[Federal Register Volume 86, Number 97 (Friday, May 21, 2021)]
[Notices]
[Pages 27680-27682]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10697]


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DEPARTMENT OF THE TREASURY


Notice and Request for Information--State Small Business Credit 
Initiative (SSBCI)

AGENCY: Departmental Offices, Treasury.

ACTION: Request for information.

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SUMMARY: The State Small Business Credit Initiative (SSBCI) provides 
funds to States, Territories, and Tribal governments to enable these 
jurisdictions to support programs for small businesses. Specifically, 
beginning in FY 2021, the Department of the Treasury (Treasury) is 
authorized to provide up to $10 billion in support for small business 
capital and technical assistance programs as a response to the economic 
effects of the COVID-19 pandemic. Treasury invites the public to 
comment on the SSBCI program design and implementation in order to 
support new and existing small businesses. Responses may be used by 
Treasury to assist in developing program design and guidance. Responses 
may also be used to inform Treasury's allocation of technical 
assistance funding to states, territories, and Tribal governments, the 
Minority Business Development Agency (MBDA), and programs implemented 
directly by Treasury.

DATES: Responses must be received by June 4, 2021 to be assured of 
consideration.

ADDRESSES: Submit comments via www.regulations.gov. In general, 
comments received will be posted on http://www.regulations.gov without 
change, including any business or personal information provided. 
Comments received, including attachments and other supporting 
materials, will be part of the public record and subject to public 
disclosure. Do not enclose any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.

FOR FURTHER INFORMATION CONTACT: Jeff Stout at (202) 622-2059 or 
[email protected].

SUPPLEMENTARY INFORMATION: 
    Purpose: This request for information offers States, Territories, 
Tribal governments, localities, community-based and other non-profit 
organizations, small businesses, researchers, financial institutions, 
and other interested individuals and entities the opportunity to 
provide information on effective approaches for the delivery of capital 
and technical assistance through SSBCI.
    Background: SSBCI provides funding for two program categories: 
Capital access programs (``CAPs'') and other credit support programs 
(``OCSPs''). CAPs provide portfolio insurance for business loans by 
setting up loan loss reserve funds for participating financial 
institutions. OCSPs include, but are not limited to, collateral support 
programs, loan participation and guarantee programs, and venture 
capital and other venture financing programs.
    SSBCI was originally created in the Small Business Jobs Act of 2010 
to increase availability of credit for small business. It was funded at 
$1.5 billion and implemented by Treasury and states and territories 
from 2011 through 2017. Funds were allocated in all 50 states, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of Northern Mariana Islands, Guam, American Samoa, and the United 
States Virgin Islands. SSBCI provided allocatees significant 
flexibility to design programs that met local market conditions. By the 
end of the program, participating jurisdictions had directed SSBCI 
funds to 152 small business programs with a wide range of models and 
strategies. State programs addressed the spectrum of small business 
financing needs, from loans for microbusinesses and equipment purchases 
for small manufacturers to equity capital for early stage technology. 
Approximately 69 percent of the funding supported lending or credit 
support programs and 31 percent supported venture capital programs. 
According to the program evaluation

[[Page 27681]]

report, state SSBCI programs supported nearly $8.4 billion in new 
capital in small business loans and investments by the end of 2015. 
Eighty percent of SSBCI transactions supported businesses with 10 or 
fewer full-time employees and nearly half the supported businesses were 
less than five years old. Through 2015, 42 percent of the 16,919 SSBCI 
transactions were with small businesses located in low-to-moderate 
income (LMI) census tracts. In several states, a successful 
relationship with community development financial institutions (CDFIs) 
resulted in higher percentages of loans in LMI areas.
    As described in the SSBCI Program Evaluation (October 2016), 
available at https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci/ssbci-program-reports:
     CAPs supported a high volume of very small loans: The 
median CAP loan size was approximately $14,800 and almost 47 percent of 
CAP loans supported businesses in LMI areas. CDFIs accounted for 65 
percent of the 10,561 CAP transactions.
     Loan guarantee, loan participation, and collateral support 
programs supported larger transactions, with a median size of $300,000. 
On average, states used SSBCI funds to support 17.4 percent of each 
transaction, implying a leverage ratio of 5.75:1. Manufacturers were 
the most common business type, representing 17 percent of all non-CAP 
credit support transactions.
     Thirty-eight states directed approximately $450 million, 
or 31 percent of total SSBCI funds, to venture capital programs. 
Between 2011 and 2015, venture capital programs supported over 1,300 
equity investments with $278 million in SSBCI funding, generating $3.1 
billion in new investment. In most cases, states partnered with private 
investment funds or specialized non-profits (state-supported entities) 
with expertise to source, structure, close, and manage equity 
investments in small businesses. Venture capital programs targeted 
high-growth potential businesses in various stages of development: Pre-
seed and proof-of-concept; seed-stage and early-stage; growth stage and 
later stage; and mezzanine and debt investments. About two-thirds of 
the transactions supported pre-seed and seed capital investments.
    Additional information about the original 2010 round of SSBCI, 
including program evaluation reports is available at: https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci/archives.
    Section 3301 of the American Rescue Plan Act of 2021, Public Law 
117-2 (ARPA), reauthorized SSBCI and provided $10 billon to implement 
the program. ARPA modified SSBCI in a number of ways, including the 
following:
    (i) Separate Allocation for Tribal Governments. SSBCI provides for 
$500 million in allocations to Tribal governments in the proportion 
determined appropriate by the Secretary of the Treasury.\1\
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    \1\ Section 3301(a)(1) of ARPA.
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    (ii) Additional Allocations to Support Business Enterprises Owned 
and Controlled by Socially and Economically Disadvantaged Individuals 
(SEDI business). SSBCI provides $1.5 billion in allocation to States, 
Territories, and Tribal governments for business enterprises owned and 
controlled by socially and economically-disadvantaged individuals.\2\
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    \2\ Section 3301(b) of ARPA.
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    [cir] SEDI business means a business that:
    [ssquf] If privately owned, 51 percent is owned by one or more 
socially and economically-disadvantaged individuals;
    [ssquf] if publicly owned, 51 percent of the stock is owned by one 
or more socially and economically-disadvantaged individuals; and
    [ssquf] in the case of a mutual institution, a majority of the 
Board of Directors, account holders, and the community which the 
institution services is predominantly comprised of socially and 
economically disadvantaged individuals.
    [cir] Socially and economically disadvantaged individuals is 
defined by reference to section 8 of the Small Business Act (15 U.S.C. 
637) and the regulations thereunder. This definition includes the 
following:
    [ssquf] Socially disadvantaged individuals are those who have been 
subjected to racial or ethnic prejudice or cultural bias because of 
their identity as a member of a group without regard to their 
individual qualities.
     Economically disadvantaged individuals are those socially 
disadvantaged individuals whose ability to compete in the free 
enterprise system has been impaired due to diminished capital and 
credit opportunities as compared to others in the same business area 
who are not socially disadvantaged.
    (iii) Incentive Allocations to Support Business Enterprises Owned 
and Controlled by Socially and Economically Disadvantaged Individuals. 
SSBCI provides $1 billion to be allocated as an incentive for States, 
Territories, and Tribal governments that demonstrate robust support for 
SEDI businesses.\3\
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    \3\ Id.
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    (iv) Additional Allocations to Support Very Small Businesses. SSBCI 
provides for $500 million to be allocated to Very Small Businesses.
    [cir] Very Small Business is defined as a business with fewer than 
10 employees; and may include independent contractors and sole 
proprietors.\4\
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    \4\ Section 3301(c) of ARPA.
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    (v) Technical Assistance (TA). SSBCI provides that $500 million may 
be used to provide TA to certain businesses applying for SSBCI or other 
state or federal programs that support small businesses.
    [cir] Treasury may provide funds to states to carry out a TA plan 
to provide Very Small Businesses and SEDI businesses with financial 
advisory, legal, accounting services, either directly or by contract 
with priority given to SEDI businesses;
    [cir] Treasury may transfer funds to the Department of Commerce's 
MBDA to provide TA to SEDI businesses; and/or
    [cir] Treasury may contract with legal, accounting, and financial 
advisory firms with priority given to SEDI businesses to provide TA to 
SEDI businesses.\5\
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    \5\ Section 3301(d) of ARPA.
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    How to Comment: This RFI is for information and planning purposes 
only and should not be construed as a solicitation or as an obligation 
on the part of Treasury. We ask respondents to address the Key 
Questions listed below. You do not need to address every question and 
should focus on those where you have views or relevant expertise. 
Please clearly indicate which questions you are addressing in your 
response. You may also provide detailed proposals outlining how States, 
Territories, and Tribal governments could use SSBCI, as well as 
examples. All comments received, including attachments and other 
supporting materials, are part of the public record and subject to 
public disclosure. You should only submit information that you wish to 
make publicly available.
    Guidance for Submitting Documents: We ask that each respondent 
include the name and address of his or her institution or affiliation, 
and the name, title, mailing and email addresses, and telephone number 
of a contact person for the institution or affiliation, if any.
    Key Questions:
    1. What changes should Treasury make to the policy guidelines last 
updated in 2014 (available here: https://

[[Page 27682]]

home.treasury.gov/policy-issues/small-business-programs/state-small-
business-credit-initiative-ssbci/archives/archived-program-rules) to 
enable the use of SSBCI to expand access to capital for small 
businesses in the current economic environment? Responses should take 
into consideration the statutory requirements for CAPs and OCSPs in the 
Small Business Jobs Act and ARPA, and provide feedback consistent with 
those constraints.
    a. Is guidance specific to Tribal governments needed? If so, what 
specific issues should this guidance address?
    2. What changes should Treasury make to the policy guidelines last 
updated in 2014 (available here: https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci/archives/archived-program-rules) to enable use of SSBCI to 
promote access to capital for diverse businesses, including SEDI 
businesses and Very Small Businesses? Please provide specific examples.
    a. What data should Treasury use in its allocation calculation 
based on the needs of SEDI businesses in States, Territories, and 
Tribal governments? Please provide specific examples.
    b. What guidance should Treasury provide regarding identifying and 
serving SEDI businesses? Please provide specific examples.
    c. How can Treasury ensure effective use of allocations to States, 
Territories, and Tribal governments to support Very Small Businesses, 
including non-employer businesses? Please provide specific examples.
    3. How should Treasury ensure effective use of the TA allocation to 
support SEDI businesses' and Very Small Businesses' access SSBCI 
capital or other capital? Please provide specific examples.
    a. How should Treasury encourage States, Territories, and Tribal 
governments to prioritize contracts to SEDI businesses to provide TA?
    b. How and to what extent should Treasury work with MBDA to provide 
TA to SEDI businesses? Please provide specific examples.
    c. For what purposes should Treasury directly contract with legal, 
accounting, and financial advisory firms to provide TA to SEDI 
businesses? Please provide specific examples.
    4. What data should Treasury require from States, Territories, and 
Tribal governments in regular reporting on their performance and 
activities that would ensure compliance and provide meaningful 
information on results to inform the public, policymakers, and others?
    5. Do you have any other comments on the implementation of SSBCI to 
improve outcomes in general, and particularly to serve underserved 
communities and groups and SEDI businesses?

    Dated: May 14, 2021.
Jeffrey Stout,
Director, Office of Federal Program Finance.
[FR Doc. 2021-10697 Filed 5-20-21; 8:45 am]
BILLING CODE 4810-AK-P