Mississippi State Grants For Small Business – Congress loves acronyms, especially those that support and invest in small businesses. There are MBDA, SBA, PPP, EDIL, SBIC, RRF etc. But less mentioned is SSBCI, the State Small Business Credit Initiative. This government program was first implemented during the Obama administration in response to the 2008-2009 year’s financial crisis. Now that we’re coming out of the COVID-induced recession, this familiar program is back.
In short, the State Small Business Loan Initiative allocates federal funds to states, which in turn provide loans and equity capital to small businesses and startups.
Mississippi State Grants For Small Business
States apply for funding and, upon approval, are eligible to receive three federal capital payments. Eighty percent of the funding round must be distributed before countries can move on to subsequent rounds.
Covid 19, Testing Sites, Closures And More
The inaugural version gave states about $1.5 billion and generated more than $10 billion in investment funding for state programs that support small businesses.
More recently, the American bailout provides $10 billion to SSBCIs. This time, more than a third of these funds are reserved for socially and economically disadvantaged persons, tribal governments and technical assistance for micro-enterprises.
As policymakers seek to support small businesses, particularly those owned by people of color, who often struggle to access capital, it is important to understand how SSBCIs work. In this note, we look at how states can use bailout funds and lessons learned about how those dollars can reach minority-owned small businesses.
SSBCI provides businesses with the capital or credit they need to obtain loans, particularly businesses that would otherwise not be considered, such as minority businesses. There are five ways countries can use SSBCI dollars to increase capital, collateral and credit:
Small Business Resource Center
Loan Guarantee Program (LGP). Under this option, states may issue partial guarantees to lenders for commercial loans. It is designed to stimulate private sector lending because if a borrower defaults on a loan, the LGP guarantees that a certain percentage of that loan is repaid to the lender. Small businesses typically use these types of programs to secure lines of credit, working capital, and commercial real estate loans. Previous users of this program have typically been more established businesses.
Collateral Support Program (CSP). Business loans usually require some form of collateral from the borrower to protect the lender in case the loan defaults. But not all small businesses have enough cash to post collateral. CSB helped small businesses get loans by providing lenders with cash collateral to reduce the “collateral shortfall”.
This program often helps entrepreneurs from socially and economically disadvantaged communities who have less personal security or others whose business may be so small that they have not established business security.
Capital Access Program (CAP). As an alternative to a loan guarantee or collateral support, the CAP program offers a reserve fund to protect the lender from partial losses. Both the lender and the borrower contribute 2-7% of the loan amount, which is then matched with SSBCI funds from the state. This program allows lenders to provide loans and lines of credit to new businesses while committing to additional loans to increase the CAP reserve fund. Many recipients of the CAP program were micro-enterprises with fewer than ten employees or less than $1 million.
Back To Business Mississippi Grant Program
Loan Membership Program. LPP does one of two things. First, the government can be set up as a lender by buying part of an existing loan. Or, secondly, the government can offer companion loans alongside the original loans from private sector lenders. Each of the methods helps borrowers get loans with more favorable terms.
Companies in this program must be established with more than three years of financial statements with a lack of evidence.
Venture capital (VC) program. Venture capital is a form of equity investment, not debt. Within the framework of this program, capital for new companies is provided either by a state-managed venture fund or by private sector venture capital companies that use state capital for individual companies. Beneficiaries of these types of programs are often companies that may not be immediately profitable, such as start-ups focusing on technology in the form of research or simply introducing new products to the market.
SSBCI’s inaugural version was a success. The program was created to raise up to $15 billion by leveraging $1.5 billion in federal funds.
The U.s. Small Business Administration’s Disaster Assistance
She held states accountable by carefully crafting her agenda for underserved communities. And community development financial institutions (CDFIs) and community banks played a key role in expanding the program to rural and low- and moderate-income areas.
SSBCI 2.0 is now six times its original size as a $10 billion federal program. Specifically, it distributes billions to socially and economically disadvantaged individuals to access credit and equity investments.
In order to be excluded, a company must be at least 51% privately or publicly owned by socially and economically disadvantaged persons. As in SSBCI 1.0, the funds will be sent to states in three installments.
These designated exemptions are critical to the success of SSBCI 2.0, but more will need to be done to ensure that disadvantaged businesses receive the support they need. As policymakers and national leaders work to move this program forward, a look at the first iteration of the SSBCI offers four lessons on how to ensure that money reaches its destination—the people who need it most.
Alumnus Winter 2021
1. States should clearly define low-income areas and minority business owners as targets for SSBCI programs. With SSBCI 1.0, each state could use its own definition of “adequately served,” which had different implications in different areas.
For example, “good enough” New York may be completely different from Illinois or Mississippi. Programs such as NYSBAP, the New York State Bond Assistance Program from SSBCI 1.0, have removed barriers faced by underserved businesses, specifically targeting women and minority businesses. The program not only helped with technical support, but also provided a guarantee line for minority companies to participate in large national and local projects.
Advantage Illinois, a program developed by the Illinois Department of Commerce and Economic Opportunity to use SSBCI money, defined as a person who
And to better reach these groups, Advantage Illinois partnered with groups like NICDC, the Northern Illinois Community Development Corporation, which provided loans to small businesses.
Long Term Recovery Committees
Southern states like Mississippi and Alabama used half of their SSBCI funds in rural areas. Although this met the definitions of “sufficient” in these countries, not all of these funds went to low-income areas. In fact, larger agricultural companies, which are usually not capital hungry, could use the funds.
Some states promoted their SSBCI program as a tool that specifically helped small businesses located in low- and moderate-income or minority, underserved, and women- and minority-owned small businesses.
But to do it well, it was necessary not only to be aware of the needs of these groups, but also to have the competence to reach them. When staff became aware of the specific needs of these communities, barriers were removed, response times were faster, and funds were distributed earlier. For example, the state of Utah partnered with bank leaders and financial networks with established relationships in underserved communities.
These organizations are SBA-certified nonprofits that offer flexible and affordable financing to entrepreneurs. Network Kansas, a nonprofit and certified development organization, administers the state’s SSBCI program and is committed to developing relationships between business and business development groups. Part of the Kansas SSBCI program launched up to 20% of the private capital needed for the deal.
Alumnus Spring 2022
3. When money went through community banks and CDFIs, more minority communities were helped. States have included CDFIs in their SSBCI planning because they target underserved communities and help non-traditional borrowers. With CDFI at the planning table, the range of programs became more accessible in many states. A total of 81% of SSBCI’s loans were issued by these entities. In California, the California Capital Access Program (CalCAP), a CDFI, encouraged “banks and other financial institutions” to make loans to small businesses that had trouble accessing capital. In 2013, CalCAP’s Opportunity Fund made more than 2,000 loans in California. Before SSBCI could give only 50 loans from this fund. Opportunity Fund also served smaller businesses with loans ranging from a few hundred dollars to more than $100,000.
Washington State contracted with nonprofit CDFI Craft3 to manage a portion of SSBCI funds directly to businesses. Craft3 marketed the SSBCI program to various advocacy groups in underserved communities and provided loans in rural and high-poverty areas.
4. Insurance programs spend their money the fastest. During SSBCI 1.0, the Collateral Support Program’s ability to address the collateral shortfall faced by minority businesses made the program attractive to lenders and investors looking to reach minority communities.
This program spent 81% of total funding by 2015, compared to the participation loan program at 80%, access to capital at 49%, loan guarantee at 68% and venture capital at 62%.
Our Big List Of Covid 19 Assistance Programs
The speed with which the funds are spent may be particularly important in the development of the national program for two reasons: to facilitate the economic recovery from the COVID-19 pandemic and to have a better chance of receiving the $1 billion in bonus allocations for the successful withdrawal of the socially owned. for companies. and economically disadvantaged persons.