The Governor Gavin Newsom announced $1.1 billion in funding to support California's small businesses, funding that comes from the U.S. Treasury's State Small Business Credit Initiative (SSBCI) and is intended to leverage an additional $18 billion in capital for small businesses in the Golden State.
"California is home to the largest and most diverse small business community in the country," Governor Newsom said. "We are a state driven by innovation and small business entrepreneurship; that's why we have invested billions of dollars to help our businesses recover from the pandemic and give more Californians a chance to achieve the California Dream."
The governor noted that, thanks to this funding, underrepresented and underserved business owners will have more access to the critical financing they need to succeed and thrive.
The California Infrastructure and Economic Development Bank (IBank) and the California Pollution Control Financing Authority will split the allocation equally to fund small business credit support programs; IBank will also launch a new program designed to create a more equitable venture capital ecosystem.
This is the second time states have been eligible to apply for this federal program. The first was in 2010, when California applied for and received $168 million to operate 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.
California Small Business Loan Guaranty Program
As it did in 2010, IBank will use a large portion of the SSBCI funds for its Small Business Loan Guarantee Program, working with nonprofits and lenders to provide loan guarantees for small businesses, the state said in a statement.
He further stated that the guarantees can reimburse lenders for up to 80 percent of a small business's outstanding loan if it is unable to make its payments.
By guaranteeing loans, IBank gives lenders the confidence they need to lend to small businesses that would otherwise have difficulty accessing capital.
Lenders urged to register
To deploy funds quickly and put them to work for small businesses, IBank is asking lenders, including community development financial institutions and minority depository institutions, to sign up to use its loan guarantee program. Certification requires only a one-page form.
The list of lenders already participating is available at the participating lenders website of IBank.
Venture Capital Program
In addition to 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 underrepresented venture capital managers, underrepresented and underserved entrepreneurs and business owners in geographic areas that are socioeconomically disadvantaged or receive very limited venture capital funding.
"Despite California's dominance in the venture capital industry, venture capital remains inaccessible to many entrepreneurs. Increasing the inclusion of not only who receives venture capital funds but also who manages venture capital funds is vitally important in the state's drive toward equity," said IBank CEO Scott Wu.
Notably, in SSBCI's first round, California used its $168 million to support more than 10,000 loans that generated more than $1 billion in total funding and created or retained more than 90,000 jobs for Californians.
You may be interested in: San Mateo County seeks candidates for various offices in upcoming elections
