US Treasury Department’s first tranche of $10 billion Pandemic Small Business Relief Program arrives

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More relief for businesses has arrived as high inflation, supply chain problems and the threat of a recession outweigh other problems caused by the pandemic.

The US Treasury Department is allocating the first round of funding from the newly authorized State Small Business Credit Initiative (SSBCI) to five states: Hawaii, Kansas, Maryland, Michigan and West Virginia. The SSBCI is a small business assistance program that has been around for a little over a decade but was replenished in March 2021 after President Joe Biden enacted the $1.9 trillion American Rescue Plan Act.

Altogether, up to about $639 million in aid has been approved for the five states, and the Treasury Department has begun distributing nearly $200 million to the states as early as this month, according to a report from The Wall Street Journal. The federal stimulus package provided SSBCI with $10 billion, although the Treasury Department says the program could deliver up to $100 billion in total lending authority. The program expects to generate $10 in private investment for every $1 in federal funding.

SSBCI funds are not distributed directly to companies but to lenders. State governments previously submitted their individual plans to the Treasury Department, detailing how they would allocate the funds to small businesses, which can be allocated through a range of programs that include venture capital, access to capital, collateral support, loan participation and loan guarantees to offer.

Maryland Gov. Larry Hogan said in a statement that the Old Line State was the first in the country to submit its SSBCI operational plan to the Treasury Department and explained why it was one of the first states to be approved. Maryland will begin providing funds beginning this summer. According to a release celebrating the award, the state of Michigan could see the first round of SSBCI funding in the next 30 to 60 days.

For its part, the state of Hawaii plans to establish new loan-sharing and credit-enhancement programs and distribute funds to underserved entrepreneurs to expand Hawaii’s economy and make it less dependent on tourism. Meanwhile, West Virginia will use its funds to increase access to venture capital (the state has no resident venture capital firms, according to the Treasury Department).

Eligible small businesses and start-ups — typically defined as businesses with 500 employees or fewer — can borrow or invest as usual through their bank, municipal lender, or financier.

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