The first round of American Rescue Plan funding for small businesses is heading out to a group of nine states and Pennsylvania tops the list with $267.8 million.
The American Rescue Plan signed in March by President Joe Biden reauthorized the State Small Business Credit Initiative (SSBCI) and expanded it to a pool of $10 billion to give small businesses the capital they need to grow.
The first run of SSBCI funding in 2010 was after the Great Recession and was only $1.5 billion, but “the leverage was dramatic and we saw the power of this,” White House American Rescue Plan Coordinator Gene Sperling said.
Now, this first round is $1.5 billion and Treasury officials said they plan to get through the state applications by late summer.
There is a focus on underserved and minority communities, Majority Whip Rep. Jim Clyburn, D- South Carolina, said on Monday’s call, and the legislation includes money set aside to ensure the program hits equitable goals.
“We know even before the pandemic hit, we knew that underserved communities, often small business of color or women were denied unfairly access to capital. We knew that venture capital tended to locate in a few cities on both coasts, and not equitably across the country,” he said.
The Pennsylvania Department of Community and Economic Development (DCED) will distribute the funding to eligible economic development partners for three different programs.
“This funding from the Biden Administration is a significant investment in Pennsylvania’s future that will be used to empower our small businesses and generate new jobs.,” Gov. Tom Wolf said in a news release.
About $142 million will go toward an equity capital investments program and venture capital investments program for seed- and early-stage technology companies through Ben Franklin Technology Partners and Life Sciences Greenhouses, as well as venture capital investments in new funds under the management of underserved venture capital firms.
The third program is more than $125 million for a loan program where up to 50% of total financing to small business borrowers will be offered through certified economic development organizations (CEDOs) and community development financial institutions (CDFIs).
“Our partners will use this funding to help small businesses, socially and economically disadvantaged businesses, and businesses in the innovation and technology sector,” DCED Acting Secretary Neil Weaver said in a news release.
Guidelines will be set soon and released on the state’s SSBCI website here, with money heading to the economic development partners this fall.
“Without their vote and support, none of this would have happened,” Sperling said.
Money is also being set aside for technical assistance, critical to helping small business owners, Deputy Secretary of the Treasury Wally Adeyemo said Monday.
The Lehigh Valley made quite an impact on Adeyemo when he visited Bethlehem last fall and toured small businesses that received money from Northampton County’s Small Business Grant Program.
“There are plenty of business (in the Lehigh Valley) that are thinking both about what they could do to grow the economy there, but also address climate issues they face,” he said. ‘It’s a place where states and local governments can drive capital.”
Adeyemo spoke of two local businesses he thought could benefit from the new SSBCI funding, like the Black woman running a child care center who was expanding with American Rescue Plan funding and the barber shop run by a Latino resident who kept all his employees on during the pandemic.
“He clearly would love to expand and think about how expand that barber shop, and SSBCI can help him do that,” Adeyemo said. “I think there are business throughout Pennsylvania and throughout the country that can use SSBCI resources to continue to grow and grow our economy going forward.”
Congresswoman Susan Wild spoke of hosting a roundtable with Black business leaders. People in the business community, and small business owners, were positive about the help during the COVID-19 pandemic.
“Many businesses told me that they literally would not have survived,” she said.
But Black business leaders described what she could only call systemic racism at state and local levels, treated with disdain or not taken seriously as business people.
“I think that’s something that’s really important for us to address,” Wild said.
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Sarah Cassi may be reached at [email protected].