Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowNine more states, including Indiana, 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.
Indiana is being allocated $99.1 million.
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.
The Indiana Economic Development Corp. said Indiana will receive a minimum of $86 million and will be eligible for an additional $13 million over 10 years.
The state plans to use the funding to expand venture capital investments and create a new program to invest in small business loan funds. A minimum of 37% of the funding will be allocated to traditionally underserved small businesses and entrepreneurs.
The IEDC also said about $70 million will be used to accelerate the state’s “innovative startup ecosystem through direct investments in early-revenue companies.” The allocation is expected to expand Indiana’s ability to support pre-seed and seed funding rounds through Indianapolis-based Elevate Ventures.
The allocation will be invested in Indiana-based companies through the Indiana Angel Network Fund. The investments will be available to companies pursuing seed stage financing.
The IEDC plans to use $28 million to create a new small business loan fund investment program, which will provide more capital for historically underserved entrepreneurs and small businesses. The remaining SSBCI funds will be used to support administrative costs.
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.
Here is how much states are expected to receive:
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:
Hawaii: $62 million
Kansas: $69.6 million
Maryland: $198.4 million
Michigan: $237 million
West Virginia: $72 million
Please enable JavaScript to view this content.
It’s interesting that they refer to it as “relief money” when it appears almost all of it will be used “to expand venture capital investments” and “expand Indiana’s ability to support pre-seed and seed funding rounds through Indianapolis-based Elevate Ventures.” I hope small business owners didn’t get their hopes up for any post pandemic “relief money.”