Baton Rouge, Louisiana – On Tuesday, the U.S. Treasury Department announced that it has approved Louisiana’s application to provide up to $113 million in federal support to small business owners and entrepreneurs as part of the $10 billion State Small Business Credit Initiative (SSBCI).
SSBCI was originally established in 2010 as a way for the federal government to help states support small businesses that are creditworthy but lack access to the capital they need to expand and create jobs. The American Rescue Package Act of 2021 reauthorizes and expands SSBCI to promote entrepreneurship, especially in traditionally underserved communities as they emerge from the pandemic.
“This award of up to $113 million is big news for our Louisiana entrepreneurs and small business owners, especially in communities that have historically struggled to attract business capital and investment,” the governor said. John Bell Edwards said. “Small businesses have long been the backbone of Louisiana’s economy, bearing some of the most challenging economic burdens since the onset of the COVID-19 pandemic. in the capital plans of small businesses and entrepreneurs.”
When the Treasury Department released SSBCI application guidelines to the 50 states last November, the governor. Edwards designated the Louisiana Department of Economic Development to administer the program through the Louisiana Economic Development Corporation (LEDC). LED will work with participating equity funds and financial institutions to disburse SSBCI funds through five Louisiana small business support programs:
- Venture Capital (LVCP) and Seed Capital (LSCP)providing equity support to small businesses by investing as a limited partner in the creation and growth of start-ups.
- Micro Loan (MLP)which established a revolving loan fund with qualified lenders to help small businesses with start-up or expansion financing needs.
- Collateralized Support (CSP) and Small Business Loan Guarantee (SBLGP) scheme, establish a pledged mortgage account where there may be a shortage, or provide a state guarantee to reduce the risk of business development or expansion financing.
Louisiana’s grant is nearly nine times the $13.2 million it received in a 2010 initiative. Most of the $113 million—a whopping $91.5 million—was allocated to venture capital and seed programs. Payment of the full amount is contingent upon meeting federal funding benchmarks for Very Small Businesses (VSBs) and Socially and Economically Disadvantaged Individuals (SEDIs) who may have had limited access to funding in the past.
“This historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan will help reduce barriers to capital access for traditionally underserved communities,” said Treasury Secretary Janet Yellen. Excited to see how the SSBCI Fund will contribute to equitable economic growth in Louisiana and the nation.”
By pursuing the established LED program, the rules of which were created earlier this year to comply with SSBCI guidelines, the state hopes it will be able to put federal funds into the hands of Louisiana business owners and entrepreneurs as efficiently as possible.
“This significant federal funding award should set the stage for a surge in small business investment throughout Louisiana, with a particular focus on our underserved communities,” said LED Secretary Don Pierson. “LED looks forward to supporting our network of banks, financial institutions and networks that support start-ups and facilitate small business investment. This new funding will also provide participating lenders with flexible funding for payments to socially and economically disadvantaged individuals . Louisiana now has a very significant opportunity through SSBCI financing, in partnership with the U.S. Department of the Treasury.”
Like the first round of SSBCIs that ended in 2017, the US 2021 Rescue Package Act has authorized the new program to be extended for another seven years. Approving the Louisiana allocation is an important but early step. The process of eligibility and selection to become a participating provider will take several months; so will the application process, which varies by program, fund, and lender, and may change over time.
All the latest updates on the program—including eligibility criteria, rules, application FAQs and supplier contact information, which will be updated as new suppliers opt into the program—can be viewed at LouisianaSSBCI.com.
“We think it’s important to think of the new round of SSBCI funding as a marathon rather than a sprint,” said LED Assistant Secretary Brenda Guess, who leads the state’s SSBCI administration efforts. “Over the past year, LED has worked with federal, public and private partners to maximize its impact, but there is still much work to be done. We encourage small business owners and potential new business owners to fully explore SSBCI advantage and take advantage of the once-in-a-lifetime opportunity it represents.”
To receive email updates on the latest SSBCI news and information, click here and check the SSBCI box. If you have any questions about the Louisiana SSBCI team, please email LEDSSBCI2@la.gov.