A newly announced $27 million in federal funds earmarked to support small businesses, startups, and entrepreneurs is headed to Missouri, representing the first of three awards approved by the U.S. Department of Treasury — totaling $95 million — to be deployed through the Missouri Technology Corporation.
The funding comes via the State Small Business Credit Initiative, which is providing nearly $10 billion to states, the District of Columbia, territories, and Tribal governments to increase access to capital and promote entrepreneurship, especially in traditionally underserved communities as they emerge from the pandemic, according to the treasury department.
SSBCI funding is expected to catalyze up to $10 of private investment for every $1 of SSBCI capital funding, amplifying the effects of the funding and providing small business owners with needed resources to sustainably grow and thrive. MTC’s state-sponsored venture capital program, the IDEA Fund Co-Investment Program, is the first program approved to deploy SSBCI funding in Missouri.
“The Missouri Technology Corporation provides vital support for companies that go on to benefit our entire state,” said Gov. Mike Parson, R-Missouri, who earlier this year signed a budget raising MTC’s funding to a historic $31 million. “SSBCI will enhance these efforts to invest in the leading tech companies of tomorrow. Our state’s commitment to innovation and entrepreneurship means an increased capacity for economic growth and more good-paying jobs for Missourians.”
Click here to learn more about the State Small Business Credit Initiative.
Originally established as part of the Small Business Jobs Act of 2010 under the Obama Administration, the SSBCI is intended to provide public funds to leverage private-sector lending and equity investment into small businesses. The initiative was reauthorized and expanded as part of the American Rescue Plan Act, President Biden’s $1.9 trillion stimulus package, which passed Congress in March 2021 along party lines.
U.S. Reps. Cori Bush and Emanuel Cleaver, D-Missouri, and U.S. Rep. Sharice Davids, D-Kansas, a member of the House Small Business Committee, supported and voted for the American Rescue Plan. All Republican members of both the Missouri and Kansas Congressional delegations in the U.S. House and U.S. Senate voted against the $1.9 trillion stimulus package.
“This is an historic investment in entrepreneurship, small business growth, and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally underserved communities,” said Janet L. Yellen, secretary of the U.S. Treasury. “I’m excited to see how these SSBCI funds will promote equitable economic growth across the country.”
The treasury department has now announced the approval of 31 state plans for about $4.8 billion in SSBCI funding. Kansas was allocated $69 million through SSBCI — supporting the Sunflower State’s new GROWKS loan and equity programs — in a previous tranche of funding announcements. More state plans are expected to be approved on a rolling basis.
Eligible SSBCI programs are limited to venture capital, loan participation, loan guarantee, collateral support, and capital access. SSBCI is the only American Rescue Plan-funded program that can be used for state-sponsored venture capital activities.
Previously, only venture capital programs have been able to achieve the expected 10:1 leveraged capital ratio requirement of the program, according to MTC. It is expected that for every dollar of federal funding invested, at least 10 dollars of private capital investment will be generated.
MTC’s IDEA Fund makes direct equity-based investments in Missouri’s most promising emerging companies to promote growth and encourage additional future investment, according to the public-private partnership. The program requires matching private funds to ensure state and federal funds are invested in the most attractive early-stage investment opportunities.
In 2011, MTC received $24 million through SSBCI which was invested in 80 Missouri-based companies. These companies have raised more than $760 million in additional private capital and created more than 500 new jobs, according to MTC.
Click here to check out the Missouri IDEA Fund portfolio.
“SSBCI funding will have a positive impact on economic development statewide,” said Maggie Kost, acting director of the Missouri Department of Economic Development. “Startups and entrepreneurs are vital to the long-term success of our economy. We’re grateful for this significant investment that will expand support for emerging businesses and create greater opportunities for Missourians.”
Nearly $40 million of Missouri’s $95 million allocation is required to support socially and economically disadvantaged (SEDI) businesses. In partnership with the Department of Economic Development, MTC has published three requests for proposals to identify partners to launch SSBCI-funded programs supporting SEDI businesses. Pending federal approval, MTC anticipates the new programs will be operational in early 2023.
“MTC has a strong track record of leveraging investments to generate economic impact and financial returns that expand entrepreneurial capacity in the state,” said Jack Scatizzi, executive director of MTC. “We’re excited to identify new partners to launch programs that provide financial support to SEDI businesses. We look forward to continuing our work through the IDEA Fund to ensure all Missouri entrepreneurs can access federal SSBCI funds.”
MTC expects to begin accepting applications for the IDEA Fund Co-Investment Program in October and make investment allocations in early 2023.
Click here to learn more about the IDEA Fund Co-Investment Program and how to apply.