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Congress reveals COVID bill with $10 billion SSBCI

February 11, 2021
By: Jason Rittenberg

The U.S. House of Representatives is working through the coronavirus relief package in committee markups this week, and there are several provisions that could have a significant impact for regional innovation economies. The highest-profile of these is $10 billion for a new State Small Business Credit Initiative (SSBCI) program. Reauthorizing this program has been a top priority for SSTI's Innovation Advocacy Council, as SSBCI was one of the federal government’s only sources of funding for equity investments in the past two decades.

The House Financial Services Committee is overseeing the SSBCI portion of the legislation. Their proposal creates a $10 billion new authorization, but there are several significant differences from the program that was first created and funded in 2010. Of the total, $6.5 billion would be distributed according to declines in employment over the past two years, as would another $500 million for tribal governments (which were excluded from the original program). An allocation of $1.5 billion would go to the states specifically to support socially- and economically- disadvantaged businesses, with another $1 billion available as incentive payments to states that prove particularly effective in supporting these companies. Finally, the program provides $500 million for technical assistance funding that will prioritize disadvantaged businesses and could be awarded to states; that funding also could be transferred to the Minority Business Development Agency, or used by Treasury to hire technical assistance providers.

The original SSBCI was a $1.5 billion program authorized during the Great Recession. It allowed states to use the funds for a wide variety of debt and investment programs, and provided many options for states to use financial entities (such as venture development organizations and community development financial institutions) to provide the financing to the small businesses. The overall goal of the program was to leverage private capital to strengthen businesses while preserving and creating jobs. About one-third of the program’s funds were used for equity investments.

Other sections of the COVID relief bill that will affect regional innovation economies include:

  • $350 billion for state and local governments in flexible funding to address emergency health costs, budget shortfalls and economic recovery;
  • $3 billion in new economic adjustment assistance funding at the Economic Development Administration, similar to the funding that was provided through the CARES Act last spring;
  • $750 million is expected to be included to assist entities that conduct research and development with costs related to disruptions in their work; and,
  • $100 million in a new community navigator pilot program at the Small Business Administration to award funds to Small Business Development Centers, Women’s Business Centers, SCORE, other nonprofits, and state, local and tribal governments to assist businesses in accessing state and federal emergency assistance.

The bill is advancing through the budget reconciliation process, and the majority party is attempting to do so in a streamlined fashion. As such, the bill could go straight from the House floor to the Senate floor, and Democrats may try to pass the bill without amendments so that it can go straight from the Senate to President Biden’s desk. The COVID bill that was signed late last year extended unemployment benefits through March 14, and the goal for the reconciliation process appears to be to finish before those benefits expire.

legislation, coronavirus, venture capital, debt