A Tool for Bankers: State Small Business Credit Initiative

April 28, 2014
By Ariel Cisneros, Senior Community Development Advisor


State Small Business Credit Initiatives help finance small businesses across the Tenth District by leveraging private lending.

The State Small Business Credit Initiative (SSBCI) has proven to be a flexible financial tool for leveraging private lending to help fund small businesses in the Tenth Federal Reserve District and across the nation.

The $1.5 billion federal program was created in 2010 to enhance new and existing state programs that lend and invest in small businesses. Funders say the popularity and value of the initiative continues to grow.

Diane Wolverton, executive director of the Wyoming Smart Capital Network, which covers 17 municipalities in Wyoming, said the program has helped close 15 deals in the state since January 2013.

Wolverton said the Network was able to leverage $3 million of the state’s $13 million SSBCI allocation to support more than $22 million in Wyoming projects, including one that otherwise may not have happened, resulting in the creation and retention of more good jobs.

She said the response from banks continues to grow. One bank is working on its eighth deal.  She said the network’s collateral support program is “becoming one of the basic tools for bankers to stimulate capital.”

While the network’s loan portfolio has been used to benefit a few startups, Wolverton said the network mainly uses the program to assist the expansion of existing businesses. “Our niche is collateral shortfall,” she said.

Stimulating economic development

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Small business initiative helps stimulate economic development in
rural and underserved areas.

In New Mexico, John Brooks, director of Commercial Lending at the New Mexico Finance Authority, sees the collateral support program as a tool to help stimulate economic development in rural and underserved areas of the state. 

Brooks said the loan participation program is particularly popular because there are no fees and it provides a single point of application, thus reducing paperwork and other burdens for participating banks and borrowers. 

He said the $13 million in SSBCI funding in New Mexico will leverage at least $132 million for multiple projects, allowing banks to make deals that otherwise may not have been possible. 

Funding has been used to support medical centers, manufacturing companies, commercial buildings and construction lines—all helping to create or retain jobs in New Mexico.

Identifying promising practices

Cliff Kellogg, director of the State Small Business Credit Initiative for the U.S. Treasury, said the agency’s 2014 priorities include helping states learn from each other to better leverage funding to reach their targeted customers. 

Kellogg said the program’s funding is intended to remain with the states, making it an evergreen resource, which can be recycled into new loans and investments.

He said the agency has proposed a budget extension in fiscal 2015 for an additional $1.5 billion in funding for SSBCI.

Learn more about the State Small Business Credit Initiative. View the SSBCI Summary of States’ Quarterly Reports as of December 31, 2013. Here is a list of available programs throughout the Tenth District.

State

SSBCI Program Website(s)

 

Colorado

Colorado Housing and Finance Authority

 
 

Kansas

NetworkKansas

 

Missouri

Missouri Small Business Resources

 

*Oklahoma

Accelerate Oklahoma

 

Nebraska

Nebraska Department of Economic Development

 

New Mexico

New Mexico Finance Authority

 

Wyoming

Wyoming Smart Capital Network

 

*Venture capital program only