The U.S. Treasury plans to distribute $360 million to economic and business development agencies in 11 states and Washington, D.C., as part of a $1.5 billion federal effort to spur more lending to small businesses.
The federal State Small Business Credit Initiative, or SSBCI, program is supposed to generate at least a $10 return of private lending for every dollar spent in federal funding on investments by supporting state-run programs that partner with private lenders and investors to increase the amount of credit available to small businesses, according to a Treasury statement. That means the current round of grants should unleash $3.6 billion in new private lending.
Proponents might argue that such government stimulus is a good investment in a weak economy, while critics might wonder whether the money will be well spent and produce the desired results.
Local banks might welcome additional community investment and support for businesses that otherwise wouldn't qualify for financing. Or they might complain about government interference.
Deputy Treasury Secretary Neal S. Wolin said in a statement that the funds will provide "critical support to state-level programs that help expand small-business lending and spur private sector job growth."
The funds will be used for new and existing small-business lending, equity investment, venture capital, microloan, rural loan, loan guarantee, seed capital, collateral enhancement, credit enhancement, economic development, subordinated gap financing and capital access programs.
The funds will be distributed through the following agencies:
- Alabama Department of Economic and Community Affairs, $31.3 million.
- Florida Office of Tourism Trade and Economic Development, $97.7 million.
- Idaho Department of Commerce, Iowa Department of Economic Development, $13.2 million.
- Iowa Department of Economic Development, $13.2 million.
- Louisiana Department of Economic Development, $13.2 million.
- Mississippi Development Authority, $13.2 million.
- Ohio Department of Development, $55.1 million.
- Oregon Business Development Department, $16.5 million.
- Tennessee Department of Economic and Community Development, $29.7 million.
- Texas Department of Agriculture, $46.6 million.
- Virginia Small Business Financing Authority, $18 million.
- Washington, D.C., $13.2 million.
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