The latest federal legislative effort to help small businesses is the State Small Business Credit Initiative (SSBCI). It is part of the Small Business Jobs Act of 2010 signed by President Obama in September of that year. It provides $1.5 billion to augment the states’ small business lending programs. According to the U.S. Treasury Department, the SSBCI is expected to trigger as much as $15 billion in new lending to small businesses. Participating states have, or will, receive a disbursement based on considerations like the total number of jobs lost in the 2008 recession. States then leverage that money to encourage private investment, with a goal of raising ten times the original amount.
The federal government has passed several stimulus programs since President Obama took office in 2009 that have offered varying degrees of support for small business. The $840 billion stimulus passed in 2009, according to many critics, did not do much to help small businesses, and the measure garnered few accolades in small business communities around the country. The $30 billion Small Business Lending Fund, also part of 2010’s Small Business Jobs Act, reportedly ended up mostly in the hands of many of the banks receiving Troubled Asset Relief Program (TARP) money, doing little to benefit small business. The SSBCI has therefore given some small business leaders, according to the Philadelphia Inquirer, cause for hope.
States receiving SSBCI funds may apply them to existing successful small business programs, giving states the opportunity to apply solutions specific to that state’s needs. New Jersey has received approval for $33.8 million in SSBCI funding. The state’s treasury department will receive the funds in three parts over a two-year period. The New Jersey Economic Development Authority (EDA) will have authority to apply the funds through existing loan programs to make new loans and credit guarantees, and to engage in venture capital investments. It will focus on “underserved communities” throughout the state. Businesses applying for their first EDA loan may qualify for loans up to $500,000, while businesses with a good EDA track record may borrow up to $750,000.
The State of New York will receive $55.4 million in SSBCI funds. Empire State Development, a state agency promoting “business investment and growth,” will administer the funds through three programs. The Innovate NY Fund, which provides seed funding for innovative, entrepreneurial ventures, will receive $26 million. The Capital Access Program, which contributes matching funds to financial institutions’ loan loss reserve pools in order to encourage small business lending, will receive $19 million. The Bonding Guarantee Assistance Program, a new program helping minority- and women-owned businesses with surety bonds, gets $10 million.
The economies of New York and north New Jersey, by most accounts, are making a slow but steady recovery. Job growth is slow, and many people are opting to give entrepreneurship a try. Lending assistance at the local, state, and federal level offers a chance for small businesses to grow in a changing landscape.
The New York business attorneys at Samuel C. Berger, PC offer fixed-fee legal services to businesses and investors who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.
More Blog Posts:
Trends from 2011 for New Jersey Businesses, New York & New Jersey Business Lawyer Blog, January 5, 2012
New Jersey Offers Support to Prospective Entrepreneurs, New York & New Jersey Business Lawyer Blog, December 27, 2012
New Jersey Assembly Passes Bill Creating Small Business Loan Program, New York & New Jersey Business Lawyer Blog, December 13, 2011
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