The federal government is offering $10bn to small businesses – here’s how to apply

A not-so-new federal program to help small businesses just began distributing funds this past week. How much? How does $10bn sound?

That’s not a joke. The federal government is making available $10bn and all small businesses in the country are eligible for the money. This is not the paycheck protection program or the economic injury disaster loan program. Both of those Covid-relief efforts have expired. This is also not a loan program from the Small Business Administration. It’s from the treasury department. The program is called the state small business credit initiative, or SSBCI, and it works like this.

The treasury department has been authorized – thanks to the 2021 American Rescue Plan Act – to distribute $10bn to each of the states, the District of Columbia and tribal territories on a formula based on local unemployment and the need for job creation. As mentioned above, the money began to flow just last week to five states and will continue throughout the next year. Also as mentioned above the program is not new. SSBCI was created back in 2010 and distributed $1.5bn at that time. So let’s call this version 2.0.

So how does your business get access to these funds? You need to start Googling “SSBCI” and your state, or you can go to the Council of Development Finance Agencies’ state resources map. The funds, once received by the states, will then be distributed to existing and authorized organizations that finance and support local small businesses. These are community development investment funds (CDFIs), minority deposit institutions (MDIs), community banks, economic development groups and other non-profits that work with small businesses in their areas.

The funds will be used for loans, grants and equity investments. They can also be used to collateralize new debt with existing banks or insure their repayments. The whole idea is to get money in the hands of small businesses that wouldn’t otherwise be able to get financing through traditional lenders because of their financial history – or lack thereof. The program also rewards investments outside traditional high-access areas and to startups that have struggled to receive funding. According to the Treasury, SSBCI is “designed to catalyze $10 of small business lending and investment for every $1 of SSBCI capital program funding, magnifying the effects of the federal funds allocated through the program.”

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Certain funds are targeted specifically to minority-owned businesses or businesses located in low- to moderate-income areas. But just about any business can apply for these funds, even non-profits.

And this is important, especially right now. Inflation is high, demand worldwide is softening, a potential recession is looming and the Federal Reserve has already announced interest rate increases over the coming months. Which means that many small businesses around the country are going to find it tougher to get capital this year. In fact, a number of startups and venture-backed tech firms are already finding that to be the case. But the SSBCI program could be a lifesaver.

So as a small business owner what do you do? You start building relationships right now. Find out the organizations that are receiving SSBCI money from your state and reach out to them. They need to get to know you and your business. The application process will take a bit of time so you want to gather your documentation – bank statements, tax returns, financial records – and begin down that road. You should be applying for funds from multiple places. These organizations aren’t going to come knocking on your door. But they do have money to spend. Your objective is to get them to spend it on you.

The SSBCI program is not without its opponents. Some say the funding is too late and that many businesses have recovered from the pandemic. Others believe the money should be re-allocated and put to other uses. These points of views are reasonable. But for now, the money is starting to flow and it’s flowing to small businesses. Take advantage and start applying now, because before you know it, this last source of pandemic-related public financing will probably disappear for ever.