Washington Small Business Credit Initiative
The Washington State Department of Commerce has been awarded $163.4 million from the U.S. Department of Treasury to launch an updated version of its highly successful Small Business Credit Initiative (SSBCI), which leveraged an initial allocation in 2016 of $19.7 million into $150 million in new capital for Washington’s small businesses.
The goals of the Small Business Credit Initiative (SSBCI) programs are to promote entrepreneurship, support small business ownership, and increase the flow of capital in underserved communities. A portion of all program funding is targeted towards Very Small Businesses (VSB) and businesses owned by Socially and Economically Disadvantaged Individuals (SEDI). Working with private partners, Commerce expects to leverage new private capital (10:1 ratio) to expand lending and investment in small businesses and entrepreneurship, build small business ecosystems and create jobs.
Funds from the U.S. Treasury will be allocated to the state over a period of eight years. These funds will be used for five separate programs managed by the Department of Commerce:
- Commercial Real Estate Loan Program: Provides subsidized owner-occupied commercial real estate loans that could be used for tenant improvements, construction, purchase or refinance.
- Loan Participation Program (Micro and Small Business Loan Fund): Assists small businesses with obtaining financing through participating lenders and Community Development Financial Institutions (CDFIs).
- Revenue-Based Program: Provides a revenue-based debt product that focuses on underbanked communities around the state to provide upfront capital for businesses beyond the traditional debt-based loan products. This program is also a Sharia Compliant financing tool.
- Collateral Support Program: Provides small business loans to companies that have trouble qualifying for short-term loans through collateral support. The program is designed to complement the Small Business Administration’s 504 loan program by providing short-term loans before the permanent financing is in place.
- Washington State Venture Capital Program: Provides capital commitments to new venture capital funds with diverse investment teams that are focused on investing in underserved startups or targeted investment objectives such as social equity, climate tech innovations, information technology, A.I. and machine learning.
In addition, Commerce has submitted its application for technical assistance funding and is currently waiting on a response from the U.S. Treasury.
Current Program Status
The state has received its first distribution of SSBCI funding and the program is under development with our participating fund administrators and in the regulatory review process. Commerce will announce programs as they become available at the provided link.
Please check back for more program information or sign up for our newsletter to receive program updates.
Frequently Asked Questions (FAQs)
Will there be grant funding available through SSBCI programs?
No. The SSBCI funds are implemented as loans or equity investments only; the programs do not offer grants or forgivable loans.
How does a small business apply for the SSBCI program funding?
Small businesses do not apply directly to Commerce for funding. Applications will be made through fund administrators and or program participating lenders. A list of participating lending partners will be posted in the near future as the programs come online.
How does Treasury define a Very Small Business (VSB)?
A VSB refers to a business with fewer than 10 employees at the time of loan application and or investment. It includes independent contractors and sole proprietors.
Where can I find more program information about the State Small Business Credit Initiative (SSBCI)?
For more information regarding the State Small Business Credit Initiative (SSBCI) program, please visit the U.S. Department of Treasury’s SSBCI program page.
How does Treasury define a Socially and Economically Disadvantaged Individual-owned (SEDI) business?
As referenced in the SSBCI Capital Program Policy Guidelines (PDF), “meeting the needs of SEDI-owned businesses” means that the SSBCI funds are expended for loans, investments or other credit or equity support to:
- business enterprises that certify that they are owned and controlled by individuals who have had their access to credit on reasonable terms diminished as compared to others in comparable economic circumstances, due to their:
- membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society
- veteran status
- limited English proficiency
- long-term residence in an environment isolated from the mainstream of American society
- membership of a federally or state-recognized Indian Tribe
- long-term residence in a rural community
- residence in a U.S. territory
- residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization)
- membership of an underserved community (see Executive Order 13985, under which “underserved communities” are populations sharing a particular characteristic, as well as geographic communities, that have been systematically denied a full opportunity to participate in aspects of economic, social, and civic life, as exemplified by the list in the definition of “equity,” and “equity” is consistent and systematic fair, just, and impartial treatment of all individuals, including individuals who belong to underserved communities that have been denied such treatment, such as Black, Latino, and Indigenous and Native American persons, Asian Americans and Pacific Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual, transgender, and 10 queer (LGBTQ+) persons; persons with disabilities; persons who live in rural areas; and persons otherwise adversely affected by persistent poverty or inequality);
- business enterprises that certify that they are owned and controlled by individuals whose residences are in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b)(3)(ii);
- business enterprises that certify that they will operate a location in a CDFI Investment Area, as defined in 12 C.F.R. § 1805.201(b)(3)(ii); or
- business enterprises that are located in CDFI Investment Areas, as defined in 12 C.F.R. § 1805.201(b) (3) (ii).
Owned and Controlled definition:
- • If privately owned, 51% is owned by such individuals
• If publicly owned, 51% of the stock is owned by such individuals
• 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 such individuals