Billions in overlooked Covid-era funds being made available to small businesses (Courtesy of the Jacksonville Business Journal) — Billions of dollars have started flowing to small-business owners in the form of direct investments and subsidized loans as a result of a pandemic-era small-business support program.
Iowa-based Kinetic Technologies, an advanced-manufacturing firm with a robotic welding table, got $175,000 in governmental funding at a time when it needed working capital to grow marketing distribution and sales.
In Maine, the employee-owned Bell Street Builders residential construction firm was formed by merging two previous firms together and with $40,000 in governmental support.
Both of those advances were made possible by the Treasury Department’s State Small Business Credit Initiative. This current iteration of the program (there was one more than a decade ago) was authorized by the American Rescue Plan Act of 2021, which set aside $10 billion for states, territories and tribal governments to set up their own programs to help small businesses access capital.
The money helps fund loan programs and credit-enhancement initiatives as well as venture-fund programs to target early-stage businesses. The goal? To leverage the $10 billion in government money into $100 billion in total investments.
While largely overlooked during the pandemic amid the rush for emergency funding from the Paycheck Protection Program and the Covid Economic Injury Disaster Loan program, among others initiatives, the SSBCI funding will be flowing through state-level programs for years, offering small businesses a chance at a different pool of capital.
A report released recently by the Treasury Department detailing the program’s status as of the end of September noted that the agency had approved roughly $7.7 billion in funding. It had disbursed about $2.5 billion to state and local government across the country, and those entities had spent about $854 million of those funds through various programs.
The money has been spread across 214 programs and was approved based on varying timelines tied to states’ requests. Most of the money, about 61%, has gone to loan-guarantee and loan-participation programs. The balance has been earmarked for equity and venture-capital programs, including direct-investment programs that spur investments in small businesses.
So far, California has reported the highest dollar amount deployed, with about $161 billion as of September 30, followed by Florida at $103 billion, Pennsylvania at $48 billion and Maryland at just under $37 billion.
When it comes to how well states are doing in getting the money they’ve received out the door, Montana leads in terms of the percentage of total funding deployed, at 59.2%. That’s followed by New Hampshire at 44.6% and Vermont at 32.7%.
Some states, meanwhile, have conveyed none or very little of the SSBCI funding received:
- Mississippi, which was allocated about $86 million in funding in May, has received about $25 million of that funding but has disbursed none of it, according to the Treasury Department report.
- New Jersey was allocated $255.2 million in March and has deployed about $4.4 million of that sum, or roughly 1.7%.
- Utah received a $69 million allocation in October 2022 and has disbursed about $213,000, or about 0.3%.
- Illinois received an allocation of $354 million in December 2022 and has disbursed about $1 million, also about 0.3%.
No information was available in the report on allocations to Texas or Alabama.
Other sources of capital available for business owners
The Treasury Department continues to award money to state and local governments. That includes $500 million earmarked for technical assistance for small businesses looking to navigate the SSBCI programs and others. The agency awarded $50.8 for technical assistance in November — bringing that total to $108.7 million.
Small-business owners can look up their own state and local programs to find out if they qualify for any funding.
The SSBCI continues to go strong as most other Covid-19 small-business programs have ended or dried up. Even now, Congress is considering a package of tax credits for small-business owners and individuals paid for in part by ending the Employee Retention Credit far earlier than scheduled. Meanwhile, the Small Business Administration continues its oversight of the Paycheck Protection Program and the Covid Economic Injury Disaster Loan program — most recently by holding off on collections actions in the hopes of boosting repayment rates.