Cooperatives eligible for State Small Business Credit Initiative


In March, President Biden signed the American Rescue Plan At into law, which included several provisions important to cooperatives. This law reauthorized the State Small Business Credit Initiative (SSBCI) and provided $10 billion in available funds to leverage low-cost financing and technical assistance for business development.

On November 10, 2021, the Treasury Department published updated guidelines and NCBA CLUSA is pleased to share that cooperatives are specifically included as eligible entities.

Specifically, the notice states that marketing, consumer and working cooperatives are eligible borrowers, and that loan proceeds may be used to purchase ownership stake in the business if it is for the purpose of a worker cooperative or other employee-owned business structure (i.e. for a cooperative conversion).

SSBCI was first established in the wake of the 2008 financial crisis when a lack of access to capital for small businesses was identified as a barrier to economic growth. These funds are allocated to state governments which offer five categories of programs to small businesses: the Capital Access Program (CAP), Collateral Support Program, Loan Guarantee Program, Loan Participation Program, and Venture Capital Program.

The American Rescue Plan Act made important changes to the original SSBCI, such as ensuring that credit unions, Community Development Financial Institutions, and Minority Depository Institutions are eligible lending partners.

Earlier this year, the Department of Treasury which administers this program, published a Request for Information from stakeholders on details the agency should consider when publishing updated guidelines for the program design and implementation. NCBA CLUSA submitted comments focusing on equitable access for cooperative businesses for both technical assistance and capital programs, as well as ensuring that reporting requirements are compatible with the one member, one vote structure of cooperative businesses. You can read the full letter here.

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