Michigan receives first round of State Small Business Credit Initiative funding to support small businesses, high-tech startups throughout the state
Thursday, August 18, 2022
LANSING, Mich. – Governor Gretchen Whitmer joined the Michigan Economic Development Corporation (MEDC) today to announce that Michigan is deploying the first round of State Small Business Credit Initiative (SSBCI) 2.0 funding from the U.S. Department of Treasury. Through this initial round of funding, up to $72 million will be available to support loans to small businesses through MEDC’s Access to Capital programs, including the Collateral Support, Loan Participation, Loan Guarantee, and Capital Access Programs, as well as equity investments for early-stage, technology-based businesses in Michigan as part of the Small Business Venture Capital Program.
Within the next 60 days, funding will also be available for loans of $250,000 or less for small businesses, with a focus on businesses owned by socially and economically disadvantaged individuals, or businesses with fewer than 10 employees, to apply for through specified lenders.
“Ensuring our small businesses are positioned to grow and create good jobs across Michigan is critical as we continue strengthening our economy and delivering on kitchen-table issues for working families,” Gov. Whitmer said. “Thriving businesses are vital to our state’s economy, and these federal funds are providing entrepreneurs and small businesses with timely financing to grow their business and create jobs.”
The Michigan Small Business Venture Capital Program (“SBVCP”) will utilize $75 million in SSBCI 2.0 funds to increase the availability of capital to early-stage, technology-based businesses aligned with the MEDC Strategic Plan. The program will invest as a limited partner in venture capital funds operating in the state who, in turn, fund qualified for-profit early-stage, technology-based businesses helping to support those businesses and continue to grow Michigan’s entrepreneurial ecosystem overall.
Applications from Michigan venture capital funds will be accepted by the MEDC during a three-year open period or until the budget is exhausted. Recommendations for awards will be submitted to the Michigan Strategic Fund board for approval.
“Michigan’s venture capital ecosystem has experienced incredible growth in recent years, including being recognized nationally as the fastest-growing state for VC investment just last year,” said Fred Molnar, Senior Vice President of Entrepreneurship and Innovation at MEDC. “We remain committed to working with our partners across all corners of the state to deploy every federal and state resource available to spark additional innovation and economic opportunity here in Michigan.”
Additionally, the MEDC’s SSBCI 2.0 Access to Capital programs are designed to increase the availability of capital to small businesses through loans that would otherwise not be available in the market through conventional terms. The program requires partnership with private sector lenders which provide the new lending including SSBCI 2.0 support.
Michigan’s SSBCI 2.0 programs include new requirements for support to small businesses owned by socially and economically disadvantaged individuals and to very small businesses, defined as businesses having 10 employees or less, to continue to ensure equity in access to capital for businesses across the state. The MEDC plans to announce within the next 60 days the availability of SSBCI 2.0 funding available for these businesses specifically to begin the application process through specified small business lenders. Support for larger loans of up to $20 million is available now through MEDC’s existing Access to Capital programs.
In the meantime, banks, credit unions and Community Development Financial Institutions (CDFIs) may begin making applications for loan enhancement support through any of these programs to the Michigan Strategic Fund (MSF) board by leveraging current MEDC Access to Capital programs and SSBCI funding available. Updated program fact sheets and new SSBCI templates with industry eligibility updates can be accessed on the Capital Access program lenders page.
To learn more about MEDC’s Access to Capital program visit michiganbusiness.org/access-capital.
In May, Michigan was approved for up to $236,990,950 in SSBCI 2.0 funding to be used for capital access, credit support, and venture capital programs designed to support the growth of Michigan’s small businesses.
Michigan was one of only five states to be approved for funding through this round of SSBCI awards, which are intended to increase access to capital and promote entrepreneurship, especially in traditionally underserved communities as they emerge from the pandemic.
“Small businesses are the backbone of our economy. Ensuring their success is critical to Michigan’s long-term economic growth and resiliency,” said Senator Gary Peters. “The deployment of these funds means direct support to small businesses to create jobs, adapt operations, and bolster local economies across our state. I was proud to help champion the State Small Business Credit Initiative in the Senate and secure these funds through the American Rescue Plan, and will continue fighting to deliver vital support to our businesses and workers.”
SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI capital funding, amplifying the effects of this funding and providing small business owners with the resources they need for sustained growth. State governments submitted plans to Treasury for how they will use their SSBCI allocation to provide funding to small businesses, including through venture capital programs, loan participation programs, loan guarantee programs, collateral support programs, and capital access programs.
A White House report released in April found that more Americans are starting new businesses than ever before. In 2021, Americans applied to start 5.4 million new businesses – 20 percent more than any other year on record. It also found that small businesses are creating more jobs than ever before, with businesses with fewer than 50 workers creating 1.9 million jobs in the first three quarters of 2021 – the highest rate of small business job creation ever recorded in a single year.
“Small businesses are the backbone of our nation’s economy, and here in Michigan, we’re committed to doing all that we can to provide the support, resources and opportunities they need to grow and thrive,” said MEDC Senior Vice President of Small Business Services Amy Rencher. “By providing this support to small businesses, especially traditionally underserved entrepreneurs, throughout Michigan, we are generating greater economic impact for all Michigan residents.”
About Michigan Economic Development Corporation (MEDC)
The Michigan Economic Development Corporation is the state’s marketing arm and lead advocate for business development, job awareness and community development with the focus on growing Michigan’s economy. For more information on the MEDC and our initiatives, visit www.MichiganBusiness.org. For Pure Michigan® tourism information, your trip begins at www.michigan.org. Join the conversation on: Facebook Instagram LinkedIn, and Twitter.