The US Treasury’s Small Business Credit Initiative will increase small business owners’ access to capital, covering over 80% of loans
California launches new program designed to create a more comprehensive ecosystem for venture capital
Sacramento – Governor Gavin Newsom today announced $1.1 billion in funding to support small businesses in California. The funding comes from the US Treasury’s State Small Business Credit Initiative (SSBCI) and aims to raise an additional $18 billion in capital to California small businesses.
“California is home to the largest and most diverse small business community in the country,” Governor Newsom said. “We are a country driven by small business innovation and entrepreneurship – that’s why we’ve invested billions of dollars to help our business recover from the pandemic and to give more Californians a chance to realize the California dream. With this funding, unrepresented and underserved business owners will have greater access to critical funding. what they need to succeed and thrive.”
As part of the 2021 US Federal Bailout Act, California will receive $1.1 billion to help support small businesses. The California Economic Development and Infrastructure Bank (IBank) and the California Pollution Control Finance Corporation will equally split the allocation to fund small business credit support programs — IBank will also launch a new program designed to create a more equitable ecosystem for venture capital.
This is the second time states have been able to apply for this federal program. The first was in 2010, when California applied and received $168 million to run three state credit support programs — the Small Business Loan Guarantee ProgramThe Additional Support Programand the California Capital Access Program (CalCAP) for Small Business.
Small Business Loan Guarantee Program
As in 2010, IBank will use a significant portion of its SSBCI funds Small Business Loan Guarantee Program, and work with non-profit organizations and lenders to provide small business loan guarantees. The guarantees can repay lenders up to 80% of the loan owed to a small business if the small business is unable to make its payments. By guaranteeing loans, IBank gives lenders the confidence they need to issue loans to small businesses struggling to access capital.
Encouraging Lenders to Register
To quickly deploy money and put it into service for small businesses, IBank requires lenders — including community development financial institutions and minority depository institutions — to sign up to use its loan guarantee program. The certification requires only a one-page form. The list of already participating lenders is available on IBank’s participating lenders website.
venture capital program
In addition to the small business loan guarantees, IBank will use approximately $200 million of its SSBCI funds to launch new venture capital. a programDesigned to create a more inclusive venture capital ecosystem by investing in underrepresented venture capital managers, underrepresented and disadvantaged entrepreneurs and business owners, and socioeconomically disadvantaged geographies or that receive very limited venture capital funding. The program will also promote climate equality and climate justice.
“IBank is not only excited to infuse new funding into our successful Small Business Loan Guarantee Program, we are particularly pleased to launch this new venture capital program,” said Scott Wu, CEO of iBank. “Despite California’s dominance of the venture capital industry, venture capital remains unavailable to many entrepreneurs. Increasing inclusion not only in who receives venture capital funding but also in who manages venture capital funds is critical to the state’s drive towards property rights.
Success under the first round of the SSBCI (2010)
Under SSBCI’s first round, California used $168 million to back more than 10,000 loans that generated more than $1 billion in total financing and created or retained more than 90,000 jobs for Californians.
“The California Pollution Control Funding Authority is pleased to partner with IBank for SSBCI 2.0 to bring money to California to support small businesses,” said CPCFA Executive Director Sheila Tobias Daniel. The CPCFA and IBank programs complement each other to serve different aspects of the California small business community. We are excited to work with IBank and California Office of Small Business Attorney (CalOSBA) to reach more small businesses through lenders and other organizations focused on small businesses such as chambers of commerce, regional small business development centers and related organizations serving small business owners.”