Two weeks ago, The Small Business Jobs Act became law, providing $30 billion in funding for community banks to lend to small businesses and $12 billion in tax cuts for the same. Today, the Treasury Dept. announced an additional $1.5 billion in federal funds heading to state treasuries to be doled out to small businesses under a section of that law, called the State Small Business Credit Initiative.
Originally posted at D. J. Marcus's Law Blog
The Treasury Department said, in a statement, that the money is "for programs that partner with private lenders to extend greater credit to small businesses. States are required to demonstrate a minimum ‘bang for the buck’ of $10 in new private lending for every $1 in federal funding. Accordingly, the $1.5 billion funding commitment that the federal government will make for this program is expected to support $15 billion in additional private lending."
So, there's a small catch: states need to show that they can generate $10 in private lending for every $1 of federal money to receive the funds.
According to the White House, the SSBCI is modeled in part after the Colorado Credit Reserve Program, which leverages state funds for private-sector lending to small businesses
Among the six states receiving the biggest allocations, California has the largest at $168.62 million, followed by Florida at $97.66 million. Michigan can receive up to $79.16 million and Illinois up to $78.37 million. Both New York and Ohio will each receive slightly more than $55 million.
Colorado will receive $17.2 million.
Small businesses cannot apply directly to receive funds. The money will be integrated into state programs that support small businesses through lending, grants, and other methods.
I'll be doing some research over the weekend on the Small Business Jobs Act and what it means for small businesses.