Nine more states have been approved for a piece of nearly $10 billion in relief money being distributed by the federal government to promote small business growth.
The Treasury Department on Monday announced the approval of plans from Arizona, Connecticut, Indiana, Maine, New Hampshire, Pennsylvania, South Carolina, South Dakota and Vermont. It previously announced funding for programs in Hawaii, Kansas, Maryland, Michigan and West Virginia.
The money is part of the State Small Business Credit Initiative, established in 2010 and reauthorized under the American Rescue Plan to support state programs that help small businesses access capital as they emerge from the pandemic.
Here is some information to help you localize the story:
HAS MY STATE APPLIED FOR FUNDS?
States and territories submitted dozens of proposals for venture capital, loan participation, loan guarantee, collateral support and capital access programs. See the full list here: https://home.treasury.gov/system/files/256/List_Proposed_Programs_Contacts.pdf
WHERE IS THE MONEY GOING?
The Treasury Department so far has allocated more than $1.5 billion for programs in 14 states.
— These are latest states approved and the maximum amounts they'll receive. Find more details on their programs here: https://content.govdelivery.com/accounts/USTREAS/bulletins/3221c46?reqfrom=share
Arizona: $111.0 million
Connecticut: $119.4 million
Indiana: $99.1 million
Maine: $62.2 million
New Hampshire: $61.5 million
Pennsylvania: $267.8 million
South Carolina: $101.3 million
South Dakota: $60.0 million
Vermont: $57.9 million
— These states previously had their plans approved. Learn more about them here: https://home.treasury.gov/news/press-releases/jy0795
Hawaii: $62 million
Kansas: $69.6 million
Maryland: $198.4 million
Michigan: $237 million
West Virginia: $72 million
PUBLISHABLE CONTEXT
The American Rescue Plan Act of 2021 reauthorized and expanded the State Small Business Credit Initiative, providing $10 billion to distribute to states, the District of Columbia, territories and tribes to expand access to capital and promote entrepreneurship, particularly in underserved communities.
Treasury Secretary Janet Yellen called it a “historic investment” that will promote equitable economic growth across the U.S.
A White House report released last month found more Americans are starting businesses than ever. In 2021, they applied to launch 5.4 million new businesses — 20% more than any other year on record. They're also creating more jobs.
Yet the financial landscape has been challenging.
A survey earlier this year from the Federal Reserve showed about 85% of small businesses experienced financial difficulties in 2021, up nearly 20 percentage points from 2019. Back then, more than half of owners who sought a loan were looking to expand; last year, the majority of applicants needed funds just to cover everyday operating expenses.
Meanwhile, inflation is the highest in decades, with prices soaring for raw materials and finished goods and workers demanding higher wages. The Federal Reserve has raised interest rates, which means the cost of borrowing money is going up.
Even in normal times, it can be tough for small businesses to get loans from traditional banks because they lack the assets and credit histories of bigger companies. During the pandemic, banks have been stingier, outside COVID-related programs. Two years in, loan applicants are more likely to get turned down or receive less than they asked for compared to before COVID-19.
