California’s small companies will get $1.1 billion in investment, according to Governor Gavin Newsom’s announcement today.
The money comes from the State Small Business Credit Initiative (SSBCI) of the U.S. Treasury, and it will be used to help California’s small companies access an extra $18 billion in finance.
The biggest and most diversified small business community in the nation is found in California, according to Governor Newsom. In order to assist our companies recover from the epidemic and to offer more Californians a chance at the California Dream, we have committed billions of dollars because we are a state that is driven by small company innovation and entrepreneurship.
Underrepresented and underprivileged company owners will now have easier access to the crucial finance they need in order to succeed and prosper.
California will get $1.1 billion as part of the federal American Rescue Plan Act of 2021 to promote small companies.
The allocation will be split equally between the California Infrastructure and Economic Development Bank (IBank) and the California Pollution Control Financing Authority to support small business credit support programmes.
IBank will also launch a new initiative to improve the venture capital ecosystem.
States may now apply for this federal programme for the second time. The first occurred in 2010, when California submitted an application for and was awarded $168 million to run three state credit-support programmes: the Small Business Loan Guarantee Program, the Collateral Support Program, and the California Capital Access Program (CalCAP) for Small Business.
Program for Small Business Loan Guarantee
The Small Company Loan Guarantee Program, which IBank runs in conjunction with NGOs and lenders to provide small business loan guarantees, will once again employ a significant percentage of the SSBCI money.
In the event that a small company is unable to make its payments, the guarantees may reimburse lenders up to 80% of the outstanding loan amount. IBank provides lenders with the assurance they need to make loans to small firms who might otherwise find it difficult to get finance by guaranteeing loans.
Promoting Lender Registration
IBank is requesting lenders, such as community development financial institutions and minority depository institutions, to join up to utilise its loan guarantee programme in order to promptly deploy funds and put them in service to small companies.
Obtaining certification just needs a one-page form. On IBank’s Participating Lenders page, you may find a list of participating lenders.
Program for Venture Capital
IBank will use roughly $200 million of its SSBCI funds to launch a new venture capital programme in addition to its small business loan guarantees.
The program’s goal is to build a more inclusive venture capital ecosystem by investing in underrepresented VC managers, entrepreneurs, and business owners, as well as geographical areas that are socioeconomically disadvantaged or that receive very little venture capital funding. Additionally, the initiative will advance climate justice and equality.
IBank Executive Director Scott Wu remarked, “IBank is not only happy to inject fresh financing into our successful Small Business Loan Guarantee programme, but are also thrilled to introduce this new venture capital programme.”
“Venture financing is still out of reach for many businesses, despite California’s dominance in the sector. In the state’s drive for fairness, increasing diversity is crucial both in terms of who gets VC investment and in terms of who administers VC money.
Success in the SSBCI’s first round (2010)
California utilised its $168 million from the first round of the SSBCI to fund more than 10,000 loans, resulting in more than $1 billion in total financing and more than 90,000 new or preserved employment for residents of the Golden State.
According to CPCFA Executive Director Shela Tobias-Daniel, “The California Pollution Control Financing Authority is thrilled to have collaborated with IBank for SSBCI 2.0 to deliver funding to California to benefit small companies.” The CPCFA and IBank programmes work in tandem to support different elements of the state’s small business community.
To reach smaller businesses through lenders and other small business-focused organisations like chambers of commerce, regional Small Business Development Centers, and affinity groups that support small business owners, we are eager to collaborate with IBank and the California Office of the Small Business Advocate (CalOSBA).