small business

SSTI has written a response to the U.S. Small Business Administration’s (SBA) proposed revisions to the Small Business Investment Company (SBIC) program, which aim to increase program participation. The proposed changes include reductions in licensing fees for first- and second-time funds, exceptions to the conflict of interest rules for follow-on financing, increasing access to credit for leveraged funds and a new “accrual debenture” option for SBICs.

The U.S. Department of the Treasury announced 11 additional states whose SSBCI plans have been approved: Alaska, Idaho, Iowa, Massachusetts, Minnesota, Missouri, Nebraska, Nevada, New Mexico, Ohio, and Utah. This is in addition to the 20 states that have been approved this year: California, Hawaii, Kansas, Maryland, Michigan, West Virginia, Arizona, Connecticut, Indiana, Maine, New Hampshire, Pennsylvania, South Carolina, South Dakota, Vermont, Colorado, Montana, New York, North Carolina and Oregon. Funds aim to make capital more accessible for underserved communities and increase economic growth and opportunity.

Gov. Tom Wolf awarded $246.8 million to Pennsylvania local economic development partners through the State Small Business Credit Initiative (SSBCI) this week. The money is expected to help small, socially and economically disadvantaged businesses grow. The Pennsylvania Department of community and Economic Development (DCED) will distribute the funds to partners who will administer the funding to qualifying businesses. The funding is divided between the Direct Venture Investment program ($123 million), which provides funding to economic development organizations that disburse it as seed and later-stage capital for companies, and the Revolving Loan fund program ($123.8 million), which provides funding to economic development organizations to create or capitalize loan funds to support small businesses.

Entrepreneurs learned more about small business funding opportunities from federal agencies with Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs during America’s Seed Fund Week last week. The $4 billion funding program, which is currently up for reauthorization, is celebrating 40 years of providing funding to small businesses each year in a variety of technology areas. Videos, including advice from program managers, and resources from each participating federal agency are available online.

A new working paper by the Federal Reserve Bank of Philadelphia used loan-level data from two fintech lenders, Funding Circle and LendingClub, to assess how the companies’ pre-pandemic lending patterns differed from those of traditional banks. The report finds fintechs contribute to a “more inclusive” financial system, expanding credit to more companies and at a lower cost.

A research team including members from MIT and the Federal Reserve Board assessed the Paycheck Protection Program (PPP) to determine if the initiative was able to keep businesses from closing and people from becoming unemployed. The authors present the highlight finding, which has been covered in multiple publications, as indicating that only about 23-34 percent of PPP funds went to workers who would have lost their jobs otherwise. This rate of effectiveness implies a cost of $170,000-$257,000 per job-year[1] of employment. The outcome seems surprising, given the program’s requirement that at least 60 percent of funds be spent on payroll. A dive into the results and policy implications bears lessons for future emergency program design.

An inaugural report looking at the landscape of capital resources in Arkansas may be useful to others who are interested in examining the capital access in their state or region. The report will serve as a baseline for trends in public, private and philanthropic investments in entrepreneurship across the state and may be a useful resource as the state plans its State Small Business Credit Initiative strategy.

The U.S. Census Bureau has recently announced that data collection has begun for Phase 7 of the Small Business Pulse Survey (SBPS). The SBPS measures the effects of changing conditions for small businesses (businesses that have a single location and under 500 employees) during the COVID-19 pandemic. This phase of the survey also includes new questions on changes in the use of digital technologies and in business, production, and management practices. Aside from surveying strictly business metrics, Phase 7 will also include questions that assess workplace COVID-19 vaccination and testing statistics and the overall well-being of business owners.

Indiana and Illinois are two of the most recent states to implement innovation voucher programs, adding another tool to their efforts to increase economic activity among innovators and entrepreneurs.

Regardless of the approach used, the goal of every economic development program in the country is to create economic opportunity within a specific geographic area. If more local, state and federal policy makers and practitioners were aware that empirical research has revealed certain types of companies were 235 percent better than others at maintaining long-term job “stickiness,” would we shift more resources and priorities in their direction?  Would knowing these same companies also were shown to be more profitable, had higher sales, and had greater survival rates than others help persuade skeptics? Should more companies with these business models be part of your region’s portfolio of innovation-based firms?