction, renovation, or 

tenant improvements of an eligible place of business that is not for passive real estate 

investment purposes. SSBCI funds may be used to purchase any tangible or intangible assets 

except goodwill. The term “business purpose” excludes acquiring or holding passive 

investments in real estate; the purchase of securities except as permitted in certification 2.d

below; and lobbying activities (as defined in Section 3(7) of the Lobbying Disclosure Act of 

1995, P.L. 104-65, as amended (2 U.S.C. § 1602(7)). 

2. The loan or investment proceeds will not be used to: 

a. repay delinquent federal or jurisdiction income taxes unless the borrower or 

investee has a payment plan in place with the relevant taxing authority; 

b. repay taxes held in trust or escrow (e.g., payroll or sales taxes); 

c. reimburse funds owed to any owner, including any equity investment or investment 

of capital for the business’s continuance; or 

d. purchase any portion of the ownership interest of any owner of the business, except for 

the purchase of an interest in an employee stock ownership plan qualifying under 

section 401 of Internal Revenue Code, worker cooperative, or related vehicle, provided 

that the transaction results in the employee stock ownership plan or other 

employee-owned entity holding a majority interest (on a fully diluted basis) in the 

business. 

3. The borrower or investee is not: 

a. a business engaged in speculative activities that profit from fluctuations in price, such as 
Sample Certification 7 – Page 2

wildcatting for oil and dealing in commodities futures, unless those activities are 

incidental to the regular activities of the business and part of a legitimate risk 

management strategy to guard against price fluctuations related to the regular activities of 

the business or through the normal course of trade;1

b. a business that earns more than half of its annual net revenue from lending activities, 

unless the business is (1) a CDFI that is not a depository institution or a bank holding 

company, or (2) a Tribal enterprise lender that is not a depository institution or a bank 

holding company;

c. a business engaged in pyramid sales, where a participant’s primary incentive is based on 

the sales made by an ever-increasing number of participants;

d. a business engaged in activities that are prohibited by federal law or, if permitted by 

federal law, applicable law in the jurisdiction where the business is located or conducted 

(this includes businesses that make, sell, service, or distribute products or services used in 

connection with illegal activity, unless such use can be shown to be completely outside of 

the business’s intended market); this category of businesses includes direct and indirect 

marijuana businesses, as defined in Small Business Administration (SBA) Standard 

Operating Procedure (SOP) 50 10 6;2 or

e. a business deriving more than one-third of gross annual revenue from legal gambling 

activities, unless the business is a Tribal SSBCI participant, in which case the Tribal

SSBCI participant is prohibited from using SSBCI funds for gaming activities, but is not 

restricted from using SSBCI funds for non-gaming activities merely due to an 

organizational tie to a gaming business.3 For purposes of Tribal SSBCI programs, 

“gaming activities” includes only “class II gaming” and “class III gaming” as these terms 

are defined under the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. § 2703.

4. The loan or investment is in accordance with the Tribal conflict-of-interest policy, which was 

provided to and reviewed by the borrower or investee.

5. The borrower or investee understands that the lender or investor will publicly disclose this

loan or investment. 

1 A construction loan permitted under the guidance on passive real estate investment in the SSBCI Capital Program 

Policy Guidelines will not be considered a speculative business for purposes of SSBCI.

2 See chapter 3.A.8.b of SBA SOP 50 10 6 (effective October 1, 2020), which specifies the following with respect to 

marijuana-related businesses: “Because federal law prohibits the distribution and sale of marijuana, financial 

transactions involving a marijuana-related business would generally involve funds derived from illegal activity. 

Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana 

may be ineligible for SBA financial assistance.”

3 Under this standard, a gaming Tribal enterprise could apply for SSBCI funds for a new gas station, for example, 

even if the Tribal enterprise’s revenues from gaming were greater than 33 percent.
Sample Certification 7 – Page 3 

The undersigned is an authorized representative of the borrower or investee. 

Signature: 

Name: 

Title: 

Date: 
Sample Certification 8 – Page 1 

Sample Certification 8. Lender/Investor Use of Proceeds and Conflict of Interest 

Certification for a Tribal Enterprise Lending to or Investing in Another Tribal Enterprise

This sample certification may be used by Tribal governments to obtain the applicable lender or 

investor use of proceeds and conflict of interest certifications for a loan or investment that is part 

of a Tribal government OCSP and involves a Tribal enterprise lending to or investing in another 

Tribal enterprise. For Tribal government OCSP transactions where a Tribal enterprise is not 

lending to or investing in another Tribal enterprise, refer to Sample Certification 2. This sample 

certification is provided for illustrative purposes only and is not intended to replace or supersede 

any internal controls a Tribal government has in place. 

Funds from the State Small Business Credit Initiative (SSBCI) may only be used for certain 

purposes and in circumstances where the applicable conflict of interest standards are satisfied. 

Legal name of Tribal enterprise lender ☐ or investor ☐: _______________________________ 

The lender or investor hereby certifies the following: 

1. The SSBCI-supported loan or investment is not being made in order to place under the 

protection of the approved program prior debt that is not covered under the approved 

program and that is or was owed by the borrower/investee to the lender/investor or to an 

affiliate of the lender/investor. 

2. If the SSBCI-supported loan is a refinancing, it complies with all applicable SSBCI 

restrictions and requirements in Sections VII.f and VIII.f of the SSBCI Capital Program 

Policy Guidelines regarding refinancing and new extensions of credit, including that the 

SSBCI-supported loan is not a refinancing of a loan previously made to the borrower by the 

lender or an affiliate of the lender. 

3. The lender or investor is not attempting to enroll any portion of an SBA-guaranteed loan. 

4. The loan or investment is in accordance with the Tribal conflict-of-interest policy which 

addresses conflicts arising from immediate family and self-dealing and has enforcement 

mechanisms for violations of the policy. 

5. The lender or investor will publicly disclose this loan or investment. 

The undersigned is an authorized representative of the lender or investor. 

Signature: 

Name: 

Title: 

Date: