California Gov. Gavin Newsom announced Wednesday $1.1 billion in funding for California’s small businesses from the U.S. Treasury’s State Small Business Credit Initiative, or SSBCI, as part of the federal American Rescue Plan Act of 2021. The funding is estimated to bring an additional $18 billion in capital to small businesses in the state.
The California Pollution Control Financing Authority, or CPCFA, and the California Infrastructure and Economic Development Bank, or IBank, will split the allocation equally to small business credit support programs, according to the press release.
“California is home to the largest and most diverse small business community in the country,” Newsom said in the press release. “We’re a state that’s driven by small business innovation and entrepreneurship – that’s why we’ve invested billions of dollars to help our businesses recover from the pandemic and to give more Californians a shot at the California Dream. ”
With the SSBCI funds, California will enact six programs anticipated to create jobs, advance investments for underserved entrepreneurs and increase small business lending in the long term, according to Sam Mahood, special projects and communications advisor to California Sen. Alex Padilla.
More than $200 million has been allocated by the state to implement various venture capital strategies intended to provide investments to small businesses, Mahood added. The state has also allocated $472 million to provide collateral for small business loans, which is estimated to generate over $5 billion in private financing over the next decade.
“Together, CPCFA and IBank programs complement one another to serve various facets of the California small business community,” said CPCFA executive director Shela Tobias-Daniel in the press release. “We are excited to work with IBank and the California Office of the Small Business Advocate 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 businesses owners.”
This is the second time California has applied for and received funding from this federal program, according to the press release. California first received $168 million in 2010 to support small businesses through three state credit-support programs: the California Capital Access Program for Small Businesses, the Collateral Support Program and the Small Business Loan Guarantee Program.
The state used the first round of funding to support more than 10,000 loans that produced over $1 billion in total financing, the press release noted. More than 90,000 jobs for Californians were created or retained.
“This historic investment demonstrates why the American Rescue Plan is one of the most transformative pieces of legislation in the 21st century,” said Padilla in an email. “The $1.1 billion invested in California’s small businesses will help unlock the potential of entrepreneurs in underserved communities across the state who may have never had the support needed to build their businesses and achieve the American Dream.”