Governor Newsom announces $1.1 billion in support for small businesses in California
U.S. Treasury’s Small Business Credit Initiative will increase small business owners’ access to capital and cover more than 80% of loans
California to Launch New Program Designed to Create a More Inclusive Venture Capital Ecosystem
SACRAMENTO – Today Governor Gavin Newsom announced $1.1 billion in funding to support small businesses in California. The funding comes from the US Treasury’s State Small Business Credit Initiative (SSBCI) and aims to raise $18 billion in additional capital for small businesses in California.
“California is home to the largest and most diverse small business community in the country,” Governor Newsom said. “We are a state that is driven by innovation and small business entrepreneurship – that is why we have invested billions of dollars to help our businesses recover from the pandemic and to give more Californians a chance to live the California dream. With this funding, underrepresented and underserved business owners will have greater access to the critical funding they need to succeed and thrive.
Under the 2021 US federal bailout law, California will receive $1.1 billion to help support small businesses. The California Infrastructure and Economic Development Bank (IBank) and the California Pollution Control Financing Authority will share the allocation equally to fund small business credit support programs. IBank will also launch a new program designed to create a fairer venture capital ecosystem.
This is the second time that states can apply for this federal program. The first was in 2010, when California requested and received $168 million to administer three state credit support programs – the Small Business Loan Guarantee Program, the Collateral Support Program and the California Capital Access Program (CalCAP) for small businesses.
Small Business Loan Guarantee Program
As in 2010, IBank will use much of the SSBCI funds for its Small Business Loan Guarantee Program, working with nonprofit organizations and lenders to provide loan guarantees to small businesses. Guarantees can repay lenders up to 80% of a small business’ outstanding loan if the business is unable to make payments. By guaranteeing loans, IBank gives lenders the confidence they need to lend to small businesses that otherwise struggle to access capital.
Encourage lenders to register
To deploy funds quickly and put them to work for small businesses, IBank requires lenders – including community development financial institutions and minority deposit-taking institutions – to register to use its loan guarantee program. Certification only requires a one-page form. The list of already participating lenders is available on the IBank Participating Lenders website.
Venture capital program
In addition to the small business loan guarantees, IBank will use approximately $200 million of its SSBCI funds to launch the new venture capital program, designed to create a more inclusive venture capital ecosystem by investing in venture capital managers. underrepresented risk, underrepresented and underserved entrepreneurs and business owners. , and geographical areas that are socio-economically disadvantaged or receive very limited venture capital funding. The program will also promote climate equity and justice.
“IBank is not only thrilled to inject new funding into our successful Small Business Loan Guarantee Program, we are especially excited to launch this new venture capital program,” said Scott Wu, Executive Director of IBank. . “Despite California’s dominance in the venture capital industry, venture capital remains inaccessible to many entrepreneurs. Increasing the inclusion of not only those who receive venture capital funds, but also those who manage venture capital funds is critically important in the state’s push for equity.
SSBCI First Round Success (2010)
Under SSBCI’s first round, California used its $168 million to support more than 10,000 loans that leveraged more than $1 billion in total funding and created or retained more than 90,000 jobs for Californians. .
“The California Pollution Control Financing Authority is pleased to have partnered with IBank for SSBCI 2.0 to bring funding to California to support small businesses,” said CPCFA Executive Director Shela Tobias-Daniel. Together, the CPCFA and IBank programs complement each other to serve various facets of the California small business community. We are excited to work with IBank and the California Office of the Small Business Advocate (CalOSBA) to reach more small businesses through lenders and other organizations that focus on small businesses such as chambers of commerce, regional small business development centers and affinity organizations that serve small business owners.