State Small Business Credit Initiative: Implementation and Funding Issues

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State Small Business Credit Initiative:
April April ~~20, 2021~~13, 2022
Implementation and Funding Issues
Robert Jay Dilger
Congressional interest in small business access to capital has always been high, Congressional interest in small business access to capital has always been high, ~~primarily~~
Senior Specialist in Senior Specialist in
primarily because small businesses are viewed as a means to stimulate economic activity because small businesses are viewed as a means to stimulate economic activity ~~and create jobs,~~
American National American National
and create jobs, but it has become especially acute in the wake of the Coronavirus but it has become especially acute in the wake of the Coronavirus Government Disease 2019 (COVID-19) Disease 2019 (COVID-19)
~~Government~~
pandemic’s widespread adverse economic impact on the pandemic’s widespread adverse economic impact on the national economy. national economy.

Grant A. Driessen
Specialist in Public Finance In recognition of small business’s current economic difficulties, Congress passed budget In recognition of small business’s current economic difficulties, Congress passed budget
~~Specialist in Public Finance~~
reconciliation legislation (P.L. 117-2, the American Rescue Plan Act of 2021) that includes an reconciliation legislation (P.L. 117-2, the American Rescue Plan Act of 2021) that includes an

appropriation of $10 billion for another round of funding for the State Small appropriation of $10 billion for another round of funding for the State Small Business Credit Business Credit
Initiative (SSBCI). The SSBCI was originally authorized by P.L. 111-240, the Small Business Initiative (SSBCI). The SSBCI was originally authorized by P.L. 111-240, the Small Business

Jobs Act of 2010, as a means to assist small businesses following the Great Recession (2007-Jobs Act of 2010, as a means to assist small businesses following the Great Recession (2007-
2009). The $1.5 billion program was administered by the Secretary of the Treasury from 2010 through September 27, 2017. 2009). The $1.5 billion program was administered by the Secretary of the Treasury from 2010 through September 27, 2017.
The original SSBCI provided funding, allocated by formula and distributed in one-third increments, to states, territories, and The original SSBCI provided funding, allocated by formula and distributed in one-third increments, to states, territories, and
eligible municipalities (hereinafter referred to as states) to expand existing or create new state small business investment eligible municipalities (hereinafter referred to as states) to expand existing or create new state small business investment
programs, including state capital access programs, collateral support programs, loan participation programs, loan guarantee programs, including state capital access programs, collateral support programs, loan participation programs, loan guarantee
programs, and venture capital programs. In most instances, the initial round of funding (called a tranche) took place in programs, and venture capital programs. In most instances, the initial round of funding (called a tranche) took place in
FY2011. Most states received their second tranche during FY2011. Most states received their second tranche during ~~FY2013. As of December 31, 2016 (the latest available data), 98%~~
~~of total allocated funding had been disbursed to the states and all 57 participants had received their first tranche, 56 had~~
~~received at least two tranches, and 53 had received their third and final tranche.~~
~~SSBCI participants were~~FY2013 and their third tranche during FY2015. SSBCI participants were (and continue to be) expected to leverage their SSBCI funds to generate new small business lending that is at least 10 expected to leverage their SSBCI funds to generate new small business lending that is at least 10
times the amount of their SSBCI funds. times the amount of their SSBCI funds. ~~As of December 31, 2016, SSBCI participants had~~The original SSBCI program’s participants leveraged $8.95 in new financing leveraged $8.95 in new financing
for every $1 in SSBCI funds. Forty-seven states; American Samoa; the District of Columbia; Guam; the Northern Mariana for every $1 in SSBCI funds. Forty-seven states; American Samoa; the District of Columbia; Guam; the Northern Mariana
Islands; Puerto Rico; the U.S. Virgin Islands; Anchorage, Alaska; two consortiums of municipalities in North Dakota; and a Islands; Puerto Rico; the U.S. Virgin Islands; Anchorage, Alaska; two consortiums of municipalities in North Dakota; and a
consortium of municipalities in Wyoming participated in the program. consortium of municipalities in Wyoming participated in the program.
~~The Obama Administration recommended in its FY2015, FY2016, and FY2017 budget requests that another $1~~P.L. 117-2 provides $6.5 billion for an SSBCI capital allocation grant, $1.5 billion to address the needs of business enterprises owned and controlled by socially and economically disadvantaged individuals (SEDI-owned businesses), $1.0 billion for an incentive allocation for participants that demonstrate robust support for SEDI-owned businesses, $500 million for very small businesses (VSBs), and $500 million for technical assistance funding. This report examines the SSBCI and its implementation, including lessons learned from the original SSBCI program’s implementation. For example, audits of the original SSBCI program indicated~~.5 billion~~
~~round of funding take place, with $1 billion competitively awarded to states and $500 million awarded “by a need-based~~
~~formula based on economic factors such as job losses and pace of economic recovery.” Legislation with provisions similar to~~
~~the Obama Administration’s proposal was introduced during the 113th Congress (H.R. 4556 and S. 2285), the 114th Congress~~
~~(S. 1901, H.R. 5144, and H.R. 5672), the 115th Congress (S. 1897), and the 116th Congress (S. 3551).~~
~~This report examines the SSBCI and its implementation, including Treasury’s response to initial program audits conducted~~
~~by the U.S. Government Accountability Office (GAO) and Treasury’s Office of Inspector General (OIG). These initial audits~~
~~suggest that SSBCI participants generally met the statute’s requirements, but there were some compliance problems. They~~
~~also indicate~~ that Treasury’s program oversight could have been improved and that performance measures were needed to that Treasury’s program oversight could have been improved and that performance measures were needed to
assess the program’s efficacy. assess the program’s efficacy.
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State Small Business Credit Initiative: Implementation and Funding Issues

Overview
Congressional interest in small business access to capital has always been high, primarily because Congressional interest in small business access to capital has always been high, primarily because
small businesses are viewed as a means to stimulate economic activity and create jobs, but it has small businesses are viewed as a means to stimulate economic activity and create jobs, but it has
become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s
widespread adverse economic impact on the national economy. widespread adverse economic impact on the national economy.
In recognition of small business’s current economic difficulties, Congress passed budget In recognition of small business’s current economic difficulties, Congress passed budget
reconciliation legislation (P.L. 117-2, the American Rescue Plan Act of 2021) that includes an reconciliation legislation (P.L. 117-2, the American Rescue Plan Act of 2021) that includes an
appropriation of $10 billion for another round of funding for the State Small Business Credit appropriation of $10 billion for another round of funding for the State Small Business Credit
Initiative (SSBCI). The SSBCI was originally authorized by P.L. 111-240, the Small Business Initiative (SSBCI). The SSBCI was originally authorized by P.L. 111-240, the Small Business
Jobs Act of 2010, as a means to assist small businesses following the Great Recession (2007-Jobs Act of 2010, as a means to assist small businesses following the Great Recession (2007-
2009). The $1.5 billion program was administered by the Secretary of the Treasury from 2010 2009). The $1.5 billion program was administered by the Secretary of the Treasury from 2010
through September 27, 2017.1 through September 27, 2017.1
The original SSBCI provided funding, allocated through a statutorily created formula and The original SSBCI provided funding, allocated through a statutorily created formula and
distributed in one-third increments (called tranches), to states, the District of Columbiadistributed in one-third increments (called tranches), to states, the District of Columbia (DC), , eligible eligible
territories, and eligible municipalities (hereinafter states) to expand existing or create new state territories, and eligible municipalities (hereinafter states) to expand existing or create new state
small business investment programs, including capital access programs, collateral support small business investment programs, including capital access programs, collateral support
programs, loan participation programs, loan guarantee programs, and venture capital programs. In programs, loan participation programs, loan guarantee programs, and venture capital programs. In
most instances, states received their initial tranche in FY2011, with more than $366 million in most instances, states received their initial tranche in FY2011, with more than $366 million in
SSBCI funds transferred to states.2 At that time, Treasury anticipated providing another $859 SSBCI funds transferred to states.2 At that time, Treasury anticipated providing another $859
million in SSBCI funds to states in FY2012.3 However, because it took states longer than million in SSBCI funds to states in FY2012.3 However, because it took states longer than
anticipated to expend, transfer, or obligate their first tranche of SSBCI funds, Treasury transferred anticipated to expend, transfer, or obligate their first tranche of SSBCI funds, Treasury transferred
less SSBCI funding to states in FY2012 than in FY2011 ($187 million, for a total of $553 less SSBCI funding to states in FY2012 than in FY2011 ($187 million, for a total of $553
million).4 Treasury transferred $364 million in SSBCI funds to states (totaling $917 million) in million).4 Treasury transferred $364 million in SSBCI funds to states (totaling $917 million) in
FY2013, $229 million in FY2014 (totaling $1.146 billion), $216 million in FY2015 (totaling FY2013, $229 million in FY2014 (totaling $1.146 billion), $216 million in FY2015 (totaling
$1.362 billion), and $50 million in FY2016 (totaling $1.412 billion).5 $1.362 billion), and $50 million in FY2016 (totaling $1.412 billion).5
As of December 31, 2016 (the latest available data), Treasury had disbursed $1.43 billion, or As of December 31, 2016 (the latest available data), Treasury had disbursed $1.43 billion, or
about 98%, of the $1.45 billion available to states ($1.5 billion minus Treasury’s administrative about 98%, of the $1.45 billion available to states ($1.5 billion minus Treasury’s administrative

1 P.L. 111-240, the Small Business Jobs Act of 2010, limited Treasury’s role in administrating the State Small Business 1 P.L. 111-240, the Small Business Jobs Act of 2010, limited Treasury’s role in administrating the State Small Business
Credit Initiative (SSBCI) program to seven years from enactment (September 27, 2010). As a result, Treasury role in Credit Initiative (SSBCI) program to seven years from enactment (September 27, 2010). As a result, Treasury role in
administering the program sunset on September 27, 2017. administering the program sunset on September 27, 2017.
2 U.S. Office of Management and Budget (OMB), 2 U.S. Office of Management and Budget (OMB), Appendix, Budget of the U.S. Government, FY2013: Department of
the Treasury, p. 1061, at http://www.gpo.gov/fdsys/pkg/BUDGET-2013-APP/pdf/BUDGET-2013-APP.pdf. , p. 1061, at http://www.gpo.gov/fdsys/pkg/BUDGET-2013-APP/pdf/BUDGET-2013-APP.pdf.
3 OMB, 3 OMB, Appendix, Budget of the U.S. Government, FY2013: Department of the Treasury, p. 1061. , p. 1061.
4 OMB, 4 OMB, Appendix, Budget of the U.S. Government, FY2014: Department of the Treasury, p. 991, at , p. 991, at
https://www.gpo.gov/fdsys/pkg/BUDGET-2014-APP/pdf/BUDGET-2014-APP.pdf. https://www.gpo.gov/fdsys/pkg/BUDGET-2014-APP/pdf/BUDGET-2014-APP.pdf.
5 U.S. Department of the Treasury, 5 U.S. Department of the Treasury, State Small Business Credit Initiative, ~~FY 2016~~FY2016: President’s Budget, p. 6, at , p. 6, at
http://www.treasury.gov/about/budget-performance/CJ16/18.%20SSBCI%20FY%202016%20CJ.pdf; U.S. Department http://www.treasury.gov/about/budget-performance/CJ16/18.%20SSBCI%20FY%202016%20CJ.pdf; U.S. Department
of the Treasury, of the Treasury, State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as of September 30,
2015, p. 1, at https://www.treasury.gov/resource-center/sb-programs/DocumentsSBLFTransactions/, p. 1, at https://www.treasury.gov/resource-center/sb-programs/DocumentsSBLFTransactions/
SSBCI%20Quarterly%20Report%20Summary%20September%202015_FINAL.pdf; and U.S. Department of the SSBCI%20Quarterly%20Report%20Summary%20September%202015_FINAL.pdf; and U.S. Department of the
Treasury, Treasury, State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as of September 30, 2016, p. , p.
1, at https://www.treasury.gov/resource-center/sb-programs/Documents/1, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI%20Quarterly%20Report%20Summary%20September%202016_Final.pdf. SSBCI%20Quarterly%20Report%20Summary%20September%202016_Final.pdf.
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costs).6 As of December 31, 2016, all 57 participants had received their first tranche, 56 had costs).6 As of December 31, 2016, all 57 participants had received their first tranche, 56 had
received their second tranche, and 53 had received their third tranche.7 received their second tranche, and 53 had received their third tranche.7
States were expected to leverage their SSBCI funds to generate new small business lending that is States were expected to leverage their SSBCI funds to generate new small business lending that is
at least 10 times the amount of their SSBCI funds (a leverage ratio of 10:1). As of December 31, at least 10 times the amount of their SSBCI funds (a leverage ratio of 10:1). As of December 31,
2016, SSBCI participants had leveraged $8.95 in new financing for every $1 in SSBCI funds.8 2016, SSBCI participants had leveraged $8.95 in new financing for every $1 in SSBCI funds.8
There were 57 participants: 47 states; American Samoa; There were 57 participants: 47 states; American Samoa; ~~the District of Columbia~~DC; Guam; the ; Guam; the
Northern Mariana Islands; Puerto Rico; the U.S. Virgin Islands; Anchorage, Alaska; two Northern Mariana Islands; Puerto Rico; the U.S. Virgin Islands; Anchorage, Alaska; two
consortiums of municipalities in North Dakota; and a consortium of municipalities in Wyoming. consortiums of municipalities in North Dakota; and a consortium of municipalities in Wyoming.
During congressional consideration, advocates argued that the SSBCI would promote economic During congressional consideration, advocates argued that the SSBCI would promote economic
growth and job creation by enhancing small business access to capital. Opponents argued that the growth and job creation by enhancing small business access to capital. Opponents argued that the
SSBCI did not address the need to stimulate demand for credit by small businesses, which, in the SSBCI did not address the need to stimulate demand for credit by small businesses, which, in the
opponents’ view, was the core issue affecting the role of small business in job creation. They opponents’ view, was the core issue affecting the role of small business in job creation. They
argued that “the solutions to America’s economic problems do not lie in more taxpayer-funded argued that “the solutions to America’s economic problems do not lie in more taxpayer-funded
bailouts” and advocated small business tax reductions as a more effective means to stimulate job bailouts” and advocated small business tax reductions as a more effective means to stimulate job
creation and economic growth.9 For additional discussion of these different approaches to creation and economic growth.9 For additional discussion of these different approaches to
stimulate job creation and economic growth, see CRS Report R40985, stimulate job creation and economic growth, see CRS Report R40985, Small Business: Access to
Capital and Job Creation, by Robert Jay Dilger. , by Robert Jay Dilger.
It is difficult to determine the full extent of the SSBCI’s effect on small business lending. As of It is difficult to determine the full extent of the SSBCI’s effect on small business lending. As of
December 31, 2016, states had spent or obligated about 88% of the $1.45 billion available ($1.27 December 31, 2016, states had spent or obligated about 88% of the $1.45 billion available ($1.27
billion of $1.45 billion), which is sufficient to provide an indication of the program’s impact on billion of $1.45 billion), which is sufficient to provide an indication of the program’s impact on
small business lending.10 However, determining the program’s influence on small business small business lending.10 However, determining the program’s influence on small business
lending is likely to be more suggestive than definitive because differentiating the SSBCI’s effect lending is likely to be more suggestive than definitive because differentiating the SSBCI’s effect
on small business lending from other factors, such as changes in the lender’s local economy, is on small business lending from other factors, such as changes in the lender’s local economy, is
methodologically challenging, especially given the relatively small amount of financing involved methodologically challenging, especially given the relatively small amount of financing involved
relative to the national market for small business loans. In 2017, the SSBCI’s $1.5 billion in relative to the national market for small business loans. In 2017, the SSBCI’s $1.5 billion in
financing represented about 0.24% of outstanding nonagricultural small business loans.11 financing represented about 0.24% of outstanding nonagricultural small business loans.11

6 U.S. Department of the Treasury, 6 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as
of December 31, 2016, p. 1, at https://www.treasury.gov/resource-center/sb-programs/Documents/, p. 1, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI_Quarterly_Report_Summary_December_2016.pdf. SSBCI_Quarterly_Report_Summary_December_2016.pdf.
7 U.S. Department of the Treasury, 7 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as
of December 31, 2016, p. 1. , p. 1.
8 U.S. Department of the Treasury, 8 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ 2016 Annual Reports, ,
p. 2, at https://www.treasury.gov/resource-center/sb-programs/Documents/p. 2, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf. SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf.
9 U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to 9 U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, report to accompany H.R. 5297, 111th Cong., 2nd Availability of Credit for Small Businesses, and for other Purposes, report to accompany H.R. 5297, 111th Cong., 2nd
sess., May 27, 2010, H.Rept. 111-499 (Washington: GPO, 2010), pp. 37, 38. sess., May 27, 2010, H.Rept. 111-499 (Washington: GPO, 2010), pp. 37, 38.
10 U.S. Department of the Treasury, 10 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as
of December 31, 2016, p. 1, at https://www.treasury.gov/resource-center/sb-programs/Documents/, p. 1, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI_Quarterly_Report_Summary_December_2016.pdf. In addition, as of December 31, 2016, 34 states reported SSBCI_Quarterly_Report_Summary_December_2016.pdf. In addition, as of December 31, 2016, 34 states reported
that they had spent about $279.9 million for new State Small Business Credit Initiative (SSBCI) supported loans and that they had spent about $279.9 million for new State Small Business Credit Initiative (SSBCI) supported loans and
investments using recycled SSBCI funds generated from SSBCI loan repayments and returns on SSBCI investments. investments using recycled SSBCI funds generated from SSBCI loan repayments and returns on SSBCI investments.
11 Federal Deposit Insurance Corporation, “Statistics on Depository Institutions,” at https://www5.fdic.gov/sdi/ 11 Federal Deposit Insurance Corporation, “Statistics on Depository Institutions,” at https://www5.fdic.gov/sdi/
main.asp?formname=compare. As of December 31, 2017, there was $627.8 billion in outstanding nonagricultural small main.asp?formname=compare. As of December 31, 2017, there was $627.8 billion in outstanding nonagricultural small
business loans (defined as the sum of “total loans secured by nonfarm nonresidential properties of $1,000,000 or less” business loans (defined as the sum of “total loans secured by nonfarm nonresidential properties of $1,000,000 or less”
and “total commercial and industrial loans to U.S. addressees of $1,000,000 or less”). and “total commercial and industrial loans to U.S. addressees of $1,000,000 or less”).
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link to page link to page 4521 State Small Business Credit Initiative: Implementation and Funding Issues

Treasury has reported that SSBCI funds supported more than 21,000 loans and investments in Treasury has reported that SSBCI funds supported more than 21,000 loans and investments in
small business totaling over $10.7 billion, with more than 80% of the funds and investments small business totaling over $10.7 billion, with more than 80% of the funds and investments
made to small businesses with 10 or fewer full-time employees. Treasury has also reported that made to small businesses with 10 or fewer full-time employees. Treasury has also reported that
small business owners indicated that the funds helped them to create or retain 240,669 jobs small business owners indicated that the funds helped them to create or retain 240,669 jobs
(79,193 new jobs and 161,476 retained jobs).12 (79,193 new jobs and 161,476 retained jobs).12
The Obama Administration recommended in its FY2015, FY2016, and FY2017 budget requests The Obama Administration recommended in its FY2015, FY2016, and FY2017 budget requests
that another $1.5 billion round of funding take place. Under their proposal, $1 billion would have that another $1.5 billion round of funding take place. Under their proposal, $1 billion would have
been competitively awarded to states “best able to target local market needs, promote inclusion, been competitively awarded to states “best able to target local market needs, promote inclusion,
attract private capital for start-up and scale-up businesses, strengthen regional entrepreneurial attract private capital for start-up and scale-up businesses, strengthen regional entrepreneurial
ecosystems, and evaluate results,” and $500 million awarded “by formula based on economic ecosystems, and evaluate results,” and $500 million awarded “by formula based on economic
factors such as job losses and pace of economic recovery.”13 factors such as job losses and pace of economic recovery.”13
Legislation containing provisions similar to the Obama Administration’s proposal was introduced Legislation containing provisions similar to the Obama Administration’s proposal was introduced
during the 113th Congress (H.R. 4556, the Small Business Access to Capital Act of 2014, and S. during the 113th Congress (H.R. 4556, the Small Business Access to Capital Act of 2014, and S.
2285, its companion bill in the Senate), the 114th Congress (S. 1901, the Small Business Access to 2285, its companion bill in the Senate), the 114th Congress (S. 1901, the Small Business Access to
Capital Act of 2015, H.R. 5144, the Jumpstart Housing Opportunities Utilizing Small Enterprises Capital Act of 2015, H.R. 5144, the Jumpstart Housing Opportunities Utilizing Small Enterprises
Act of 2016, and H.R. 5672, the Small Business Access to Capital Act of 2016), the 115th Act of 2016, and H.R. 5672, the Small Business Access to Capital Act of 2016), the 115th
Congress (S. 1897, the Small Business Access to Capital Act of 2017), and the 116th Congress (S. Congress (S. 1897, the Small Business Access to Capital Act of 2017), and the 116th Congress (S.
3551, the Small Business Access to Capital Act of 2020).14 3551, the Small Business Access to Capital Act of 2020).14
This report examines the current SSBCI provision (P.L. 117-2, round two) and its legislative This report examines the current SSBCI provision (P.L. 117-2, round two) and its legislative
origins and the implementation of the original SSBCI (P.L. 111-240, round one), including origins and the implementation of the original SSBCI (P.L. 111-240, round one), including
Treasury’s response to initial program audits conducted by the U.S. Government Accountability Treasury’s response to initial program audits conducted by the U.S. Government Accountability
Office (GAO) and Treasury’s Office of Inspector General (OIG). These audits suggested that Office (GAO) and Treasury’s Office of Inspector General (OIG). These audits suggested that
states generally met the statute’s requirements, but there were some compliance problems. They states generally met the statute’s requirements, but there were some compliance problems. They
also indicated that Treasury’s oversight of the program could have been improved and that also indicated that Treasury’s oversight of the program could have been improved and that
performance measures were needed to assess the program’s efficacy. performance measures were needed to assess the program’s efficacy.
Legislative Origins
On February 4, 2021, Senator Gary Peters, who sponsored legislation establishing the original On February 4, 2021, Senator Gary Peters, who sponsored legislation establishing the original
SSBCI (see thSSBCI (see the Appendix for the original SSBCI’s legislative origins), introduced S. 258, the for the original SSBCI’s legislative origins), introduced S. 258, the

12 U.S. Department of the Treasury, 12 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ 2016 Annual Reports, ,
pp. 2, 3, 15, at https://www.treasury.gov/resource-center/sb-programs/Documents/pp. 2, 3, 15, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf. SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf.
13 OMB, 13 OMB, The Appendix, Budget of the United States Government, Fiscal Year 2017: Department of the Treasury, pp. , pp.
1034, 1035, at https://www.gpo.gov/fdsys/pkg/BUDGET-2017-APP/pdf/BUDGET-2017-APP.pdf. 1034, 1035, at https://www.gpo.gov/fdsys/pkg/BUDGET-2017-APP/pdf/BUDGET-2017-APP.pdf.
14 H.R. 5144, the Jumpstart HOUSE Act of 2016, added a provision (Section 3. Support for affordable housing 14 H.R. 5144, the Jumpstart HOUSE Act of 2016, added a provision (Section 3. Support for affordable housing
projects) designed to facilitate the financing of affordable housing projects: “ ... to develop, acquire, construct, projects) designed to facilitate the financing of affordable housing projects: “ ... to develop, acquire, construct,
rehabilitate, maintain, operate, or manage housing projects that provide housing that is affordable for low- or moderate-rehabilitate, maintain, operate, or manage housing projects that provide housing that is affordable for low- or moderate-
income households, as determined by the Secretary, in consultation with the Secretary of Housing and Urban income households, as determined by the Secretary, in consultation with the Secretary of Housing and Urban
Development.” Development.”
H.R. 5672, the Small Business Access to Capital Act of 2016, added a provision (Section 2. New tranches of capital for H.R. 5672, the Small Business Access to Capital Act of 2016, added a provision (Section 2. New tranches of capital for
successful State programs) that would have included competitive award factors designed to provide preference to successful State programs) that would have included competitive award factors designed to provide preference to
participants based on their plans to (I) leverage private sector capital; (II) create and retain jobs during the 2-year period participants based on their plans to (I) leverage private sector capital; (II) create and retain jobs during the 2-year period
beginning on the date of the award; (III) serve small businesses that have been incorporated or in operation for not beginning on the date of the award; (III) serve small businesses that have been incorporated or in operation for not
more than 5 years; (IV) serve low- or moderate-income communities; (V) serve minority- and women-owned small more than 5 years; (IV) serve low- or moderate-income communities; (V) serve minority- and women-owned small
businesses; and establish or continue a robust self-evaluation of their use of awarded funds; provide nonfederal funds in businesses; and establish or continue a robust self-evaluation of their use of awarded funds; provide nonfederal funds in
excess of the amount required; and the extent to which the participant expended, obligated, or transferred their 2010 excess of the amount required; and the extent to which the participant expended, obligated, or transferred their 2010
allocation. allocation.
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Small Business Access to Capital Act of 2021.15 The bill would provide $10 billion for another Small Business Access to Capital Act of 2021.15 The bill would provide $10 billion for another
round of SSBCI funding ($5 billion in formula-based allocations and an additional $5 billion in round of SSBCI funding ($5 billion in formula-based allocations and an additional $5 billion in
competitive grants for states that have already capitalized the financing received from the 2010 competitive grants for states that have already capitalized the financing received from the 2010
program).16 program).16
Several organizations indicated their support for the bill. For example, the Council of Several organizations indicated their support for the bill. For example, the Council of
Development Finance Agencies (CDFA) argued that Development Finance Agencies (CDFA) argued that
A $10 billion infusion in a reauthorized SSBCI Program would provide immediate access A $10 billion infusion in a reauthorized SSBCI Program would provide immediate access
to capital for small businesses that desperately need it. The programs created by states to capital for small businesses that desperately need it. The programs created by states
under the original SSBCI are still in operation and would be ready to immediately deploy under the original SSBCI are still in operation and would be ready to immediately deploy
capital to businesses in need. There would be no need to create new rules and regulations capital to businesses in need. There would be no need to create new rules and regulations
should this option be enacted. States are prepared to receive an infusion of SSBCI funding should this option be enacted. States are prepared to receive an infusion of SSBCI funding
immediately.17 immediately.17
There were disagreements concerning whether a reauthorization of the SSBCI should be included There were disagreements concerning whether a reauthorization of the SSBCI should be included
in the budget reconciliation bill. Generally speaking, Democrats argued that the SSBCI should be in the budget reconciliation bill. Generally speaking, Democrats argued that the SSBCI should be
included in the reconciliation bill because the program included in the reconciliation bill because the program
 had a proven track record of assisting small businesses create and retain jobs; and  had a proven track record of assisting small businesses create and retain jobs; and
 required states to develop programs that targeted the needs of underserved  required states to develop programs that targeted the needs of underserved
communities, which, they argued, had not been adequately addressed by the communities, which, they argued, had not been adequately addressed by the
Small Business Administration’s Paycheck Protection Program (PPP), which Small Business Administration’s Paycheck Protection Program (PPP), which
provides forgivable loans to small businesses adversely affected by COVID-19.18 provides forgivable loans to small businesses adversely affected by COVID-19.18
Republicans generally argued that the SSBCI should not be included in the reconciliation bill Republicans generally argued that the SSBCI should not be included in the reconciliation bill
because the program because the program
 was an extraneous matter that did not directly address COVID-19 and would  was an extraneous matter that did not directly address COVID-19 and would
make funding available for years after the pandemic’s expected duration; make funding available for years after the pandemic’s expected duration;
 was duplicative of the PPP, which had, at that time, $140 billion in lending  was duplicative of the PPP, which had, at that time, $140 billion in lending
authority still available; and authority still available; and
 had limited oversight, did not meet all of its statutory objectives, was slow to  had limited oversight, did not meet all of its statutory objectives, was slow to
launch and inefficient at deploying capital, and had a questionable effect on job launch and inefficient at deploying capital, and had a questionable effect on job
creation.19 creation.19

15 Sen. Gary Peters introduced similar legislation (S. 3551, the Small Business Access to Capital Act of 2020) during 15 Sen. Gary Peters introduced similar legislation (S. 3551, the Small Business Access to Capital Act of 2020) during
the 116th Congress. That bill would have appropriated $3 billion for another round of SSBCI funding (on March 20, the 116th Congress. That bill would have appropriated $3 billion for another round of SSBCI funding (on March 20,
2020). 2020).
16 Sen. Gary Peters, “Peters, Stabenow Reintroduce Legislation Providing $10 Billion to Support Small Business 16 Sen. Gary Peters, “Peters, Stabenow Reintroduce Legislation Providing $10 Billion to Support Small Business
Lending,” press release, February 5, 2021, at https://www.peters.senate.gov/newsroom/press-releases/peters-stabenow-Lending,” press release, February 5, 2021, at https://www.peters.senate.gov/newsroom/press-releases/peters-stabenow-
reintroduce-legislation-providing-10-billion-to-support-small-business-lending. reintroduce-legislation-providing-10-billion-to-support-small-business-lending.
17 Council of Development Finance Agencies, “Small Business Access to Capital Act,” at https://www.cdfa.net/cdfa/ 17 Council of Development Finance Agencies, “Small Business Access to Capital Act,” at https://www.cdfa.net/cdfa/
cdfaweb.nsf/pages/SSBCI.html. cdfaweb.nsf/pages/SSBCI.html.
18 For further information and analysis of the Paycheck Protection Program, see CRS Report R46284, 18 For further information and analysis of the Paycheck Protection Program, see CRS Report R46284, COVID-19 Relief
Assistance to Small Businesses: Issues and Policy Options, by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry. , by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry.
19 U.S. House of Representatives, Committee on Financial Services, “Supporting Small and Minority-Owned 19 U.S. House of Representatives, Committee on Financial Services, “Supporting Small and Minority-Owned
Businesses Through the Pandemic,” majority staff hearing memorandum, February 1, 2021, at https://democrats-Businesses Through the Pandemic,” majority staff hearing memorandum, February 1, 2021, at https://democrats-
financialservices.house.gov/UploadedFiles/020421_NSIDMP_Small_Biz_Hrg_Memo.pdf; U.S. House of financialservices.house.gov/UploadedFiles/020421_NSIDMP_Small_Biz_Hrg_Memo.pdf; U.S. House of
Representatives, Committee on Financial Services, Subcommittee on National Security, International Development and Representatives, Committee on Financial Services, Subcommittee on National Security, International Development and
Monetary Policy, “Supporting Small and Minority-Owned Businesses Through the Pandemic,” subcommittee hearing, Monetary Policy, “Supporting Small and Minority-Owned Businesses Through the Pandemic,” subcommittee hearing,
February 4, 2021, at https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407099; U.S. Senate, February 4, 2021, at https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407099; U.S. Senate,
Committee on Banking, Housing and Urban Affairs, “The Coronavirus Crisis: Next Steps for Rebuilding Main Street,” Committee on Banking, Housing and Urban Affairs, “The Coronavirus Crisis: Next Steps for Rebuilding Main Street,”
committee hearing, February 25, 2021, at https://www.banking.senate.gov/hearings/the-coronavirus-crisis-next-steps-committee hearing, February 25, 2021, at https://www.banking.senate.gov/hearings/the-coronavirus-crisis-next-steps-
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During their internal negotiations on the reconciliation bill, Democratic congressional leaders During their internal negotiations on the reconciliation bill, Democratic congressional leaders
amended S. 258 to reserve amended S. 258 to reserve
 $2.5 billion for businesses owned and controlled by socially and economically  $2.5 billion for businesses owned and controlled by socially and economically
disadvantaged individuals, including minority-owned businesses ($1.5 billion in disadvantaged individuals, including minority-owned businesses ($1.5 billion in
an initial allocation, plus $1 billion for an incentive program for states that an initial allocation, plus $1 billion for an incentive program for states that
demonstrate “robust support,” as defined by the Secretary of the Treasury, for demonstrate “robust support,” as defined by the Secretary of the Treasury, for
businesses owned and controlled by socially and economically disadvantaged businesses owned and controlled by socially and economically disadvantaged
individuals); individuals);
 $500 million for tribal governments;  $500 million for tribal governments;
 at least $500 million for businesses, including independent contractors and sole  at least $500 million for businesses, including independent contractors and sole
proprietors, with fewer than 10 employees proprietors, with fewer than 10 employees (very small businesses, VSBs); and ; and
 $500 million for technical assistance to small businesses that need legal,  $500 million for technical assistance to small businesses that need legal,
accounting, financial, and other kinds of advice in applying for small business accounting, financial, and other kinds of advice in applying for small business
support programs. support programs.
Also, like the original SSBCI initiative, the program was provided a sunset date. The Secretary of Also, like the original SSBCI initiative, the program was provided a sunset date. The Secretary of
the Treasury is required to complete all SSBCI disbursements and remaining obligations before the Treasury is required to complete all SSBCI disbursements and remaining obligations before
September 30, 2030. Any amount that remains unexpended, whether obligated or unobligated, on September 30, 2030. Any amount that remains unexpended, whether obligated or unobligated, on
September 30, 2030, is to be rescinded and deposited into the general fund. September 30, 2030, is to be rescinded and deposited into the general fund.
Among other things, the amended bill, as developed in the House, would have required states and Among other things, the amended bill, as developed in the House, would have required states and
other jurisdictions to submit a plan on how they would expeditiously deliver funds to help small other jurisdictions to submit a plan on how they would expeditiously deliver funds to help small
businesses respond to and recover from the pandemic and a plan to encourage program businesses respond to and recover from the pandemic and a plan to encourage program
participation by minority depository institutions (MDIs) and community development financial participation by minority depository institutions (MDIs) and community development financial
institutions (CDFIs). The amended bill would have also authorized Treasury to create a multi-institutions (CDFIs). The amended bill would have also authorized Treasury to create a multi-
state participation program that would allow states to automatically deem a person or business state participation program that would allow states to automatically deem a person or business
eligible for their SSBCI program if that person or business were already participating in the other eligible for their SSBCI program if that person or business were already participating in the other
state’s SSBCI program. These provisions were included in the House-passed version of the bill, state’s SSBCI program. These provisions were included in the House-passed version of the bill,
but were later removed by the Senate. but were later removed by the Senate.
The House Committee on Financial Services included the amended SSBCI bill language in its The House Committee on Financial Services included the amended SSBCI bill language in its
portion of the budget reconciliation bill (H.R. 1319), which was agreed to (29-24) on February portion of the budget reconciliation bill (H.R. 1319), which was agreed to (29-24) on February
10, 2021, and reported to the House Committee on the Budget. The House Committee on the 10, 2021, and reported to the House Committee on the Budget. The House Committee on the
Budget agreed to the budget reconciliation bill (19-16), which included the amended SSBCI bill Budget agreed to the budget reconciliation bill (19-16), which included the amended SSBCI bill
language, on February 22, 2021, and reported the bill to the full House on February 24, 2021. The language, on February 22, 2021, and reported the bill to the full House on February 24, 2021. The
House passed H.R. 1319 (219-212) on February 27, 2021. On March 6, 2021, the Senate replaced House passed H.R. 1319 (219-212) on February 27, 2021. On March 6, 2021, the Senate replaced
the text of the House-passed bill with S.Amdt. 891, then agreed to a number of additional the text of the House-passed bill with S.Amdt. 891, then agreed to a number of additional
amendments before passing the measure (50-49). The bill then went back to the House, which amendments before passing the measure (50-49). The bill then went back to the House, which
voted 220-211 to concur with the Senate amendment (i.e., S.Amdt. 891, as amended) on March voted 220-211 to concur with the Senate amendment (i.e., S.Amdt. 891, as amended) on March
10, 2021. President Biden signed the bill into law (P.L. 117-2) on March 11, 2021. 10, 2021. President Biden signed the bill into law (P.L. 117-2) on March 11, 2021.
SSBCI Programs
The SSBCI The SSBCI ~~provided~~provides funding to expand existing or create new state small business funding to expand existing or create new state small business lending and investment investment
programs, including programs, including state capital access programscapital access programs~~, loan participation programs, loan guarantee~~ (CAPs) and other credit support programs (OCSPs).

for-rebuilding-main-street; and Sen. Pat Toomey, “Toomey Opening Statement at Banking Hearing on COVID and for-rebuilding-main-street; and Sen. Pat Toomey, “Toomey Opening Statement at Banking Hearing on COVID and
Small Businesses,” February 25, 2021, at https://www.banking.senate.gov/newsroom/minority/toomey-opening-Small Businesses,” February 25, 2021, at https://www.banking.senate.gov/newsroom/minority/toomey-opening-
statement-at-banking-hearing-on-covid-and-small-businesses. statement-at-banking-hearing-on-covid-and-small-businesses.
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~~programs, collateral support programs, venture capital programs, and any other small business~~
~~credit or equity support program that meets the SSBCI’s program requirements.~~
~~State Capital Access Programs~~
~~State capital access programs (CAP) are loan portfolio insurance programs that enable “small~~
~~businesses to obtain credit to help them grow and expand their business.”20 Under a~~ State Capital Access Programs State CAPs provide portfolio insurance to lenders to encourage them to lend to small businesses. Under a state CAP, when a CAP, when a
participating lender originates a loan, the lender and borrower combine to contribute a percentage participating lender originates a loan, the lender and borrower combine to contribute a percentage
~~of the loan or line of credit into a reserve fund, which is held by the lender. Under the SSBCI, the~~
~~contribution must be from 2% to 7% of the amount borrowed. Typically, the contributions range~~
~~from 3% to 4%. The state~~of the loan or line of credit (together up to 7% of the loan or line of credit amount) into a reserve fund, which is held by the lender. The SSBCI then matches then matches the aggregate borrower/lender contribution on a 1:1 basis~~the combined contribution~~ and sends that amount to the and sends that amount to the
lender, who deposits the funds into the lender-held reserve fund. State CAPs encourage lending to lender, who deposits the funds into the lender-held reserve fund. State CAPs encourage lending to
small businesses because the reserve fund reduces the lender’s risk of losses by being available to small businesses because the reserve fund reduces the lender’s risk of losses by being available to
cover any losses on any of the loans in the lender’s cover any losses on any of the loans in the lender’s state CAP portfolio. Interest rates, maturity, CAP portfolio. Interest rates, maturity,
collateral, and other loan terms are negotiated between the lender and the borrowercollateral, and other loan terms are negotiated between the lender and the borrower~~.21~~ within limits set by Treasury.20
Under the SSBCI, approved state CAPs are eligible for federal funding equal to the amount of the Under the SSBCI, approved state CAPs are eligible for federal funding equal to the amount of the
insurance premiums paid by the borrower and the lender into the lender-held reserve fund, as insurance premiums paid by the borrower and the lender into the lender-held reserve fund, as
calculated on a loan-by-loan basis. The state may use SSBCI funding to make its contribution to calculated on a loan-by-loan basis. The state may use SSBCI funding to make its contribution to
the lender-held reserve fund. States may also supplement the federal contribution with state or the lender-held reserve fund. States may also supplement the federal contribution with state or
private funds if they choose to do so.private funds if they choose to do so.2221
Subject to some restrictions, SSBCI state CAP loans may be used for most business purposes, Subject to some restrictions, SSBCI state CAP loans may be used for most business purposes,
“including, including, “but not limited to: start-up costs, working capital, but not limited to: start-up costs, working capital, ~~business procurement, franchise~~
~~fees, equipment, inventory, and~~franchise fees; and acquisition of equipment, inventory, or services used in the production, manufacturing, or delivery of a business’s goods or services, or in the purchase, construction, renovation, or tenant improvements of the purchase, construction, renovation, or tenant improvements of
an eligible place of business that is not for passive real estate investment purposes.”an eligible place of business that is not for passive real estate investment purposes.”2322 In addition, In addition,
the borrower must have 500 employees or fewer at the time that the loan is enrolled in the the borrower must have 500 employees or fewer at the time that the loan is enrolled in the
program and the loan amount may not exceed $5 million.program and the loan amount may not exceed $5 million.24
~~State Loan Participation Programs~~
~~State loan participation programs enable “small businesses to obtain medium to long-term~~
~~financing, usually in the form of term loans.”25 States may structure loan participation programs~~
~~in two ways: (1) by purchasing a portion of a loan originated by a lender (also known as a~~
~~purchase transaction or purchase participation) or (2) by participating in the loan as a co-lender~~
~~(also known as a companion loan). In a companion loan, a lender originates a senior loan and the~~
~~state originates a second loan, which is usually subordinate to the lender’s senior loan should a~~
~~default occur, to the same borrower. State loan participation programs encourage lending to small~~
23 Other Credit Support Programs State OCSPs are programs that (1) are not a state CAP program, (2) use public resources to promote private access to credit, and (3) meet certain eligibility criteria. State OCSPs may include loan programs, investment programs, or other credit or equity support programs, such as collateral support programs, loan participation programs, state-sponsored venture capital programs, loan guarantee programs, or other similar programs.24
20 U.S. Department of the Treasury, “20 U.S. Department of the Treasury, “~~SSBCI Program Profile: Capital Access Program,” at http://www~~State Small Business Credit Initiative: Capital Program Policy Guidelines,” November 10, 2021, p. 14, at https://home.treasury.gov/system/files/256/SSBCI-Capital-Program-Policy-Guidelines-November-2021.pdf (hereinafter U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines”)~~.treasury.gov/~~
~~resource-center/sb-programs/Documents/SSBCI_Program_Profile_Capital_Access_Program_FINAL_May_17.pdf~~. .
21 U.S. Department of the Treasury, “SSBCI 21 U.S. Department of the Treasury, “SSBCI ~~Program Profile: Capital Access Program.”~~: Capital Program Policy Guidelines,” pp. 11-12.
22 U.S. Department of the Treasury, “SSBCI22 U.S. Department of the Treasury, “SSBCI ~~Program Profile: Capital Access Program.”~~: Capital Program Policy Guidelines,” p. 15. 23 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 14. 24 Collateral support programs help viable businesses that are struggling to obtain credit because the value of the collateral they hold is below the lender’s standards. The collateral support provides banks greater confidence in extending credit to these borrowers. Loan participation programs entail risk sharing among financial institution lenders and the participating state. States typically structure loan participation programs in two ways: (1) by purchasing a portion of a loan originated by a lender (also known as a purchase transaction or purchase participation) or (2) by participating in the loan as a co-lender (also known as a companion loan). State-sponsored venture capital programs typically “entail joint public-private investment programs focused on “seeding” small businesses with high-growth-potential.” Loan guarantee programs “provide an assurance to lenders that they will be partially repaid in the event of default, after Congressional Research Service 6 State Small Business Credit Initiative: Implementation and Funding Issues Each OCSP must demonstrate (1) a reasonable expectation that it will achieve a 10:1 private financing ratio (the ratio of small business lending and investment to the federal contribution amount) and (2) that, at a minimum, each $1 of public investment by the state will cause and result in at least $1 of new private credit.25 OCSPs are required to  target an average borrower or investee size of 500 employees or less,  not extend credit support to borrowers that have
~~23 U.S. Department of the Treasury, “SSBCI Program Profile: Capital Access Program.” State capital access programs~~
~~(CAPs) under the SSBCI program may not enroll the unguaranteed portions of Small Business Association (SBA)~~
~~guaranteed or other federally guaranteed loans without the express, prior written consent of Treasury. Also, restrictions~~
~~apply to refinancing and other uses.~~
~~24 U.S. Department of the Treasury, “SSBCI Program Profile: Capital Access Program.”~~
~~25 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Participation Program,” at~~
~~http://www.treasury.gov/resource-center/sb-programs/Documents/~~
~~SSBCI_Program_Profile_Loan_Participation_FINAL_May_17.pdf.~~
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~~businesses because the lender is able to diversify its risk of loss by sharing its exposure to loan~~
~~losses with the state. Interest rates, maturity, collateral, and other loan terms for purchase~~
~~transactions and purchase participations are negotiated between the lender and the borrower,~~
~~although the state may seek to approve the loan terms prior to closing. For companion loans, the~~
~~state and lender negotiate interest rates, maturity, collateral and other loan terms.26~~
~~Subject to some restrictions, loans in SSBCI state loan participation programs may be used for~~
~~most business purposes (start-up costs, working capital, business procurement, franchise fees,~~
~~etc.). In addition, SSBCI state loan participation programs must target an average borrower size~~
~~of 500 employees or fewer and may not extend credit to borrowers with more than 750~~
~~employees. They must also target an average loan~~ more than 750 employees,  target support towards loans or investments with an average principal amount of ~~amount of~~ $5 million or less$5 million or less, and  not provide credit or investment support if a given transaction exceeds ~~and may not~~
~~extend credit for any single loan exceeding $20~~ $20 million.million.27
~~State Loan Guarantee Programs~~
~~State loan guarantee programs enable “small businesses to obtain term loans or lines of credit” by~~
~~providing the lender “with the necessary security, in the form of a partial guarantee, for the lender~~
~~to approve a loan or line of credit.”28 The guarantee percentage is determined by the states and~~
~~lenders but, under the SSBCI, may not exceed 80% of loan losses. Also, origination and annual~~
~~utilization fees are determined by each state to defray the program’s cost. Under the SSBCI, fees~~
~~may range from 0% to 3% of the loan amount. States typically establish limits on the amount of~~
~~loans any one lender can originate in the program and have a cash reserve to cover anticipated~~
~~losses on the guarantees. Interest rates, maturity, collateral, and other loan terms are typically~~
~~negotiated between the lender and the borrower, although in some cases loan terms are subject to~~
~~state approval and, in many cases, the state and lender will discuss and negotiate loan terms and~~
~~guarantee options prior to reaching agreement to approve the loan and issue a guarantee.29~~
~~Subject to some restrictions, loans in SSBCI state loan guarantee programs may be used for most~~
~~business purposes. In addition, SSBCI state loan guarantee programs must target an average~~
~~borrower size of 500 employees or fewer and may not guarantee credit to borrowers with more~~
~~than 750 employees. They must also target an average loan amount of $5 million or less and may~~
~~not guarantee credit for any single loan exceeding $20 million.30~~
~~State Collateral Support Programs~~
~~State collateral support programs are “designed to enable financing that might otherwise be~~
~~unavailable due to a collateral shortfall.”31 They provide pledged collateral accounts to lenders to~~
~~enhance the collateral coverage of individual loans. Lenders are required to have at least 20% of~~
~~their own capital at risk in each loan. Interest rates, maturity, collateral, and other loan terms are~~
~~negotiated between the lender and the borrower. The state and lender negotiate the amount of~~

~~26 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Participation Program.”~~
~~27 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Participation Program.”~~
~~28 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Guarantee Program,” at http://www.treasury.gov/~~
~~resource-center/sb-programs/Documents/SSBCI_Program_Profile_Loan_Guarantee_FINAL_May_17.pdf.~~
~~29 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Guarantee Program.”~~
~~30 U.S. Department of the Treasury, “SSBCI Program Profile: Loan Guarantee Program.”~~
~~31 U.S. Department of the Treasury, “SSBCI Program Profile: Collateral Support Program,” at http://www.treasury.gov/~~
~~resource-center/sb-programs/Documents/SSBCI_Program_Profile_Collateral_Support_FINAL_May_17.pdf.~~
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~~cash collateral to be pledged by the state. In practice, state collateral support is rarely provided for~~
~~more than 50% of the loan value.32~~
~~Subject to some restrictions, SSBCI state collateral support program loans may be used for most~~
~~business purposes. In addition, SSBCI state collateral support programs must target an average~~
~~borrower size of 500 employees or fewer and may not support credit to borrowers with more than~~
~~750 employees. They must also target an average loan amount of $5 million or less and may not~~
~~support credit for any single loan exceeding $20 million.33~~
~~State Venture Capital Programs~~
~~State venture capital programs provide “investment capital to create and grow start-up and early-~~
~~stage businesses.”34 They come in two forms: a state-run fund, which may include private~~
~~investors, that invests directly in businesses and a fund of funds that invests in other venture~~
~~capital funds that, in turn, invest in individual businesses.35 In both cases, the day-to-day~~
~~management of the fund is typically outsourced to a professional firm. Investments are typically~~
~~equity (stock) and hybrid investments, such as preferred equity and subordinated debt. Terms are~~
~~negotiated between the business owner and the venture capital fund. The standard life of most~~
~~state venture capital funds is 12 years, and individual fund investments are typically for 3 years to~~
~~7 years.36~~
~~Subject to some restrictions, SSBCI state venture capital program investments may be used for~~
~~most business purposes. In addition, SSBCI state venture capital programs must target their~~
~~investments to businesses that have 500 employees or fewer and may not invest in businesses~~
~~with more than 750 employees. They must also target an average investment of $5 million or less~~
~~and may not make a single investment exceeding $20 million.37~~
~~SSBCI Funding~~
~~P.L. 111-240 appropriated $1.5 billion to the Department of the Treasury for the SSBCI program,~~
~~including the “reasonable costs of administering the program.”38 The 50 states, American Samoa,~~
~~the District of Columbia, Guam, Puerto Rico, the Northern Mariana Islands, the U.S. Virgin~~
~~Islands, and, in some instances, municipalities were eligible for funding, with the amount~~
~~available to each state, territory, and municipality determined by a formula contained in the act~~
~~(described later in this section). As mentioned, P.L. 117-2 appropriated $10 billion for the~~

~~32 U.S. Department of the Treasury, “SSBCI Program Profile: Collateral Support Program.”~~
~~33 U.S. Department of the Treasury, “SSBCI Program Profile: Collateral Support Program.”~~
~~34 U.S. Department of the Treasury, “SSBCI Program Profile: Venture Capital Program,” at http://www.treasury.gov/~~
~~resource-center/sb-programs/Documents/SSBCI_Program_Profile_Venture_Capital_FINAL_May_17.pdf.~~
~~35 U.S. Department of the Treasury, “SSBCI Program Profile: Venture Capital Program.”~~
~~36 U.S. Department of the Treasury, “SSBCI Program Profile: Venture Capital Program.”~~
~~37 U.S. Department of the Treasury, “SSBCI Program Profile: Venture Capital Program.”~~
~~38 12 U.S.C. §5708(b). Treasury reports that SSBCI administrative expenses, which include the cost of government~~
~~employee salaries, contract support, and reimbursement to the Treasury OIG for program audits, were $5.393 million in~~
~~FY2011, $4.746 million in FY2012, and $6.431 million in FY2013; and is estimated to be $8,299,000 in FY2014. See~~
~~U.S. Department of the Treasury, State Small Business Credit Initiative: FY2013 President’s Budget Submission, pp. 3,~~
~~8, at http://www.treasury.gov/about/budget-performance/Documents/16%20-%20FY%202013%20SSBCI%20CJ.pdf;~~
~~U.S. Department of the Treasury, State Small Business Credit Initiative: FY2014 President’s Budget, pp. 3, 8, at~~
~~http://www.treasury.gov/about/budget-performance/CJ14/16.%20SSBCI%20CJ%20FINAL%20ok.pdf; and U.S.~~
~~Department of the Treasury, State Small Business Credit Initiative: FY2015 President’s Budget, pp. 3, 9, at~~
~~http://www.treasury.gov/about/budget-performance/CJ15/21.%20SSBCI.pdf.~~
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~~program in FY2021, with the funding available until expended (except that all disbursements and~~
~~remaining obligations on September 30, 2030, “shall be rescinded and deposited into the general~~
~~fund of the Treasury”).~~
~~Application Process~~
~~During round one, states, American Samoa, the District of Columbia, Guam, Puerto Rico, the~~
~~Northern Mariana Islands, and the U.S. Virgin Islands were required to file a notice of intent to~~
~~apply for SSBCI funding with Treasury by November 26, 2010. After filing a notice of intent to~~
~~apply for funding, they were required to submit to Treasury an application for funding by June 27,~~
~~2011.~~
~~Municipalities were allowed to apply for funding only in the event their state did not participate~~
~~in the program. Municipalities were eligible to apply for funding up to the total amount of their~~
~~state’s SSBCI allotment, with the final approved amounts apportioned based on their~~
~~proportionate share of the population of all approved municipal applicants in that state, based on~~
~~the most recent available decennial census.39 Eligible municipalities were required to submit to~~
~~Treasury an application for funding by September 27, 2011.~~
~~The application for funding requested information concerning such items as~~
~~ the amount requested;~~
~~ how the funds are to be used (state capital access program, collateral support~~
~~program, loan participation program, loan guarantee program, venture capital~~
~~program, or other small business support program);~~
~~ confirmation that, at a minimum, $1 of public investment will result in at least $1~~
~~of new private credit; that there is a reasonable expectation the funding will result~~
~~in new small business lending of at least 10 times the amount of the SSBCI~~
~~federal contribution; that the funding targets small businesses with 500~~
~~employees or fewer, does not support borrowers that have more than 750~~
~~employees, targets loans with an average principal of $5 million or less, and does~~
~~not extend credit support to loans that exceed $20 million;~~
~~ documentation describing the operational capacity, skills, and experience of the~~
~~applicant’s management team in operating capital access and other small~~
~~business capital support programs;~~
~~ documentation describing the internal accounting and administrative control~~
~~systems used to safeguard against waste, loss, unauthorized use, and~~
~~misappropriation; and~~
~~ documentation describing how the participant planned to use the funds “to~~
~~provide access to capital for small businesses (1) in low- and moderate-income~~
~~communities, (2) in minority communities, (3) in other underserved~~
~~communities, and to (4) women- and minority-owned small businesses.”40~~

~~39 12 U.S.C. §5703(d)(6). If more than three municipalities or combinations of municipalities from the same state are~~
~~approved, Treasury is required to allocate federal funds to the three municipalities (or combination of municipalities)~~
~~with the largest populations. See 12 U.S.C. §5703(d)(5).~~
~~40 U.S. Department of the Treasury, “State Small Business Credit Initiative: Application,” at http://www.treasury.gov/~~
~~resource-center/sb-programs/Documents/SSBCI%20Application.pdf.~~
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~~During round two, states, territories, the District of Columbia, and tribal governments are~~
~~required to file a notice of intent to apply for SSBCI funding with Treasury by June 11, 2021.~~
~~Applications are due by December 11, 2021. Applications from municipalities located in states~~
~~that do not apply for SSBCI funding are due by March 11, 2022.41~~
~~The Funding Formula~~
~~The SSBCI funding formula took into account the number of jobs and job losses for each state in~~
~~proportion to the aggregate number of jobs and job losses nationally. Specifically, it was based on~~
~~the average of (1) the number of individuals employed in each state in December 2007 compared~~
~~with the number of individuals employed in each state in December 2008 and (2) the number of~~
~~individuals unemployed in each state in December 2009 compared with the number of individuals~~
~~unemployed nationally in December 2009. After accounting for Treasury’s anticipated~~
~~administrative costs, each participating state was guaranteed a minimum allotment of 0.9% of~~
~~available funding ($13.168 million).42~~
~~P.L. 117-2 uses the same allocation formula but replaces December 2007 with December 2019,~~
~~December 2008 with December 2020, and December 2009 with December 2021. Also, as~~
~~mentioned, there is a separate $500 million allocation for tribal governments “in the proportion~~
~~the Secretary determines appropriate including with consideration to available employment and~~
~~economic data regarding such tribal government.”~~
~~Funding was (and will be) provided in three installments (called tranches), each approximately~~
~~one-third of the participant’s approved allotment. The first tranche was provided “immediately~~
~~following the receipt of the fully signed Allocation Agreement.”43 Allotment agreements~~
~~described how states were to comply with program requirements and were signed after the state’s~~
~~application was approved.~~
~~Prior to the receipt of the second and third tranches, each state was (and will be) required to~~
~~certify that it had expended, transferred, or obligated at least 80% of the previous disbursement~~
~~to, or for the account of, one or more approved state programs.44 Treasury was (and continues to~~
~~be) authorized to recoup misused funds should the state be found in default of the allocation~~
~~agreement. All round one SSBCI allocation agreements expired on March 31, 2017.~~
~~To encourage states to utilize their funds expeditiously, P.L. 117-2 requires states to receive their~~
~~second tranche (second one-third allotment) within three years and their third and final tranche~~
~~(last one-third allotment) within six years of their approval date to participate in the program.~~
~~States failing to do so must return their remaining SSBCI funds to Treasury, and Treasury would~~
~~be required to either return the funds to the general fund or reallocate the funds to other~~
~~participating states.~~

~~41 U.S. Department of the Treasury, “State Small Business Credit Initiative (SSBCI): Key Deadlines,” at~~
~~https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci.~~
~~42 Treasury anticipated that its total administrative costs over the lifetime of the SSBCI program would be about $36.85~~
~~million.~~
~~43 U.S. Department of the Treasury, “State Small Business Credit Initiative: Frequently Asked Questions,” at~~
~~http://www.treasury.gov/resource-center/sb-programs/Pages/ssbci-faqs.aspx#gen3.~~
~~44 U.S. Department of the Treasury, “State Small Business Credit Initiative: Frequently Asked Questions.”~~
~~Congressional Research Service~~

10

~~link to page 15 link to page 15~~26 SSBCI Funding As mentioned, P.L. 117-2 appropriated $10 billion for the SSBCI program in FY2021, with the funding available until expended (except that all disbursements and remaining obligations on September 30, 2030, “shall be rescinded and deposited into the general fund of the Treasury”). Application Process States, American Samoa, DC, Guam, Puerto Rico, the Northern Mariana Islands, and the U.S. Virgin Islands were required to file a notice of intent to apply for SSBCI funding with Treasury by December 11, 2021, and to apply for SSBCI capital grants by February 11, 2022, and SSBCI technical assistance grants by June 30, 2022.27 Municipalities may apply for funding only in the event their state does not participate in the program. Municipalities are eligible to apply for funding up to the total amount of their state’s SSBCI allotment, with the final approved amounts apportioned based on their proportionate share of the population of all approved municipal applicants in that state, based on the most recent available decennial census.28 Eligible municipalities were required to submit to Treasury an application for funding by March 11, 2022. Tribal governments are required to initiate and apply for SSBCI capital grants by May 11, 2022, and SSBCI technical assistance grants by July 11, 2022. The application for funding requested information concerning such items as the lender makes every reasonable effort to collect, helping small businesses secure loans that may have otherwise been inaccessible or prohibitively expensive.” See U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 2; and U.S. Department of the Treasury, “State Small Business Credit Initiative (SSBCI) Program, Fact Sheet,” November 2021, at https://home.treasury.gov/system/files/256/State-Small-Business-Credit-Initiative-SSBCI-Fact-Sheet.pdf. 25 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” pp. 22, 24. 26 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 26. 27 U.S. Department of the Treasury, “State Small Business Credit Initiative, 2021 Archive,” at https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci/ssbci-2021. 28 12 U.S.C. §5703(d)(6). If more than three municipalities or combinations of municipalities from the same state are approved, Treasury is required to allocate federal funds to the three municipalities (or combination of municipalities) with the largest populations. See 12 U.S.C. §5703(d)(5). Congressional Research Service 7 link to page 14 link to page 14 State Small Business Credit Initiative: Implementation and Funding Issues  the amount requested;  how the funds are to be used (state capital access program, collateral support program, loan participation program, loan guarantee program, venture capital program, or other small business support program);  confirmation that, at a minimum, $1 of public investment will result in at least $1 of new private credit; that there is a reasonable expectation the funding will result in new small business lending of at least 10 times the amount of the SSBCI federal contribution; that the funding targets small businesses with 500 employees or fewer, does not support borrowers that have more than 750 employees, targets loans with an average principal of $5 million or less, and does not extend credit support to loans that exceed $20 million;  documentation describing the operational capacity, skills, and experience of the applicant’s management team in operating capital access and other small business capital support programs;  documentation describing the internal accounting and administrative control systems used to safeguard against waste, loss, unauthorized use, and misappropriation; and  documentation describing how the participant planned to use the funds “to help provide access to capital for small businesses in low- and moderate-income, minority, and other underserved communities, including women- and minority-owned small businesses.”29 The Capital Grants’ Funding Formula The SSBCI’s allocation formula for the distribution of $6.5 billion in main capital funds takes into account a state’s 2020 job losses in proportion to the aggregate job losses of all states in 2020. Each state, DC, and territory is guaranteed a minimum allocation of 0.9% of the $6.0 billion allocation available for states (not including tribal governments). Treasury made a separate allocation to tribal governments based on tribal enrollment, with a preliminary minimum allocation of approximately 0.09% of the $500 million available for tribal allocation (see Table 1).30 Funding is provided in three approximately equal installments (called tranches): 33%, 33%, and 34%. The first tranche is provided immediately following the receipt of the fully signed Allocation Agreement. Allotment agreements describe how states are to comply with program requirements and are signed after the state’s application was approved. Prior to the receipt of the second and third tranches, each state is required to certify that it has expended, transferred, or obligated at least 80% of the previous disbursement to, or for the account of, one or more approved state programs.31 Treasury is authorized to recoup misused funds should the state be found in default of the allocation agreement.32 29 U.S. Department of the Treasury, “2021 State Small Business Credit Initiative: Application Instructions,” at https://home.treasury.gov/policy-issues/small-business-programs/state-small-business-credit-initiative-ssbci/2021-ssbci/program-materials/application-material. 30 12 U.S.C. §5702(b). State employment decline is defined as the excess (if any) of (i) the number of individuals employed in such state determined for December 2019; over (ii) the number of individuals employed in such state determined for December 2020. 31 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 3. 32 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 7. Congressional Research Service 8 link to page 14 State Small Business Credit Initiative: Implementation and Funding Issues To encourage states to utilize their funds expeditiously, P.L. 117-2 requires states to receive their second tranche (second one-third allotment) within three years and their third and final tranche (last one-third allotment) within six years of their approval date to participate in the program. States failing to do so must return their remaining SSBCI funds to Treasury, and Treasury is required to either return the funds to the general fund or reallocate the funds to other participating states. Set-Asides for SEDI-Owned Businesses, Incentive Allocation for SEDI-Owned Businesses, VSBs, and Technical Assistance P.L. 117-2 requires Treasury to set aside $1.5 billion in SSBCI funding to address the needs of business enterprises owned and controlled by socially and economically disadvantaged individuals (SEDI-owned businesses), $1.0 billion for an incentive allocation for participants that demonstrate robust support for SEDI-owned businesses, $500 million for very small businesses (VSBs), and $500 million for technical assistance funding. SEDI-Owned Businesses Treasury allocated the $1.5 billion set-aside for SEDI-owned businesses into a portion for states, DC, and territories and a portion for tribal governments, consistent with the division of funds under the main capital allocation.33 Each state, DC, or territory’s share of these jurisdictions’ portion of the $1.5 billion SEDI allocation is “based on the percentage of the jurisdiction’s total population residing in Community Development Financial Institution (CDFI) Investment Areas, as defined in 12 C.F.R. §1805.201(b)(3)(ii), relative to the total population residing in all CDFI Investment Areas.”34 Each tribal government’s share of the tribal government portion of the $1.5 billion SEDI allocation is “determined using the same formula as the main capital allocation, based on enrollment data, except without the minimums” (see Table 1).35 Each state’s SEDI allocation will be transferred in three approximately equal tranches: 33%, 33%, and 34%. The first allocation will be disbursed when the state is approved for participation in the SSBCI. The second and third disbursements will occur when the state certifies that it has deployed 80% of its prior tranche of SSBCI funds. Incentive Allocation for SEDI-Owned Businesses P.L. 117-2 requires Treasury to set aside $1 billion to increase the amount of SSBCI funds that states can obtain, beyond their allocated amounts for the second and third tranches of main 33 Treasury determined “that these portions reasonably reflect the needs of SEDI-owned businesses in the respective jurisdictions, because these portions, determined by statute for the main capital allocation, generally reflect small business financing needs in these jurisdictions.” See U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 5. 34 Treasury indicated that “the population in CDFI Investment Areas serves as a proxy for the needs of SEDI-owned businesses because these areas are generally low-income, high-poverty geographies that receive neither sufficient access to capital nor support for the needs of small businesses, including minority-owned businesses.” See U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 5. 35 Treasury indicated that “the use of enrollment data reflects the needs of Tribal SEDI-owned businesses, as Tribal members and communities have faced widespread and long-standing lack of access to capital and investment, such that a population-based approach provides a reasonable proxy for the extent of the needs of these businesses.” See U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” pp. 5-6. Congressional Research Service 9 link to page 14 State Small Business Credit Initiative: Implementation and Funding Issues capital, “for states that demonstrate “robust support” for SEDI-owned businesses in the deployment of prior allocation amounts.”36 Of this amount, Treasury will use $500 million to provide states additional funds for each of the second and third tranches of main capital.37 Each state’s initial eligible amount was determined in the same manner as the $1.5 billion SEDI allocation methodology.38 For each of the second and third tranches of main capital, Treasury will increase the amount of SSBCI funds that a state can obtain using a two-step process: First, each state should aspire to expend a certain percentage (the SEDI Objective) of its SSBCI funds that have been expended since the state’s prior disbursement of main capital allocation, SEDI allocation, and VSB allocation funds for meeting the needs of the SEDI-owned businesses within its state. For states of the United States, the District of Columbia, and territories, the SEDI Objective equals the population of the jurisdiction that are residents in CDFI Investment Areas, as defined in 12 C.F.R. §1805.201(b)(3)(ii), divided by the jurisdiction’s total population. For Tribal governments, the SEDI Objective is 100 percent.... 39 For each of the second and third tranches of main capital, $400 million of the $500 million of additional funds will be available as initial eligible amounts. Each state’s initial eligible amount will be determined in the same manner as the $1.5 billion SEDI allocation methodology described above, as that methodology reflects the needs of SEDI-owned businesses.40 Second, for each of the second and third tranches of main capital, Treasury will make a second disbursement from these additional funds, totaling $100 million in the aggregate plus any other residual funds, to states that have requested their Step 1 disbursement by the date that Treasury sets for the second disbursement. For the second tranche of main capital, the residual funds will include only initial eligible amounts unachieved by the states that have requested their Step 1 disbursement. For the third tranche of main capital, the residual funds will include any remaining (unachieved and un-drawn) amount of the $400 million for the second tranche of main capital and any remaining (unachieved and un-drawn) amount of the $400 million for the third tranche of main capital.41 Very Small Businesses P.L. 117-2 requires Treasury to set aside $500 million to states to be expended for VSBs. The allocations for VSBs are determined according to the same formula as the state’s main capital allocation, except without the minimums for the tribal government portion. Each state’s VSB allocation will be transferred in three approximately equal tranches, 33%, 33%, and 34%. The first tranche will be disbursed when the state is approved for participation in the SSBCI. The second and third tranches will be disbursed when the state certifies that it has deployed 80% of its prior tranche of disbursed SSBCI funds (see Table 1). 36 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 7. 37 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 7. 38 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 8. 39 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 8. 40 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 8. 41 U.S. Department of the Treasury, “SSBCI: Capital Program Policy Guidelines,” p. 8. Congressional Research Service 10 link to page 14 link to page 14 State Small Business Credit Initiative: Implementation and Funding Issues States are not required to establish a separate VSB program, but must maintain records of the total amount of its SSBCI funds expended for VSBs. Technical Assistance P.L. 117-2 requires Treasury to set aside $500 million for state administrative costs. These costs are capped by statute (see 12 U.S.C. §5702(c)(3)(C)-(D)). Specifically, administrative costs may not exceed 5% of SSBCI funds for the first tranche and 3% for the second or third tranche. State-by-State Allotments Table 1 shows the amount of SSBCI funding available to each state (not including administrative awards, which will be determined later). As shown in Table 1, California is eligible for ~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~State-by-State Allotments~~
~~By the original June 27, 2011, application deadline, 48 states, American Samoa, the District of~~
~~Columbia, Guam, Puerto Rico, the Northern Mariana Islands, and the U.S. Virgin Islands had~~
~~submitted an application to participate in the program. Collectively, they requested approximately~~
~~$1.4 billion in funding.45 North Dakota and Wyoming did not apply. Alaska later withdrew its~~
~~application. Five municipalities (one in Alaska, two in North Dakota, and two in Wyoming)~~
~~subsequently requested $39.5 million in SSBCI funding.46 Funding was allotted to Anchorage,~~
~~Alaska ($13.168 million); a Laramie, Wyoming, led consortium of 17 municipalities ($13.168~~
~~million); a Mandan, North Dakota, led consortium of 37 municipalities and an Indian tribe~~
~~($9.711 million); and a Carrington, North Dakota, led consortium of 36 municipalities ($3.458~~
~~million).~~
Table 1 shows the amount of SSBCI funding that was awarded to each state and territory
~~(hereinafter referred to as states unless otherwise noted) and the types of small business~~
~~investment programs supported. As shown on Table 1,~~ ~~California received~~ the largest allotment the largest allotment
~~($167.75 million) and American Samoa, which requested less than the minimum guaranteed~~
~~allotment, received~~($1.18 billion) and the Northern Mariana Islands is eligible for the smallest allotment the smallest allotment ($57.06 million). Table 1. SSBCI Allocation Table Total Potential Funding Initial Eligible Amount Amounts (excluding Very Small ($800 million Technical Main Capital Business SEDI of incentive Assistance Participant Allocation Allocation Allocation funding) grants) Alabama $52,092,000 $4,142,176 $27,201,417 $14,507,422 $97,943,015 Alaska $52,092,000 $4,142,176 $2,394,597 $1,277,118 $59,905,891 American Samoa $52,092,000 $4,142,176 $553,430 $295,163 $57,082,769 Arizona $54,546,269 $4,337,331 $34,009,405 $18,138,349 $111,031,354 Arkansas $52,092,000 $4,142,176 $16,557,075 $8,830,440 $81,621,691 California $829,050,641 $65,923,238 $187,189,392 $99,834,342 $1,181,997,613 Colorado $70,278,471 $5,588,301 $18,852,249 $10,054,533 $104,773,554 Connecticut $93,906,484 $7,467,119 $11,766,086 $6,275,245 $119,414,934 Delaware $52,092,000 $4,142,176 $3,090,605 $1,648,322 $60,973,103 District of $52,092,000 $4,142,176 $3,777,969 $2,014,917 $62,027,062 Columbia Florida $300,311,399 $23,879,723 $107,149,207 $57,146,243 $488,486,572 Georgia $109,140,449 $8,678,471 $53,346,483 $28,451,457 $199,616,860 Guam $52,092,000 $4,142,176 $1,588,530 $847,216 $58,669,922 Hawaii $52,092,000 $4,142,176 $3,774,640 $2,013,141 $62,021,957 Idaho $52,092,000 $4,142,176 $6,158,721 $3,284,651 $65,677,548 Il inois $261,128,465 $20,764,032 $47,435,265 $25,298,808 $354,626,570 Indiana $57,461,660 $4,569,152 $24,167,552 $12,889,361 $99,087,725 Iowa $78,036,450 $6,205,188 $7,735,439 $4,125,567 $96,102,644 Kansas $52,092,000 $4,142,176 $8,714,786 $4,647,885 $69,596,847 Congressional Research Service 11 State Small Business Credit Initiative: Implementation and Funding Issues Total Potential Funding Initial Eligible Amount Amounts (excluding Very Small ($800 million Technical Main Capital Business SEDI of incentive Assistance Participant Allocation Allocation Allocation funding) grants) Kentucky $75,985,059 $6,042,069 $22,888,318 $12,207,103 $117,122,549 Louisiana $68,793,015 $5,470,182 $25,309,701 $13,498,507 $113,071,405 Maine $52,092,000 $4,142,176 $3,912,223 $2,086,519 $62,232,918 Maryland $154,429,827 $12,279,725 $20,670,917 $11,024,489 $198,404,958 Massachusetts $125,977,247 $10,017,275 $21,258,689 $11,337,967 $168,591,178 Michigan $162,909,105 $12,953,968 $39,866,007 $21,261,870 $236,990,950 Minnesota $69,777,312 $5,548,450 $14,143,588 $7,543,246 $97,012,596 Mississippi $52,092,000 $4,142,176 $19,463,655 $10,380,616 $86,078,447 Missouri $52,092,000 $4,142,176 $25,188,018 $13,433,609 $94,855,803 Montana $52,092,000 $4,142,176 $3,322,039 $1,771,754 $61,327,969 Nebraska $52,092,000 $4,142,176 $5,068,397 $2,703,145 $64,005,718 Nevada $85,277,686 $6,780,986 $13,629,033 $7,268,818 $112,956,523 New Hampshire $52,092,000 $4,142,176 $3,413,648 $1,820,612 $61,468,436 New Jersey $197,308,382 $15,689,280 $27,521,719 $14,678,250 $255,197,631 New Mexico $52,092,000 $4,142,176 $11,905,193 $6,349,436 $74,488,805 New York $349,347,050 $27,778,868 $81,170,522 $43,290,945 $501,587,385 North Carolina $111,588,774 $8,873,153 $53,110,274 $28,325,479 $201,897,680 North Dakota $52,092,000 $4,142,176 $1,570,218 $837,449 $58,641,843 Northern $52,092,000 $4,142,176 $537,122 $286,465 $57,057,763 Mariana Islands Ohio $106,498,285 $8,468,375 $43,944,282 $23,436,950 $182,347,892 Oklahoma $52,092,000 $4,142,176 $16,573,324 $8,839,106 $81,646,606 Oregon $52,092,000 $4,142,176 $17,782,859 $9,484,191 $83,501,226 Pennsylvania $191,483,931 $15,226,140 $39,866,127 $21,261,934 $267,838,132 Puerto Rico $52,092,000 $4,142,176 $3,581,833 $1,910,311 $61,726,320 Rhode Island $56,224,591 $4,470,785 $26,509,098 $14,138,185 $101,342,659 South Carolina $52,092,000 $4,142,176 $2,462,790 $1,313,488 $60,010,454 South Dakota $60,573,813 $4,816,620 $33,612,467 $17,926,649 $116,929,549 Tennessee $265,398,300 $21,103,554 $121,038,443 $64,553,836 $472,094,133 Texas $106,498,285 $8,468,375 $43,944,282 $23,436,950 $182,347,892 Utah $52,092,000 $4,142,176 $8,329,451 $4,442,373 $69,006,000 Vermont $52,092,000 $4,142,176 $1,117,696 $596,105 $57,947,977 Virgin Islands $52,092,000 $4,142,176 $1,060,678 $565,695 $57,860,549 Virginia $174,537,551 $13,878,622 $27,403,585 $14,615,245 $230,435,003 Congressional Research Service 12 State Small Business Credit Initiative: Implementation and Funding Issues Total Potential Funding Initial Eligible Amount Amounts (excluding Very Small ($800 million Technical Main Capital Business SEDI of incentive Assistance Participant Allocation Allocation Allocation funding) grants) Washington $115,269,784 $9,165,854 $25,450,902 $13,573,814 $163,460,354 West Virginia $52,092,000 $4,142,176 $10,350,406 $5,520,216 $72,104,798 Wisconsin $52,092,000 $4,142,176 $14,929,240 $7,962,261 $79,125,677 Wyoming $52,092,000 $4,142,176 $1,429,764 $762,541 $58,426,481 Total $9.087,998,714 Source: U.S. Department of Treasury, “Allocations for States, Territories, Washington DC, and Tribal Governments,” at https://home.treasury.gov/system/files/256/Updated-Preliminary-Allocations-Table-Nov-2021.pdf. Lessons Learned from Round One Audits and Evaluation Reports P.L. 111-240 required Treasury’s OIG to conduct, supervise, and coordinate audits and investigations into the use of SSBCI funds. The act also required GAO to perform an annual audit of the SSBCI program. P.L. 113-188, the Government Reports Elimination Act of 2014, later ~~($10.5 million).~~
~~States used SSBCI funding to support the following small business investment programs: 23~~
~~supported a capital access program, 40 supported a loan participation program, 20 supported a~~
~~loan guarantee program, 16 supported a collateral support program, and 38 supported a venture~~
~~capital program.~~
~~Table 1. Round One SSBCI Allotments and Programs~~
~~Capital~~
~~Allotment~~
~~Access~~
~~Loan~~
~~Loan~~
~~Collateral Venture~~
~~Participant~~
~~($ millions) Program Participation Guarantee~~
~~Support~~
~~Capital~~
~~Alabama~~
~~$31.301~~
X
X
X

~~Alaska,~~
~~$13.168~~

X
~~Anchorage~~
~~American~~
~~$10.500~~

X
~~Samoa~~
~~Arizona~~
~~$18.204~~

X

~~Arkansas~~
~~$13.168~~
X
X
X

X
~~California~~
~~$167.755~~
X
X
X
X

~~Colorado~~
~~$17.233~~
X

X

~~Connecticut~~
~~$13.301~~

X
~~Delaware~~
~~$13.168~~
X
X

~~District of~~
~~$13.168~~

X

X
X
~~Columbia~~
~~Florida~~
~~$97.622~~
X
X
X

X

~~45 Applicants were entitled to the funding provided by the SSBCI formula. American Samoa requested $10,418,500.~~
~~The minimum SSBCI allotment is $13,168,350. All other applicants requested the amount provided by the SSBCI~~
~~formula. See U.S. Government Accountability Office (GAO), State Small Business Credit Initiative, GAO-12-173,~~
~~December 7, 2011, p. 9, at http://www.gao.gov/assets/590/586727.pdf.~~
~~46 GAO, State Small Business Credit Initiative, GAO-12-173, December 7, 2011, p. 9.~~
~~Congressional Research Service~~

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~~link to page 17~~ ~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Capital~~
~~Allotment~~
~~Access~~
~~Loan~~
~~Loan~~
~~Collateral Venture~~
~~Participant~~
~~($ millions) Program Participation Guarantee~~
~~Support~~
~~Capital~~
~~Puerto Rico~~
~~$14.540~~

X

X
~~Rhode Island~~
~~$13.168~~

X

X
~~South~~
~~$17.990~~
X
X

~~Carolina~~
~~South Dakota~~
~~$13.168~~

X

~~Tennessee~~
~~$29.672~~

X
~~Texas~~
~~$46.553~~

X

X
~~Utah~~
~~$13.168~~

X
X

X
~~Vermont~~
~~$13.168~~

X

~~Virgin Islands~~
~~$13.168~~

X
X

~~Virginia~~
~~$17.953~~
X
X

X
X
~~Washington~~
~~$19.722~~
X
X

X
X
~~West Virginia~~
~~$13.168~~

X
X
X
X
~~Wisconsin~~
~~$22.363~~

X

X
~~Wyoming,~~
~~$13.168~~

X

X
~~Laramie~~
~~Consortiumb~~
Sources: U.S. Department of Treasury, “State Programs Funded by SSBCI,” at https://www.treasury.gov/
~~resource-center/sb-programs/Documents/SSBCI%20State%20Programs%20and%20Contacts.pdf; and U.S.~~
~~Government Accountability Office, State Small Business Credit Initiative, GAO-12-173, December 7, 2011.~~
~~a. The Mandan, North Dakota, led consortium of 37 municipalities and an Indian tribe was allotted $9.711~~
~~mil ion to administer a loan participation program. The Carrington, North Dakota, led consortium of 36~~
~~municipalities was allotted $3.458 mil ion to administer a col ateral support program and a venture capital~~
~~program.~~
~~b. The Laramie, Wyoming, led consortium includes 17 municipalities.~~
~~Approximately 32.5% of SSBCI funds were allocated to loan participation programs, 29.5% to~~
~~venture capital programs, 18.4% to collateral support programs, 16.9% to loan guarantee~~
~~programs, and 2.7% to capital access programs.47~~
~~As mentioned, most states received their initial tranche in FY2011 and, as of December 31, 2016,~~
~~all 57 participants had received their first tranche, 56 had received their second tranche, and 53~~
~~had received their third tranche.48~~
~~States were (and would continue to be) allowed to use up to 5% of their initial tranche, and up to~~
~~3% of their second and third tranches, for administrative expenses related to implementing an~~
~~approved small business investment program. They were (and would continue to be) also subject~~
~~to several reporting requirements. For example, states had to submit quarterly reports to Treasury~~
~~describing the use of allocated funds for each approved program, including the total amount of~~

~~47 U.S. Department of the Treasury,~~ ~~State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as~~
~~of December 31, 2016, p. 10, at https://www.treasury.gov/resource-center/sb-programs/Documents/~~
~~SSBCI_Quarterly_Report_Summary_December_2016.pdf.~~
~~48 U.S. Department of the Treasury,~~ ~~State Small Business Credit Initiative: A Summary of States’ Quarterly Reports as~~
~~of December 31, 2016, p. 1.~~
~~Congressional Research Service~~

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~~link to page 18~~ ~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~allocated funds used for direct and indirect administrative costs, the total amount of allocated~~
~~funds used, the amount of program income generated, and the amount of charge-offs against the~~
~~federal contributions to the reserve funds set aside for any approved CAP. States were also~~
~~required to submit annual reports to Treasury, by March 31 of each year, containing, among other~~
~~things, transaction-level data for each loan or investment made with SSBCI funds for that year.~~
Table 2 shows the preliminary SSBCI allocations for states and territories for round two,
~~including $500 million in pro rata funding for programs that assist very small businesses, defined~~
~~as having less than 10 employees. In addition,~~
~~ tribal governments will be provided $500 million.~~
~~ $2.5 billion will be awarded to SSBCI programs that support businesses owned and~~
~~controlled by socially and economically disadvantaged individuals, including $1 billion~~
~~in incentive allocations to participants that demonstrate robust support for businesses~~
~~owned and controlled by socially and economically disadvantaged individuals. The~~
~~incentive awards will be added to the participant’s second and third tranches.~~
~~ $500 million is available for technical assistance, including legal, accounting, and~~
~~financial advisory services, with priority given to participants with technical assistance~~
~~programs serving businesses owned and controlled by socially and economically~~
~~disadvantaged individuals and very small (fewer than 10 employees) businesses.~~
~~ additional funding, as determined by the Secretary of the Treasury, will be made available~~
~~to participants based on the needs of businesses owned and controlled by socially and~~
~~economically disadvantaged individuals.~~
~~Table 2. Round Two Preliminary SSBCI Allotments, States and Territories~~
~~Participant~~
~~Allotment~~
~~Participant~~
~~Allotment~~
~~Alabama~~
~~$56,234,176~~
~~Montana~~
~~$56,234,176~~
~~Alaska~~
~~$56,234,176~~
~~Nebraska~~
~~$56,234,176~~
~~American Samoa~~
~~$56,234,176~~
~~Nevada~~
~~$92,058,672~~
~~Arizona~~
~~$58,883,599~~
~~New Hampshire~~
~~$56,234,176~~
~~Arkansas~~
~~$56,234,176~~
~~New Jersey~~
~~$212,997,662~~
~~California~~
~~$894,973,879~~
~~New Mexico~~
~~$56,234,176~~
~~Colorado~~
~~$75,866,772~~
~~New York~~
~~$377,125,918~~
~~Connecticut~~
~~$101,373,602~~
~~North Carolina~~
~~$120,461,927~~
~~Delaware~~
~~$56,234,176~~
~~North Dakota~~
~~$56,234,176~~
~~District of Columbia~~
~~$56,234,176~~
~~Northern Mariana Islands~~
~~$56,234,176~~
~~Florida~~
~~$324,191,122~~
~~Ohio~~
~~$114,966,660~~
~~Georgia~~
~~$117,818,920~~
~~Oklahoma~~
~~$56,234,176~~
~~Guam~~
~~$56,234,176~~
~~Oregon~~
~~$56,234,176~~
~~Hawaii~~
~~$56,234,176~~
~~Pennsylvania~~
~~$206,710,071~~
~~Idaho~~
~~$56,234,176~~
~~Puerto Rico~~
~~$56,234,176~~
~~Il inois~~
~~$281,892,497~~
~~Rhode Island~~
~~$56,234,176~~
~~Indiana~~
~~$62,030,812~~
~~South Carolina~~
~~$60,695,376~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Participant~~
~~Allotment~~
~~Participant~~
~~Allotment~~
~~Iowa~~
~~$84,241,639~~
~~South Dakota~~
~~$56,234,176~~
~~Kansas~~
~~$56,234,176~~
~~Tennessee~~
~~$65,390,433~~
~~Kentucky~~
~~$82,027,128~~
~~Texas~~
~~$286,501,855~~
~~Louisiana~~
~~$74,263,197~~
~~Utah~~
~~$56,234,176~~
~~Maine~~
~~$56,234,176~~
~~Vermont~~
~~$56,234,176~~
~~Maryland~~
~~$166,709,553~~
~~Virgin Islands~~
~~$56,234,176~~
~~Massachusetts~~
~~$135,994,521~~
~~Virginia~~
~~$188,416,173~~
~~Michigan~~
~~$175,863,073~~
~~Washington~~
~~$124,435,638~~
~~Minnesota~~
~~$75,325,763~~
~~West Virginia~~
~~$56,234,176~~
~~Mississippi~~
~~$56,234,176~~
~~Wisconsin~~
~~$56,234,176~~
~~Missouri~~
~~$56,234,176~~
~~Wyoming~~
~~$56,234,176~~

~~Total~~
~~$6,248,241,730~~
Source: U.S. Department of the Treasury, “State Small Business Credit Initiative (SSBCI): Preliminary
~~Allocations for States, Territories, and Washington, DC (including very small business allocations),” at~~
~~https://home.treasury.gov/system/files/256/Preliminary-Allocation-for-States-Decline-in-Employment.pdf.~~
Notes: These preliminary allocations include $500 mil ion in pro rata allocations to very small businesses and
~~are subject to change depending on state participation, actual versus expected administrative expenses, other~~
~~allocations specified by Subtitle C of Title III of P.L. 117-2, which includes forthcoming allocations to tribal~~
~~governments, and the reallocation of amounts not transferred, if any.~~
~~Round One Audits, Evaluation Reports, and~~
~~Program Adjustments~~
~~P.L. 111-240 required Treasury’s OIG to conduct, supervise, and coordinate audits and~~
~~investigations into the use of SSBCI funds. The act also required GAO to perform an annual audit~~
~~of the SSBCI program. P.L. 113-188, the Government Reports Elimination Act of 2014,~~
eliminated this requirement. eliminated this requirement.
Treasury’s OIG released its first evaluation report of Treasury’s implementation of the SSBCI on Treasury’s OIG released its first evaluation report of Treasury’s implementation of the SSBCI on
August 5, 2011, and its first audit of a state’s use of SSBCI funds (California) on May 24, 2012. It August 5, 2011, and its first audit of a state’s use of SSBCI funds (California) on May 24, 2012. It
completed audits of 24 participants’ use of SSBCI funds (California, Montana, Vermont, completed audits of 24 participants’ use of SSBCI funds (California, Montana, Vermont,
Michigan, Texas, Massachusetts, Delaware, New Jersey, Alabama, Missouri, Washington, Michigan, Texas, Massachusetts, Delaware, New Jersey, Alabama, Missouri, Washington,
Kansas, Florida, West Virginia, Illinois, South Carolina, American Samoa, North Carolina, Idaho, Kansas, Florida, West Virginia, Illinois, South Carolina, American Samoa, North Carolina, Idaho,
Indiana, Tennessee, the North Dakota Mandan consortium, Rhode Island, and New York).Indiana, Tennessee, the North Dakota Mandan consortium, Rhode Island, and New York).4942
GAO released annual audits of the SSBCI program on December 7, 2011, December 5, 2012, GAO released annual audits of the SSBCI program on December 7, 2011, December 5, 2012,
December 18, 2013, and December 11, 2014.December 18, 2013, and December 11, 2014. GAO’s Audits GAO’s audits indicated that the SSBCI program got off to a relatively slow start for a number of reasons:  Treasury’s revisions to its policy guidelines and application paperwork led several states, worried that they might be found in noncompliance with Treasury’s rules and regulations, to postpone their SSBCI applications until

4942 U.S. Department of the Treasury, Office of Inspector General (OIG), Small Business Lending Fund Program U.S. Department of the Treasury, Office of Inspector General (OIG), Small Business Lending Fund Program
Oversight Office, Oversight Office, Small Business Lending Fund Oversight Reports, at https://oig.treasury.gov/Office-of-Small-, at https://oig.treasury.gov/Office-of-Small-
Business-Lending-Fund-Program-Oversight. An audit of Louisiana’s use of SSBCI funds was issued on January 9, Business-Lending-Fund-Program-Oversight. An audit of Louisiana’s use of SSBCI funds was issued on January 9,
2014, and removed from the Treasury OIG’s website on February 19, 2015, pending further review. The OIG later 2014, and removed from the Treasury OIG’s website on February 19, 2015, pending further review. The OIG later
determined that the work performed was not sufficient to support the findings and conclusions in the report under determined that the work performed was not sufficient to support the findings and conclusions in the report under
generally accepted government auditing standards. The audit report will not be reissued. generally accepted government auditing standards. The audit report will not be reissued.
Congressional Research Service Congressional Research Service

1513 State Small Business Credit Initiative: Implementation and Funding Issues Treasury finalized its policy guidance. Thirty-seven states waited to submit their applications until June 2011, the final month that applications were allowed.43  Many states did not have preexisting small business programs in place and lacked the administrative infrastructure necessary to distribute SSBCI funds quickly. Instead of immediately disbursing funds, many states conducted outreach to lenders to make them aware of their SBCI programs and to encourage them to commit to small business lending.44  Some states reported that some large, multi-state banks were reluctant to participate in the program due to the variation of SSBCI programs across the nation and the need to “tailor different processes to each SSBCI participant’s program.”45 None of these implementation impediments is expected to affect the latest round of funding. States and lenders have become familiar with the SSBCI regulations and guidelines, and states now have infrastructures in place to enable them to process applications and awards. GAO also encouraged Treasury to develop

~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~GAO’s Audits~~
~~The SSBCI was authorized on September 27, 2010. Because the program was new, it took~~
~~Treasury nearly three months to post the initial set of SSBCI policy guidelines and application~~
~~materials on its website (December 21, 2010).50 The program officially started in January 2011,~~
~~when Treasury obtained signed allocation agreements and distributed first installments of funds to~~
~~two states.51 However, in response to feedback from states, the SBA, and other federal agencies,~~
~~Treasury revised its policy guidelines and application paperwork in April 2011 “to better~~
~~articulate what documentation was required for both the application and review processes.”52 The~~
~~two previously approved states were asked to sign an amended allocation agreement that~~
~~incorporated the revisions.~~
~~GAO’s first annual audit, issued on December 7, 2011, reported that several states, worried that~~
~~they might be found in noncompliance with Treasury’s rules and regulations, delayed submitting~~
~~their SSBCI applications until Treasury finalized its policy guidance, and 37 states waited to~~
~~submit their applications until June 2011, the final month that applications were allowed.~~
~~GAO also found that Treasury did not finalize its disbursement procedures for second and third~~
~~installments of SSBCI funds until the beginning of November 2011. Treasury officials reported~~
~~that despite this delay, no state, at that time, had expended 80% of its initial disbursement to~~
~~support loans or investments to small businesses. However, GAO noted that one state reported~~
~~that it was ready for its second installment before Treasury had finalized the disbursement~~
~~procedures but was told by Treasury officials that it would have to wait until the disbursement~~
~~procedures were finalized.53~~
~~GAO concluded its 2011 audit by noting that Treasury had not yet developed~~ SSBCI performance SSBCI performance
~~measures and recommended that the agency do so~~ measures to enable it to “be in a position to determine to enable it to “be in a position to determine
whether the SSBCI program is effective in achieving its goals.”whether the SSBCI program is effective in achieving its goals.”54
~~In response to GAO’s audit~~46 In response, in January 2012, Treasury adopted three performance goals to , in January 2012, Treasury adopted three performance goals to
measure its administration of the program and four performance indicators to measure SSBCI measure its administration of the program and four performance indicators to measure SSBCI
outcomes. outcomes.
The three administrative performance goals were The three administrative performance goals were
 90% of requests for modifications to allocation agreements are approved or  90% of requests for modifications to allocation agreements are approved or
rejected within 90 days of receiving a final submission; rejected within 90 days of receiving a final submission;
 90% of requests for subsequent disbursements under existing allocation  90% of requests for subsequent disbursements under existing allocation
agreements are approved or rejected within 90 days of receipt of a formal agreements are approved or rejected within 90 days of receipt of a formal
submission; and submission; and
 90% of quarterly reports are received within  90% of quarterly reports are received within 5five days of the deadline. days of the deadline.5547 Treasury tracked these performance goals continuously and reported 12-month data to the Office of Management and Budget as part of its annual budget submission. The four performance indicators were  the amount of SSBCI funds used over time, as reported on SSBCI quarterly reports;  the volume and dollar amounts of loans or investments supported by SSBCI funds, as reported on SSBCI annual reports;  the amount of private sector leverage, as reported on SSBCI annual reports; and 43 GAO, State Small Business Credit Initiative: Opportunities Exist to Improve Program Oversight, GAO-12-173, p. 14, at https://www.gao.gov/products/gao-12-173. 44 GAO, Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, GAO-13-76, December 5, 2012, p. 22, at http://www.gao.gov/assets/660/650555.pdf. 45 GAO, State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and Evaluation, p. 16. 46 GAO, State Small Business Credit Initiative, GAO-12-173, p. 21. 47 U.S. Treasury, “Correspondence with the author,” June 22, 2012. For the first two goals, the measurement period starts once all required documentation from the requesting participating state is received. Congressional Research Service 14 State Small Business Credit Initiative: Implementation and Funding Issues  the estimated number of jobs created or retained, as reported on SSBCI annual reports. Treasury reported this performance data internally to the Assistant Secretary of Financial Institutions on an annual basis. After GAO recommended this data be made public, on September 25, 2013, Treasury officials made SSBCI performance information publicly available by releasing the first of what would become an annual summary report of performance information drawn from SSBCI participants’ annual reports.48 Treasury’s Inspector General Evaluation Report and State Audits On August 5, 2011, Treasury’s OIG released an evaluation report examining the SSBCI program.49 Treasury’s OIG made a number of recommendations for improving program guidance language and to improve SSBCI program oversight. In response, Treasury redefined several terms and conditions in its guidance documents and established
~~Treasury tracked these performance goals continuously and reported 12-month data to the Office~~
~~of Management and Budget as part of its annual budget submission.~~

~~50 U.S. Government Accountability Office (GAO), State Small Business Credit Initiative, GAO-12-173, December 7,~~
~~2011, p. 21, at http://www.gao.gov/assets/590/586727.pdf.~~
~~51 GAO, State Small Business Credit Initiative, GAO-12-173, p. 14.~~
~~52 GAO, State Small Business Credit Initiative, GAO-12-173, p. 14.~~
~~53 GAO, State Small Business Credit Initiative, GAO-12-173, p. 16.~~
~~54 GAO, State Small Business Credit Initiative, GAO-12-173, p. 21.~~
~~55 U.S. Treasury, “Correspondence with the author,” June 22, 2012. For the first two goals, the measurement period~~
~~starts once all required documentation from the requesting participating state is received.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~The four performance indicators were~~
~~ the amount of SSBCI funds used over time, as reported on SSBCI quarterly~~
~~reports;~~
~~ the volume and dollar amounts of loans or investments supported by SSBCI~~
~~funds, as reported on SSBCI annual reports;~~
~~ the amount of private sector leverage, as reported on SSBCI annual reports; and~~
~~ the estimated number of jobs created or retained, as reported on SSBCI annual~~
~~reports.~~
~~Treasury reported this performance data internally to the Assistant Secretary of Financial~~
~~Institutions on an annual basis.~~
~~GAO’s second annual SSBCI audit, issued on December 5, 2012, found that states with~~
~~preexisting small business programs distributed their SSBCI funds quicker than other states~~
~~because the state administrative infrastructure necessary to distribute the funds was already in~~
~~place, and lenders were already familiar with the programs. States without preexisting small~~
~~business programs reported that they had to conduct extensive outreach to lenders to make them~~
~~aware of the programs and encourage them to commit to small business lending.56~~
~~GAO noted that Treasury had, as recommended, created performance measures to help monitor~~
~~and measure the SSBCI’s effectiveness.57 However, GAO noted that Treasury “has not yet~~
~~determined how and when it will make this information public.”58 GAO argued that this~~
~~information should be made public because “performance information is an important tool for~~
~~policymakers, particularly as Congress reviews and considers programs to assist small businesses~~
~~going forward.”59~~
~~In response to this recommendation, on September 25, 2013, Treasury officials made SSBCI~~
~~performance information publicly available by releasing the first of what would become an~~
~~annual summary report of performance information drawn from SSBCI participants’ annual~~
~~reports.60 The summary report included data related to each of the Treasury’s four performance~~
~~measures (amount of SSBCI funds used over time; volume and dollar amounts or investments~~
~~supported by SSBCI funds; amount, in dollars, of private-sector leverage; and estimated number~~
~~of jobs created or retained).~~
~~GAO’s third annual SSBCI audit, issued on December 18, 2013, found that although the pace of~~
~~participant SSBCI spending had increased since the second annual audit, participants were still~~
~~facing several challenges in using their SSBCI funds. For example, as of June 30, 2013, Treasury~~
~~had disbursed about $811 million in SSBCI funds to participants (about 54% of total SSBCI~~
~~funds). Only 8 participants had received their third and final tranche, 19 participants had received~~

~~56 GAO, Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs,~~
~~GAO-13-76, December 5, 2012, p. 22, at http://www.gao.gov/assets/660/650555.pdf.~~
~~57 GAO, Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, p.~~
~~40.~~
~~58 GAO, Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, p.~~
40
~~59 GAO, Small Business Lending: Opportunities Exist to Improve Performance Reporting of Treasury’s Programs, pp.~~
~~40-41.~~
~~60 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ 2012 Annual Reports,~~
~~September 25, 2013, at http://www.treasury.gov/resource-center/sb-programs/Documents/~~
~~SSBCI%20Summary%20of%20States%202012%20Annual%20Reports%20FINAL.pdf.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~their second tranche, and 30 participants were “still working to use their first disbursement of~~
~~SSBCI funding.”61~~
~~Participants told GAO that Treasury’s delay in finalizing the program’s guidelines and the~~
~~learning associated with implementing a relatively large number of new small business programs~~
~~had slowed spending.62 Participants also told GAO the unexpected low demand for some SSBCI~~
~~capital access programs (CAP) further slowed their SSBCI spending. They explained that it took~~
~~some time for them to reallocate funds from SSBCI programs experiencing low demand to those~~
~~experiencing higher demand.63 Some participants also reported that some large banks were~~
~~reluctant to participate in the program due to the variation of SSBCI programs across the nation~~
~~and the need to “tailor different processes to each SSBCI participant’s program.”64~~
~~GAO’s fourth, and final, annual SSBCI audit, issued on December 11, 2014, found that although~~
~~the pace of participant SSBCI spending had increased since its third audit, officials from three of~~
~~the 10 SSBCI participants it interviewed reported that some banks were still reluctant to~~
~~participate in the program because they were unfamiliar with it or perceived that it would increase~~
~~scrutiny from regulators.65 Officials from three of the 10 SSBCI participants interviewed also~~
~~indicated that “there continues to be a lack of clarity in Treasury’s guidance regarding the use of~~
~~SSBCI funds for certain transactions.”66~~
~~Treasury’s Inspector General Evaluation Reports~~
~~On August 5, 2011, Treasury’s OIG issued its first evaluation report examining the SSBCI~~
~~program.67 After examining Treasury’s policy guidelines and the allocation agreement between~~
~~Treasury and participating states, the OIG made nine recommendations for improvements. For~~
~~example, the OIG recommended that Treasury improve the understanding of state oversight~~
~~responsibilities by more clearly defining what is meant by terms such as “supervision and~~
~~oversight and accountability” and by setting “minimum standards for participating state oversight~~
~~of SSBCI recipients, including defining a participating state’s role in overseeing compliance with~~
~~loan use requirements and restrictions.”68 The OIG also recommended that Treasury require~~
~~participating states to make a representation that it is aware of, monitoring, and enforcing~~

~~61 GAO,~~ ~~State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and~~
~~Evaluation, GAO-14-97, December 18, 2013, p. 9, at http://www.gao.gov/products/gao-14-97.~~
~~62 GAO,~~ ~~State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and~~
~~Evaluation, p. 13.~~
~~63 GAO,~~ ~~State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and~~
~~Evaluation, p. 16.~~
~~64 GAO,~~ ~~State Small Business Credit Initiative: Opportunities Exist to Enhance Performance Measurement and~~
~~Evaluation, p. 16.~~
~~65 GAO,~~ ~~Small Business Credit Programs: Treasury Continues to Enhance Performance Measurement and Evaluation~~
~~but Could Better Communicate and Update Results, GAO-15-105, December 11, 2014, p. 19, at http://www.gao.gov/~~
~~assets/670/667450.pdf.~~
~~66 GAO,~~ ~~Small Business Credit Programs: Treasury Continues to Enhance Performance Measurement and Evaluation~~
~~but Could Better Communicate and Update Results, p. 19.~~
~~67 U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State~~
~~Accountability for Use of Funds,” August 5, 2011, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/SBLF11002.pdf.~~
~~68 U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State~~
~~Accountability for Use of Funds,” p. 19.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~compliance with the policy guidelines and other restrictions applicable to the other participants~~
~~[lenders and borrowers] in the program.”69~~
~~Treasury took several immediate actions to address the OIG’s recommendations. For example, in~~
~~response to the OIG’s recommendation that Treasury more clearly define the terms “supervision~~
~~and oversight and accountability” and establish~~ minimum standards for participating state minimum standards for participating state
~~oversight of SSBCI recipients, Treasury revised the SSBCI FAQ document on its website “to~~
~~combine all applicable oversight requirements in one place” and “elaborate on the specific duty~~
~~that each provision imposes upon the participating state.”70 In addition, Treasury took into~~
~~consideration the OIG’s recommendations as it developed its “SSBCI National Standards for~~
~~Compliance and Oversight” document, which was released on May 15, 2012.71~~
~~Treasury’s Inspector General Use of SSBCI Funds Audit Reports~~
oversight of SSBCI recipients.50 On May 24, 2012, Treasury’s OIG released the first of a On May 24, 2012, Treasury’s OIG released the first of a ~~planned~~ series of audits of state use of series of audits of state use of
SSBCI funds, starting with California.SSBCI funds, starting with California.7251 Treasury’s OIG completed audits of 24 participants’ use Treasury’s OIG completed audits of 24 participants’ use
of SSBCI funds (California, Montana, Vermont, Michigan, Texas, Massachusetts, Delaware, New of SSBCI funds (California, Montana, Vermont, Michigan, Texas, Massachusetts, Delaware, New
Jersey, Alabama, Missouri, Washington, Kansas, Florida, West Virginia, Illinois, South Carolina, Jersey, Alabama, Missouri, Washington, Kansas, Florida, West Virginia, Illinois, South Carolina,
American Samoa, North Carolina, Idaho, Indiana, Tennessee, the North Dakota Mandan American Samoa, North Carolina, Idaho, Indiana, Tennessee, the North Dakota Mandan
consortium, Rhode Island, and New York).consortium, Rhode Island, and New York).7352 A summary of the OIG’s findings for each state A summary of the OIG’s findings for each state
follows, starting with California. follows, starting with California.
In each audit, the OIG reviewed a judgmental sample of small business loans or investments to In each audit, the OIG reviewed a judgmental sample of small business loans or investments to
“determine whether [the loans or investments] complied with program requirements for loan use, “determine whether [the loans or investments] complied with program requirements for loan use,
capital at risk, and other restrictions.”capital at risk, and other restrictions.”7453 Treasury was required to recoup any funds the OIG Treasury was required to recoup any funds the OIG
identified as intentionally or recklessly misused.identified as intentionally or recklessly misused.7554 Only Texas, New Jersey, West Virginia, and the Only Texas, New Jersey, West Virginia, and the
North Dakota Mandan consortium were found to be in full compliance with all SSBCI North Dakota Mandan consortium were found to be in full compliance with all SSBCI
requirements. requirements.
~~California~~
~~Treasury’s OIG determined that California had properly used the majority of the $3.6 million in~~
~~SSBCI loans it examined, but it identified $133,250 in loan loss reserves funded under~~
~~California’s Small Business Loan Guarantee Program that did not comply with SSBCI program~~

69These audits revealed that states generally did not intentionally or recklessly misuse SSBCI funds. Nonetheless, Treasury’s OIG found many instances where states did not fully comply with 48 U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ 2012 Annual Reports, September 25, 2013, at http://www.treasury.gov/resource-center/sb-programs/Documents/SSBCI%20Summary%20of%20States%202012%20Annual%20Reports%20FINAL.pdf. 49 U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State
Accountability for Use of Funds,” Accountability for Use of Funds,” ~~p. 20.~~
70August 5, 2011, at https://oig.treasury.gov/sites/oig/files/Audit_Reports_and_Testimonies/SBLF11002.pdf. 50 U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State U.S. Department of the Treasury, OIG, “State Small Business Credit Initiative: Treasury Needs to Strengthen State
Accountability for Use of Funds,” Accountability for Use of Funds,” ppp. 10, 20. 51~~. 10.~~
~~71 U.S. Department of the Treasury, “SSBCI National Standards for Compliance and Oversight,” May 15, 2012, at~~
~~http://www.treasury.gov/resource-center/sb-programs/Pages/ssbci.aspx.~~
72 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, Small Business Lending Fund: California Needs to Improve Its Oversight of
Programs Participating in the State Small Business Credit Initiative, May 24, 2012, at https://oig.treasury.gov/sites/oig/, May 24, 2012, at https://oig.treasury.gov/sites/oig/
files/Audit_Reports_and_Testimonies/OIG-SBLF-12-003.pdf. files/Audit_Reports_and_Testimonies/OIG-SBLF-12-003.pdf.
7352 U.S. Department of the Treasury, OIG, Small Business Lending Fund Program Oversight Office, U.S. Department of the Treasury, OIG, Small Business Lending Fund Program Oversight Office, Small Business
Lending Fund Program and State Small Business Credit Initiative Oversight Reports, at https://oig.treasury.gov/Office-, at https://oig.treasury.gov/Office-
of-Small-Business-Lending-Fund-Program-Oversight. of-Small-Business-Lending-Fund-Program-Oversight.
7453 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, Small Business Lending Fund: California Needs to Improve Its Oversight of
Programs Participating in the State Small Business Credit Initiative, p. 2. , p. 2.
7554 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, Small Business Lending Fund: California Needs to Improve Its Oversight of
Programs Participating in the State Small Business Credit Initiative, p. 1. , p. 1.
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State Small Business Credit Initiative: Implementation and Funding Issues

~~requirements.76 The OIG indicated that these noncompliant expenditures “constitute a ‘reckless’~~
~~misuse of funds as defined by Treasury guidance, which under the provisions of the Small~~
~~Business Jobs Act must be recouped.”77 The OIG also identified $160,988 in administrative~~
~~expenses charged to the SSBCI program that were “not adequately supported by actual expenses~~
~~incurred or with proper documentation to validate the costs claimed.”78 In addition, the OIG~~
~~reported that “42 or approximately 58 percent, of the 73 loans [OIG] tested lacked all of the~~
~~required borrower and lender assurances.”79~~
~~Treasury agreed to recoup from California the $133,250 in loan loss reserves identified by the~~
~~OIG as a reckless misuse of funds; required California to provide additional supporting~~
~~documentation for its SSBCI administrative expenses; and instructed California program officials~~
~~to address missing borrower and lender certifications and assurances. Treasury subsequently~~
~~noted that any loans still missing required assurances and certifications had been unenrolled and~~
~~that all other certification issues had been resolved.80~~
~~Montana~~
~~Treasury’s OIG found that Montana had misused $2.73 million of the $4.9 million in SSBCI~~
~~funds it examined because the funds were used for passive real estate investments and the~~
~~refinancing of prior debt, which “are prohibited under the Small Business Jobs Act or SSBCI~~
~~Policy Guidelines.”81 The OIG also found that $3,426 in personnel costs incurred for~~
~~administering SSBCI funds were not allowable or allocable because the costs were not properly~~
~~supported as required by OMB Circular A-87.82~~
~~The OIG “did not find the misuse of funds to be intentional or reckless as Montana sought~~
~~guidance from Treasury before enrolling the loans.”83 The OIG reported that Treasury officials~~
~~did not provide definitive guidance on the permissibility of passive real estate loans and informed~~
~~Montana that refinancing prior debt to the same lender was allowable if the prior debt had~~
~~matured and new underwriting had occurred. The OIG noted that Treasury attempted to clarify~~
~~the Small Business Job Act’s prohibition on the refinancing of prior debt by defining refinancing,~~
~~which is not defined in the act. The OIG challenged Treasury’s conclusion “that the statutory~~
~~prohibition on refinancing the same lenders’ loans pertained only to existing debt that had not yet~~
~~matured and that refinancing debt after it matures constitutes ‘refunding,’ a permitted use.”84 The~~

~~76 U.S. Department of the Treasury, OIG,~~ ~~Small Business Lending Fund: California Needs to Improve Its Oversight of~~
~~Programs Participating in the State Small Business Credit Initiative, p. 3.~~
~~77 U.S. Department of the Treasury, OIG,~~ ~~Small Business Lending Fund: California Needs to Improve Its Oversight of~~
~~Programs Participating in the State Small Business Credit Initiative, p. 3.~~
~~78 U.S. Department of the Treasury, OIG,~~ ~~Small Business Lending Fund: California Needs to Improve Its Oversight of~~
~~Programs Participating in the State Small Business Credit Initiative, p. 3.~~
~~79 U.S. Department of the Treasury, OIG,~~ ~~Small Business Lending Fund: California Needs to Improve Its Oversight of~~
~~Programs Participating in the State Small Business Credit Initiative, p. 3.~~
~~80 U.S. Department of the Treasury, OIG,~~ ~~Small Business Lending Fund: California Needs to Improve Its Oversight of~~
~~Programs Participating in the State Small Business Credit Initiative, pp. 13-14.~~
~~81 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, September 27, 2012, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF12006.pdf.~~
~~82 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, pp. 2, 6.~~
~~83 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, pp. 2, 9.~~
84 U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: Montana’s Use of Funds Received
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~~OIG noted that there were no references in the Small Business Jobs Act or in Treasury’s SSBCI~~
~~policy guidelines concerning “re-funding.”85~~
~~Treasury agreed to notify participating states that loans for passive real estate are considered a~~
~~misuse of funds and encourage them to review their loan enrollments to ensure compliance with~~
~~guidance that was in place at the time the loans were made.86 Treasury also agreed to “provide a~~
~~clear and rigorous analysis documenting how Treasury concluded that some refinancing of~~
~~existing debt from the same lender, or ‘re-funding,’ is consistent with the statutory language, or~~
~~amend the program procedural guidance to remove that possibility.”87 Treasury also found that~~
~~Montana was unable to provide the necessary documentation for the $3,426 in personnel costs~~
~~cited by the OIG in its review of the state’s SSBCI administrative expenses and that those costs~~
~~would be disallowed.88~~
~~Vermont~~
~~Treasury’s OIG examined 26 loans issued under Vermont’s four SSBCI programs and found that~~
~~Vermont’s interest rate subsidy program ($931,000 in SSBCI funding) did not comply with the~~
~~requirements established by its allocation agreement with Treasury.89 Because the state estimated~~
~~its interest rate subsidies, the OIG found that Vermont’s quarterly reports to Treasury “do not~~
~~reflect the State’s actual use of funds for the program” and, therefore, “the State cannot provide~~
~~Treasury with accurate information for measuring the leverage achieved with SSBCI funds.”90~~
~~The OIG recommended that Treasury require Vermont to provide a subaccounting of all funds~~
~~transferred in connection with the interest rate subsidy program as well as program income~~
~~generated from the use of such funds. In addition, the OIG recommended that Treasury determine~~
~~whether Vermont “is in general default of its Allocation Agreement due to its non-compliance~~
~~with accounting and lender/borrower assurance requirements, and whether future funding to the~~
~~State should be reduced, suspended, or terminated.”91 The OIG also found that $216,820 in~~
~~administrative expenses charged to the SSBCI program did not comply with program guidance.92~~
~~Treasury agreed to require Vermont to provide a subaccounting of all the funds transferred in~~
~~connection with the interest rate subsidy program as well as all program income generated from~~
~~the use of such funds.93 Treasury also agreed to determine whether “there has been a general~~

from the State Small Business Credit Initiative, p. 3.
~~85 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, p. 12.~~
~~86 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, p. 16.~~
~~87 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, p. 16.~~
~~88 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Montana’s Use of Funds Received~~
~~from the State Small Business Credit Initiative, p. 18.~~
~~89 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, November 30, 2012, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13001.pdf.~~
~~90 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, pp. 2-3.~~
~~91 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, pp. 3-4.~~
~~92 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, p. 3.~~
93 U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: Vermont’s Use of Federal Funds for
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~~event of default under Vermont’s Allocation Agreement resulting from the state’s noncompliance~~
~~with the grants management common rule or lender/borrower assurance requirements [and], if~~
~~such an event has occurred and has not been adequately cured, determine whether it warrants a~~
~~reduction, suspension, or termination of future funding to the State.”94 In addition, Treasury~~
~~agreed to disallow the $216,820 in administrative expenses charged to the SSBCI program by~~
~~Vermont unless the state provides supporting documentation in accordance with OMB Circular A-~~
~~87.95~~
~~Michigan~~
SSBCI rules and regulations, especially early in the program’s implementation. For example, Treasury’s OIG determined that California had properly used the majority of the $3.6 million in SSBCI loans examined, but it identified $133,250 in loan loss reserves funded under California’s Small Business Loan Guarantee Program that did not comply with SSBCI program requirements.55 The OIG indicated that these noncompliant expenditures “constitute a ‘reckless’ misuse of funds as defined by Treasury guidance, which under the provisions of the Small Business Jobs Act must be recouped.”56 The OIG also identified $160,988 in administrative expenses charged to the SSBCI program that were “not adequately supported by actual expenses incurred or with proper documentation to validate the costs claimed.”57 In addition, the OIG reported that “42 or approximately 58 percent, of the 73 loans [OIG] tested lacked all of the required borrower and lender assurances.”58 Similarly, Treasury’s OIG found that Michigan had used the majority of the $38.5 million in SSBCI loans it Treasury’s OIG found that Michigan had used the majority of the $38.5 million in SSBCI loans it
examined properly, but it identified “approximately $2.524 million in misuse, of which $2.5 examined properly, but it identified “approximately $2.524 million in misuse, of which $2.5
million was used to finance lender purchase transactions that did not involve extensions of million was used to finance lender purchase transactions that did not involve extensions of
additional credit to borrowers; $3,000 supported a partner buy-out, a prohibited use; and $21,000 additional credit to borrowers; $3,000 supported a partner buy-out, a prohibited use; and $21,000
was used to pay the CAP insurance premium on a loan closed and funded prior to Michigan’s was used to pay the CAP insurance premium on a loan closed and funded prior to Michigan’s
acceptance into the SSBCI program and Treasury’s allocation of funds to the State.”acceptance into the SSBCI program and Treasury’s allocation of funds to the State.”96 59 The OIG The OIG
determined determined ~~that~~ the $21,000 used to pay the CAP insurance premium was a “reckless” misuse of the $21,000 used to pay the CAP insurance premium was a “reckless” misuse of
funds that must be recouped. Although the OIG did not find the $2.5 million used to finance funds that must be recouped. Although the OIG did not find the $2.5 million used to finance
lender purchase transactions that did not involve extensions of additional credit to borrowers to be lender purchase transactions that did not involve extensions of additional credit to borrowers to be
a similarly reckless misuse of funds, it did question whether the purchase transactions were a similarly reckless misuse of funds, it did question whether the purchase transactions were
“consistent with the intent of the [Small Business Jobs] Act to help small businesses expand, “consistent with the intent of the [Small Business Jobs] Act to help small businesses expand,
grow, and create jobs.”grow, and create jobs.”9760 It recommended that Treasury develop guidance for such transactions. In It recommended that Treasury develop guidance for such transactions. In
addition, the OIG found $8,506 in administrative expenses charged to the SSBCI program that addition, the OIG found $8,506 in administrative expenses charged to the SSBCI program that
were incurred prior to the date Michigan was approved to participate in the program and notified were incurred prior to the date Michigan was approved to participate in the program and notified
of its SSBCI allocation. The OIG recommended that those expenses be disallowed.of its SSBCI allocation. The OIG recommended that those expenses be disallowed.9861
Treasury agreed to issue guidance to address the conditions under which loan purchase Treasury agreed to issue guidance to address the conditions under which loan purchase
transactions would be permitted.transactions would be permitted.9962 Treasury also agreed to recoup the $21,000 used to pay the Treasury also agreed to recoup the $21,000 used to pay the
CAP insurance premium on a loan closed and funded prior to Michigan’s acceptance into the CAP insurance premium on a loan closed and funded prior to Michigan’s acceptance into the
SSBCI program and Treasury’s allocation of funds to the state and to disallow the $8,506 in SSBCI program and Treasury’s allocation of funds to the state and to disallow the $8,506 in
~~administrative expenses that were incurred prior to the date Michigan was approved to participate~~
~~in the program and notified of its SSBCI allocation.100~~

Capital Access and Credit Support Programs, p. 15.
~~94 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, p. 15.~~
~~95 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Vermont’s Use of Federal Funds for~~
~~Capital Access and Credit Support Programs, p. 14.~~
~~96 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Michigan’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, December 13, 2012, pp. 2-3, at https://oig.treasury.gov/sites/oig/~~
~~files/Audit_Reports_and_Testimonies/OIGSBLF13002.pdf.~~
~~97 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Michigan’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 3.~~
~~98 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Michigan’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 3.~~
~~99 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Michigan’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 13.~~
~~100~~ 55 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, ~~State Small Business Credit Initiative: Michigan’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 15-16.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Texas~~
~~Treasury’s OIG examined five investments, totaling $6.3 million, financed by the Texas Small~~
~~Business Venture Capital Program and $105,000 of administrative costs that the state charged~~
~~against SSBCI funds. The OIG found the program in full compliance with all SSBCI~~
~~requirements. The OIG credited the state’s “success in ensuring full compliance with SSBCI~~
~~requirements” to Texas’s “use of a checklist to evaluate compliance with program requirements~~
~~prior to the completion of each transaction.”101~~
~~Massachusetts~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit~~
~~Massachusetts’s use of SSBCI funds. As of June 30, 2012, Massachusetts had obligated or spent~~
~~approximately $6.6 million of the SSBCI funds disbursed, including $4 million for the~~
~~Massachusetts Growth Capital Corporation (MGCC) loan participation program, $2.1 million for~~
~~the Massachusetts Business Development Corporation (MBDC) loan participation program, and~~
~~$211,000 for the Massachusetts Capital Access Program (MCAP). Massachusetts also incurred~~
~~approximately $321,000 in administrative costs.~~
~~The accounting firm reviewed the state’s administrative costs and a randomly selected sample of~~
~~35 state SSBCI transactions (3 loan participation loans and 32 capital access loans) to determine~~
~~their compliance with SSBCI requirements. The audit found that Massachusetts charged $200,000~~
~~in administrative costs to the SSBCI program that did not comply with program guidance and that~~
~~the state did not include in its quarterly reports to Treasury $51,248 of program income. The audit~~
~~also found that 34 of the 35 transactions were in compliance with program requirements. The~~
~~accounting firm noted that a transaction for $237,000 made by the MBDC loan participation~~
~~program appeared to be prohibited by SSBCI policy guidelines because it involved an SBA-~~
~~guaranteed loan. Massachusetts officials reportedly “believed that the loan in question was~~
~~compliant with program requirements because Treasury’s SSBCI Policy Guidelines prohibit the~~
~~enrollment of only the unguaranteed portions of federally-guaranteed loans. Therefore, they~~
reasonably believed the prohibition on credit enhancement did not pertain to the guaranteed
~~portion of federally-guaranteed loans.”102 In addition, the audit found that Massachusetts did not~~
~~obtain complete borrower and lender assurances for 89% of the loans reviewed by the time of~~
~~loan closing.103~~
~~The OIG recommended that Treasury “revise its program guidance to make the enrollment of~~
~~federally-guaranteed loans a clear prohibition, disallow $200,000 in administrative expenses~~
~~unless the Commonwealth can provide adequate support for such costs, and require the~~
~~Commonwealth to demonstrate that it has a compliant system for allocating administrative~~
~~costs.”104 The OIG also recommended that Treasury “determine whether there has been a general~~

~~101 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Texas’ Use of Federal Funds for~~
~~Other Credit Support Programs, January 29, 2013, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13003.pdf.~~
~~102 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Massachusetts’ Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, May 14, 2013, p. 7, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13007.pdf.~~
~~103 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Massachusetts’ Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, pp. 1-3.~~
~~104~~Small Business Lending Fund: California Needs to Improve Its Oversight of Programs Participating in the State Small Business Credit Initiative, p. 3. 56 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, ~~State Small Business Credit Initiative: Massachusetts’ Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 3.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~event of default of the Allocation Agreement resulting from Massachusetts’s non-compliance~~
~~with lender/borrower assurance requirements, materially inaccurate certifications, and failure to~~
~~report program income.”105~~
~~In response to the OIG’s recommendations, Treasury indicated it was in the process of revising its~~
~~program guidance on the enrollment of federally guaranteed loans. It also stated that it will~~
~~determine whether Massachusetts has adequately cured its noncompliance with program~~
~~requirements and whether additional action is warranted. Massachusetts clarified that although it~~
~~reported $200,000 in administrative expenses; it did not charge the SSBCI fund for these~~
~~expenses and does not intend to seek reimbursement from SSBCI for them. Massachusetts also~~
~~reported that many of the transactions examined during the audit “were made in the early stage of~~
~~the SSBCI program, before suggested reporting forms were promulgated by Treasury.”106~~
~~Delaware~~
~~Treasury’s OIG found that as of September 30, 2012, Delaware had obligated or spent~~
~~approximately $4.1 million of its first SSBCI disbursement of $4.3 million—$80,883 for 36 loans~~
~~enrolled in the Delaware Access Program and approximately $4 million for 14 loans enrolled in~~
~~the Delaware Strategic Fund (DSF) Loan Program. The OIG reviewed a random sample of 26~~
~~loans (19 from the Delaware Access Program and 7 from the DSF Loan Program) that were~~
~~enrolled as of September 30, 2012, to determine if they were in compliance with program~~
~~requirements.107~~
~~The OIG did not identify any instances of intentional or reckless misuse of funds. However, it did~~
~~find that although Delaware obtained most borrower and lender assurances at loan closing, these~~
~~assurances did not contain all required affirmations.108 Several assurances were also missing~~
~~signatures or dates. In addition, the OIG found that Treasury became aware of Delaware’s~~
~~noncompliance with the assurance requirements in May 2012, but it was not until October 2012~~
~~that Treasury directed Delaware’s officials to obtain the missing assurances for each loan. By~~
~~November 2012, Delaware had retroactively obtained these assurances.~~
~~The OIG recommended that Treasury “examine the reasons why appropriate and timely actions~~
~~were not taken to address Delaware’s compliance and certification issues, and take appropriate~~
~~actions to strengthen its compliance monitoring and enforcement of program requirements.”109 In~~
~~response to this recommendation, Treasury reported that it “is in the process of adjusting the~~
~~quarterly certification process to cover circumstances where a participating state has a known~~

~~105 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Massachusetts’ Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 3.~~
~~106 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Massachusetts’ Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 19.~~
~~107 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Delaware’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, March 29, 2013, p. 11, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13006.pdf.~~
~~108 Participating states must require the financial institution lender to obtain an assurance from each borrower stating~~
~~that the loan proceeds will not be used for an impermissible purpose under the SSBCI program. For example, the loan~~
~~proceeds must be used for an approved “business purpose” and they cannot be used to repay delinquent federal or state~~
~~income taxes, unless the borrower has a payment plan in place with the relevant taxing authority; repay taxes held in~~
~~trust or escrow; reimburse funds owed to any owner, including any equity injection or injection of capital for the~~
~~business’s continuance; or purchase any portion of the ownership interest of any owner of the business.~~
~~109 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Delaware’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 3.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~unresolved item of noncompliance.”110 Also, Delaware officials reported that they had~~
~~implemented “additional precautions, including random audits of SSBCI loans, to ensure~~
~~compliance with use of proceeds, capital-at-risk, and assurance requirements.”111~~
~~New Jersey~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit New~~
~~Jersey’s use of SSBCI funds.112 The accounting firm found that as of June 30, 2012, New Jersey~~
~~had spent about $2.9 million of its first SSBCI disbursement of $11.1 million—$1.76 million for~~
~~two loan participations, $675,000 for a credit guarantee, and $500,000 for a direct loan.113~~
~~The accounting firm reviewed all four transactions and determined that New Jersey complied~~
~~with all program requirements in administering the $2.9 million in SSBCI funds. The OIG~~
~~concluded that New Jersey’s “success in ensuring full compliance was attributable to several best~~
~~practices that the New Jersey Economic Development Authority [which administers New Jersey’s~~
~~SSBCI program] employed to enhance its program oversight,” including the use of an “SSBCI~~
~~Application Eligibility Criteria Checklist that listed each of the required SSBCI assurances and~~
~~specific SSBCI program requirements” and that had to be completed and signed prior to each~~
~~transaction.114~~
~~Alabama~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit~~
~~Alabama’s use of SSBCI funds. The accounting firm reviewed all 14 loans enrolled in Alabama’s~~
~~loan guarantee program, totaling approximately $3.8 million, made between the signing of the~~
~~SSBCI allocation agreement on August 24, 2011, and June 30, 2012. The accounting firm also~~
~~reviewed the $45,172 in administrative expenses Alabama charged against SSBCI funds during~~
~~that time period to ensure these expenses were allowable, reasonable, and allocable.~~
~~The audit found that Alabama complied with all program requirements in administering the $3.8~~
~~million of SSBCI funds used as of June 30, 2012. The OIG attributed “the state’s success in~~
~~ensuring full compliance” to the Alabama Department of Economic and Community Affairs’~~
~~requirement that a checklist containing SSBCI requirements be completed prior to each loan~~
~~enrollment to ensure the loan was in full compliance with SSBCI requirements.115 The audit also~~
~~found that Alabama had overstated the amount of SSBCI funds used by approximately $1 million~~
~~in its March 31, 2012, quarterly report and by approximately $4 million in its June 30, 2012,~~
~~quarterly report. The OIG indicated that the errors occurred because Alabama incorrectly included~~

~~110 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Delaware’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 4.~~
~~111 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Delaware’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 3-4.~~
~~112 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: New Jersey’s Use of Federal Funds~~
~~for Other Credit Support Programs, February 27, 2013, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13005.pdf.~~
~~113 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: New Jersey’s Use of Federal Funds~~
~~for Other Credit Support Programs, p. 4.~~
~~114~~Small Business Lending Fund: California Needs to Improve Its Oversight of Programs Participating in the State Small Business Credit Initiative, p. 3. 57 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, ~~State Small Business Credit Initiative: New Jersey’s Use of Federal Funds~~
~~for Other Credit Support Programs, p. 8.~~
~~115 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Alabama’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, June 4, 2013, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13008.pdf.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~private-lender contributions to loan loss reserves for loans guaranteed with SSBCI funds.~~
~~However, because Treasury identified and corrected the inaccuracies prior to the audit, the OIG~~
~~made no recommendations concerning the errors.116~~
~~Missouri~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit~~
~~Missouri’s use of SSBCI funds. The accounting firm reviewed all 17 SSBCI transactions between~~
~~the signing of the SSBCI allocation agreement on May 23, 2011, and March 31, 2012. These~~
~~transactions included 16 investments, totaling $6.6 million, by the Missouri Innovation,~~
~~Development, and Entrepreneurship Advancement (IDEA) Fund and one loan, totaling $511,135,~~
~~by the Grow Missouri Loan Fund. The accounting firm also reviewed the $151,568 in~~
~~administrative expenses Missouri charged against SSBCI funds during that time period to ensure~~
~~these expenses were allowable, reasonable, and allocable. Because the audit of the IDEA Fund~~
~~revealed a prohibited party relationship, the audit’s scope was expanded to include seven~~
~~additional IDEA Fund transactions made between April 1, 2012, and September 30, 2012, “to~~
~~determine whether additional prohibited party relationships existed.”117~~
~~The OIG found that Missouri “properly used over 96% of the $7.3 million in SSBCI funds~~
~~expended, and that all related administrative costs were compliant with program requirements.”118~~
~~However, the audit revealed that a $240,000 venture capital investment made by the IDEA Fund~~
~~“constituted a reckless misuse of funds, as defined by Treasury” because a director of the board~~
~~that approved the investment “had a prohibited party relationship with the company that received~~
~~the investment based on the director’s controlling interest in the investee.”119 The director had~~
~~recused herself from the vote approving the investment. The OIG noted that the board should~~
~~have known that prohibited party relationships are not allowed because the SSBCI policy~~
~~guidelines “require every borrower and investee receiving funds to certify that such a relationship~~
~~did not exist.”120 The OIG recommended that Treasury recoup the $240,000 investment. Missouri~~
~~disagreed with the OIG’s finding that it “recklessly misused funds,” arguing that the board was in~~
~~compliance with its own conflict-of-interest policy and that the relationship with the “potentially~~
~~interested director” was “disclosed repeatedly in the application materials which were provided to~~
~~the Board” and that the investment “was made on the merits through a rigorous and independent~~
~~process.”121 Nonetheless, Missouri took measures “to remedy the situation and prevent similar~~
~~issues in the future.”122 For example, the board administering the IDEA Fund “replenished the~~
~~SSBCI program account in the amount of the misused funds and unenrolled the transaction,”~~

~~116 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Alabama’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 1-2.~~
~~117 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, July 24, 2013, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF13009.pdf.~~
~~118 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 3.~~
~~119 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 3.~~
~~120 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 3.~~
~~121~~Small Business Lending Fund: California Needs to Improve Its Oversight of Programs Participating in the State Small Business Credit Initiative, p. 3. 58 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 26.~~
~~122 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 22.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~amended its conflict-of-interest policy to comply with the SSBCI guidelines on conflicts of~~
~~interest, and created a checklist to ensure that each transaction supported by SSBCI funds is in~~
~~compliance with the SSBCI guidelines on conflicts of interest.123~~
~~Treasury agreed to recoup the $240,000 from Missouri. Treasury also agreed to “determine~~
~~whether Missouri has adequately cured its noncompliance with the related party prohibition,~~
~~requirements for assurances, and certification filings” and if further action is warranted.124~~
~~Washington~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit~~
~~Washington’s use of SSBCI funds. The accounting firm reviewed all of the state’s $5.3 million in~~
~~SSBCI loans issued by Washington’s Enterprise Cascadia Loan Participation Program and all of~~
~~the $1.7 million in investments issued by the state’s W Fund Venture Capital Program between~~
~~the signing of the SSBCI allocation agreement on October 31, 2011, and June 30, 2012. The~~
~~accounting firm also reviewed the $92,291 in administrative expenses Washington charged~~
~~against SSBCI funds during that time period to ensure these expenses were allowable, reasonable,~~
~~and allocable.125~~
~~The audit determined that all $7.1 million in loans and venture capital investments “complied~~
~~with SSBCI program requirements and restrictions, and that borrower and lender assurances were~~
~~complete and timely.”126 However, the audit found that the $92,291 in administrative expenses~~
~~reported to Treasury “was overstated by $5,779 as a result of an accounting change [comprised of~~
~~payroll costs for administration of the SSBCI program that were incurred during the reporting~~
~~period, but subsequently transferred to an alternative funding source] that was not reflected in the~~
~~state’s SSBCI Quarterly Report.”127 When the auditors brought the overstatement to their~~
~~attention, Washington officials notified Treasury of the need to adjust their SSBCI Quarterly~~
~~Report to reflect the cost transfer. Treasury “advised Washington that it would authorize the~~
~~adjustment upon completion of the OIG’s audit.”128~~
~~Kansas~~
~~Treasury’s OIG contracted with an independent certified public accounting firm to audit Kansas’s~~
~~use of SSBCI funds. The accounting firm reviewed all of the state’s $1.53 million in SSBCI loans~~
~~issued by the Kansas Capital Multiplier Loan Fund and the $696,950 in investments issued by the~~
~~Kansas Capital Multiplier Venture Fund between the signing of the SSBCI allocation agreement~~
~~on June 28, 2011, and March 31, 2012. The accounting firm also reviewed the $14,585 in~~

~~123 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 22.~~
~~124 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Missouri’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 22.~~
~~125 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Washington’s Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, August 15, 2013, pp. 1, 2, at https://oig.treasury.gov/sites/oig/~~
~~files/Audit_Reports_and_Testimonies/OIG-SBLF-13-011.pdf.~~
~~126 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Washington’s Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 2.~~
~~127 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Washington’s Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 2.~~
~~128 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Washington’s Use of Federal Funds~~
~~for Capital Access and Other Credit Support Programs, p. 7.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~administrative expenses Kansas charged against SSBCI funds during that time period to ensure~~
~~these expenses were allowable, reasonable, and allocable.~~
~~The audit found that Kansas “appropriately used most of the SSBCI funds it had expended” but~~
~~questioned three $250,000 loans that were issued to affiliated entities as part of a $31 million~~
~~aggregate financial arrangement.129 The OIG noted that there is a $20 million cap on SSBCI loans~~
~~made under other credit support programs (OCSPs) and that Treasury’s guidance “does not~~
~~address how the cap should be applied when funds are used to make companion loans comprising~~
~~a larger financial package or where multiple loans are made to affiliated entities.”130 The OIG~~
~~recommended that Treasury clarify the requirement that SSBCI funds not be used to support loans~~
~~that exceed a principal amount of $20 million. Treasury agreed to revise the SSBCI policy~~
~~guidelines to clarify the requirement.131~~
~~The audit also found that Kansas inaccurately reported in its March 31, 2012, SSBCI quarterly~~
~~report a $173,822 advance for administrative costs issued to NetWork Kansas (a nonprofit entity~~
~~that, among other activities, administers the Kansas Capital Multiplier Loan Fund and the Kansas~~
~~Capital Multiplier Venture Fund) as a loan and that $29,247 of that advance was not subsequently~~
~~reported as administrative expenses in the state’s June 30, 2012, SSBCI quarterly report because~~
~~those spent funds were previously incorrectly reported as a loan.132 In addition, the audit found~~
~~that $13,181 of the $29,247 should be disallowed by Treasury because the funds were used to pay~~
~~audit and tax consulting costs that were not properly allocated through a cost allocation plan or an~~
~~indirect cost proposal as required by OMB Circular A-87.133 Treasury agreed to work with Kansas~~
~~“to correct its quarterly statements, remove the $13,181 in disallowed audit and tax consulting~~
~~costs from the State’s quarterly reports, and review Kansas’ cost allocation plan for administrative~~
~~costs.”134~~

~~129 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, September 5, 2013, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIG-SBLF-13-013.pdf.~~
~~130 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, p. 2.~~
~~131 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, p. 18. Kansas officials explained that the three loans in question were “made to~~
~~separate legal entities which were operated as separate businesses at separate locations, but who sold product to a~~
~~common buyer [and] not contrived to avoid the $20 million cap on loans.” Officials also explained that “while the~~
~~similarity in names and inadvertent language in the applications make the independence of the loans more difficult to~~
~~ascertain, review of the facts shows SSBCI loan support was not to a single loan in excess of $20 million. Rather,~~
~~SSBCI funds were used to support separate loans to separate businesses.” See U.S. Department of the Treasury, OIG,~~
State Small Business Credit Initiative: Kansas’ Use of Federal Funds for Other Credit Support Programs, p. 20.
~~132 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, pp. 3, 12, 13.~~
~~133 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, p. 13.~~
~~134 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for~~
~~Other Credit Support Programs, p. 19. Treasury also agreed to inform Kansas “that the State is required to obtain~~
~~lender assurances from relevant companion lenders in future transactions, but agrees with Kansas that retroactively~~
~~collecting companion lender assurances [as was recommended by the OIG] is impractical and unnecessary.” See U.S.~~
~~Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Kansas’ Use of Federal Funds for Other~~
~~Credit Support Programs, p. 18. Treasury agreed to clarify the “SSBCI National Standards for Compliance and~~
~~Oversight” document to specify which companion lenders must submit assurances.~~
~~Congressional Research Service~~

28

~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Florida~~
~~Treasury’s OIG reviewed all 7 SSBCI venture capital investments, totaling $37 million, issued by~~
~~the Florida Venture Capital Program and all 17 SSBCI loans, totaling approximately $14.6~~
~~million, issued by the Florida Loan Participation Program (11 loans, totaling $9.75 million);~~
~~Florida Direct Loans Program (1 loan, totaling $3.5 million); Florida Loan Guarantee Program (3~~
~~loans, totaling $1.37 million); and Florida Capital Access Program (2 loans, totaling $780 for~~
~~portfolio insurance) between the signing of the SSBCI allocation agreement on August 24, 2011,~~
~~and December 31, 2012.135 The OIG also reviewed the $378,634 in administrative expenses~~
~~Florida charged against SSBCI funds during that time period to ensure these expenses were~~
~~allowable, reasonable, and allocable.~~
~~The OIG found that Florida “properly used the majority (92%) of the SSBCI funds it expended”~~
~~and that “23 of the 24 transactions ... sampled were compliant with program guidelines related to~~
~~prohibited relationships, maximum transaction amounts, use-of-proceeds, capital-at-risk, and~~
~~other restrictions noted in the [Small Business Jobs] Act and SSBCI Guidelines.”136 The~~
~~questionable transaction involved the use of $4 million in SSBCI funds in a $34.7 million~~
~~investment “that involved multiple equity instruments, which ... exceeded the $20 million~~
~~restriction in the [Small Business Jobs] Act intended [to] be placed on the amount of credit~~
~~support that may be extended to a recipient.”137 The OIG concluded that “although two equity~~
~~instruments were involved [$4 million from the SSBCI and $30.7 million from private capital],~~
~~the transaction constituted one investment package because if the business were to fail, both~~
~~equity instruments would be affected.”138 The OIG recommended that Treasury “revise the SSBCI~~
~~Policy Guidelines to clarify how the $20 million restriction on credit support should be applied~~
~~when an investment involves multiple equity instruments.”139 Treasury agreed to revise the~~
~~program’s guidance concerning the $20 million credit support restriction.140~~
~~The OIG also found that Florida had overstated its administrative expenses by approximately~~
~~$55,000. Florida officials indicated that the overstatement “occurred because of incorrect~~
~~selection criteria used to pull administrative cost information from the state accounting system”~~
~~following the merger of several state agencies. Florida officials informed Treasury of the error~~
~~and made adjustments to the state’s administrative expenses to account for the error in their~~
~~March 31, 2013, SSBCI quarterly report.141~~
~~In addition, the OIG found that Florida had “overstated by approximately $23 million the amount~~
~~of SSBCI funds that had been obligated because it included FLVCP [Florida Venture Capital~~

~~135 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, November 15, 2013, pp. 1, 13, at https://oig.treasury.gov/sites/oig/~~
~~files/Audit_Reports_and_Testimonies/OIGSBLF14002R.pdf.~~
~~136 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 7.~~
~~137 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 7.~~
~~138 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 7, 8.~~
~~139 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 11.~~
~~140 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 12, 15.~~
~~141 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 9.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Program] reserves that were set aside for future follow-on investments to existing investees.”142~~
~~Florida officials asserted that their reporting of these funds was in compliance with the definitions~~
~~provided in the SSBCI policy guidelines and FAQ documents at the time that the funds were~~
~~reported.143 However, state officials also noted that Treasury had informed them in February 2013~~
~~that Florida’s “reserve commitment letters did not meet Treasury’s criteria for designation as~~
~~obligated funds” and that the state had submitted an updated disbursement request with its second~~
~~tranche of funding, which was received in June 2013.144 Subsequently, “Florida adjusted its~~
~~quarterly statements for June 30, 2012, September 30, 2012, and December 31, 2012, to exclude~~
~~amounts shown as obligated pursuit to the FLVCP reserve commitment letters.”145 Treasury also~~
~~agreed to determine whether Florida has adequately addressed its reporting of obligated funds and~~
~~whether additional action is warranted.146~~
~~West Virginia~~
~~Treasury’s OIG reviewed a random sample of 28 SSBCI loans and investments, totaling~~
~~approximately $9.5 million, made by West Virginia’s four SSBCI programs (13 from the Seed~~
~~Capital Co-Investment Fund, 11 from the West Virginia Collateral Support Program, 3 from the~~
~~Subordinated Debt Program, and 1 from the West Virginia Loan Guarantee Program) issued~~
~~between the signing of the allocation agreement on November 18, 2011, and June 30, 2013. The~~
~~OIG also examined a sample ($170,533) of West Virginia’s $181,784 in SSBCI administrative~~
~~costs. The program was found to be in full compliance with all SSBCI requirements.147~~
~~Illinois~~
~~Treasury’s OIG examined a random sample of 48 SSBCI loans and investments, totaling $34.5~~
~~million, issued by five SSBCI programs in Illinois (35 from the Illinois Participation Loan~~
~~Program, 8 from the Invest Illinois Venture Fund, 3 from the Illinois Capital Access Program, 1~~
~~from the Collateral Support Program, and 1 from the Conditional Direct Loan Program) between~~
~~the signing of the allocation agreement on July 26, 2011, and March 31, 2013. The OIG also~~
~~examined a sample ($589,882) of the state’s $1.03 million in SSBCI administrative costs and~~
~~found the sampled administrative expenses to be in full compliance with SSBCI requirements.148~~
~~The OIG found that “Illinois appropriately used most of the $34.5 million in SSBCI funds it had~~
~~expended as of March 31, 2013, but spent $105,000 to participate in a loan that was used to~~

~~142 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 4.~~
~~143 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 19.~~
~~144 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 19.~~
~~145 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 20.~~
~~146 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Florida’s Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 15.~~
~~147 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: West Virginia’s Use of Federal Funds~~
~~for Other Credit Support Programs, March 19, 2014, pp. 1-2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF14004R.pdf.~~
~~148 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Illinois’ Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, March 26, 2014, p. 17, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIG-SBLF-14-005R%20%28for%20web%29.pdf.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~purchase the stock of a company representing its entire ownership interest, which is prohibited by~~
~~the SSBCI Policy Guidelines.”149 The OIG also identified 22 other transactions “that did not fully~~
~~comply with lender sex offender certification requirements” and found that “Illinois neglected to~~
~~execute lender certifications on the State’s behalf as prescribed in the National Standards” for~~
~~direct loans and state-run venture capital investments.150 Also, the OIG determined that Illinois~~
~~unintentionally overstated, in the state’s 2012 annual report, the amount of private financing~~
~~associated with a loan in which the state participated by $4.7 million. This occurred because the~~
~~financing structure of the transaction was changed without the state’s knowledge.151~~
~~Treasury informed the OIG that it will recoup from Illinois the $105,000 expenditure identified~~
~~by the OIG as being prohibited, require Illinois to modify any master agreements with lenders~~
~~that do not include required language mandating that lenders notify the state of changes in the~~
~~sex-offender status of their principals, and require Illinois to provide lender certifications when it~~
~~is acting as a direct lender under the SSBCI program. Treasury also indicated that it will work~~
~~with Illinois to adjust the $4.7 million overstatement in the state’s 2012 annual report and~~
~~determine whether a general default has occurred as a result of the OIG findings.152~~
~~South Carolina~~
~~Treasury’s OIG examined a random sample of 38 SSBCI loans issued by South Carolina’s two~~
~~SSBCI programs (10 from the South Carolina Capital Access Program and 28 from the South~~
~~Carolina Loan Participation Program), totaling $11.4 million, between the signing of the~~
~~allocation agreement on July 6, 2011, and June 30, 2013. The OIG also examined South~~
~~Carolina’s $136,449 in SSBCI administrative costs.153~~
~~The OIG found that South Carolina appropriately used most of its SSBCI funds “but misused~~
~~$427,500 to participate in a loan that was used to finance the building of a new church sanctuary~~
~~and make renovations to the existing sanctuary, which is prohibited by the SSBCI Policy~~
~~Guidelines.”154 The OIG noted, however, that although South Carolina misused those funds, the~~
~~misuse was “not reckless or intentional because SSBCI Policy Guidelines do not explicitly~~
~~prohibit the use of SSBCI funds for non-secular purposes.”155 The OIG also identified eight other~~
~~transactions “that did not comply with the National Standards because the State did not verify that~~
~~the borrower and lender assurances were complete and duly executed prior to the transfer of~~

~~149 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Illinois’ Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 2-3.~~
~~150 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Illinois’ Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, p. 3.~~
~~151 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Illinois’ Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 12-13.~~
~~152 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Illinois’ Use of Federal Funds for~~
~~Capital Access and Other Credit Support Programs, pp. 19-20.~~
~~153 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: South Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, March 26, 2014, p. 12~~Small Business Lending Fund: California Needs to Improve Its Oversight of Programs Participating in the State Small Business Credit Initiative, p. 3. 59 U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: Michigan’s Use of Federal Funds for Capital Access and Other Credit Support Programs, December 13, 2012, pp. 2-3, at https://oig.treasury.gov/sites/, at https://oig.treasury.gov/sites/
oig/files/Audit_Reports_and_Testimonies/oig/files/Audit_Reports_and_Testimonies/~~OIG-SBLF-14-006~~OIGSBLF13002.pdf. .pdf.
~~154~~60 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: ~~South Carolina~~Michigan’s Use of Federal
~~Funds for Capital Access and Other Credit Support Programs, pp. 2-3.~~
~~155 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: South Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, p. 3.~~
~~Congressional Research Service~~

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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~SSBCI funds.”156 South Carolina’s administrative charges were found to be in full compliance~~
~~with all SSBCI requirements.~~
~~Treasury informed the OIG that it will publish guidance to clarify that using SSBCI funds to~~
~~support transactions with a nonsecular identity is not a permitted business purpose and determine~~
~~whether a general event of default has occurred as a result of South Carolina’s not fully~~
~~complying with borrower and lender assurance requirements.157 South Carolina informed~~
~~Treasury that it had added an additional line item to its internal control compliance checklist to~~
~~ensure that all borrower and lender assurance requirements are signed and dated prior to the~~
~~transfer of SSBCI funds.158~~
~~American Samoa~~
~~American Samoa was awarded $10.5 million in SSBCI funds on January 12, 2012, and received~~
~~its first disbursement of $3.465 million later that month. Treasury’s OIG found that American~~
~~Samoa had not obligated or spent any SSBCI funds for credit support as of September 30, 2013.~~
~~As a result, the OIG’s audit focused on whether American Samoa’s $50,307 in SSBCI~~
~~administrative costs was “reasonable, whether the territory was fully positioned to extend credit,~~
~~and whether the territory was in compliance with the program’s reporting and certification~~
~~requirements.”159~~
~~The OIG “identified $49,155 in unsupported personnel and travel expenses that should be~~
~~disallowed,” and found that “American Samoa has not provided Treasury with records that would~~
~~allow the Department to determine whether the Territory is ‘fully positioned’ to provide credit~~
~~support to small businesses, as required by its Allocation Agreement.”160 The OIG also found that~~
~~American Samoa “did not obtain Treasury’s prior approval for three changes to the entity~~
~~designated to administer the SSBCI funds; did not submit two of its quarterly reports or its 2012~~
~~annual report to Treasury on time, causing Treasury to declare a general event of default of~~
~~American Samoa’s Allocation Agreement; and incorrectly certified the accuracy of two quarterly~~
~~reports to Treasury and did not certify the accuracy of three other quarterly reports.”161 Based on~~
~~its findings, the OIG recommended that Treasury disallow the $49,155 in unsupported~~
~~administrative expenses, “determine whether a reduction, suspension, or termination of future~~
~~funding to the Territory is warranted,” and, if funding is not terminated, “require that the Territory~~
~~first comply with the terms of its Allocation Agreement, and approve the agreement~~
~~modifications, before disbursing additional funds.”162~~

~~156~~Funds for Capital Access and Other Credit Support Programs, p. 3. 61 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: ~~South Carolina~~Michigan’s Use of Federal
Funds for Capital Access and Other Credit Support Programs, p. 3. , p. 3.
~~157 I~~62 U.S. Department of the Treasury, OIG, U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: ~~South Carolina~~Michigan’s Use of Federal
Funds for Capital Access and Other Credit Support Programs, p. 13. Congressional Research Service 16 State Small Business Credit Initiative: Implementation and Funding Issues administrative expenses that were incurred prior to the date Michigan was approved to participate in the program and notified of its SSBCI allocation.63 Most of the issues raised by the Treasury OIG’s state audits became lessons learned for SSBCI participants. SSBCI advocates might point to the state’s previous SSBCI experiences as an indication that there will be fewer implementation problems during round two than there were in round one. Nevertheless, these previous audits reveal that programs with multiple actors (federal and state officials, hundreds of lenders and venture capital companies, and thousands of small businesses) are likely to encounter implementation issues even under the best of circumstances. Concluding Observations The original SSBCI was enacted as part of a larger effort to enhance the supply of capital to small businesses. Advocates argued that the SSBCI would help to address the then-recent decline in small business lending and create jobs. Opponents were not convinced it would enhance small business lending and worried about the program’s potential cost to the federal treasury. It is difficult to determine the full extent of the program’s effect on small business lending. As mentioned, as of December 31, 2016, states had spent or obligated about 88% of the $1.45 billion available ($1.27 billion of $1.45 billion), which is sufficient to provide some insight. For example, as mentioned, Treasury reported that SSBCI funds supported more than 21,000 loans and investments in small business amounting to over $10.7 billion, with more than 80% of the funds and investments made to small businesses with 10 or fewer full-time employees. Treasury also reported that small businesses indicated that SSBCI funds helped them to create or retain 240,669 jobs (79,193 new jobs and 161,476 retained jobs).64 But, as Treasury also noted, determining the SSBCI’s influence on small business lending is likely to be more suggestive than definitive because differentiating the SSBCI’s effect on small business lending from other, exogenous factors, such as changes in the lender’s local economy and changes in the demand for small business loans, is methodologically challenging, especially given the relatively small amount of financing involved relative to the national market for small business loans.65 As mentioned, the SSBCI’s $1.5 billion in financing at that time represented about 0.24% of outstanding nonagricultural small business loans. Treasury’s OIG’s audits of 24 states’ implementation of their SSBCI programs suggest that many states experienced difficulty reaching full compliance with the program’s administrative requirements, which were designed to reduce the likelihood of loan defaults, investment losses, and fraudulent use of funds. That should be less of an issue during round two, because states now have ~~Capital Access and Other Credit Support Programs, pp. 13-14.~~
~~158 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: South Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, p. 16.~~
~~159 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, March 26, 2014, p. 1, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIG-SBLF-14-007.pdf.~~
~~160 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 2.~~
~~161 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, pp. 2-3.~~
~~162 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 13.~~
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~~State Small Business Credit Initiative: Implementation and Funding Issues~~

~~Treasury informed the OIG that it will disallow the $49,155 in unsupported administrative costs,~~
~~determine whether American Samoa has again defaulted on its allocation agreement, and~~
~~determine what form of remedy may be appropriate.163 Treasury also indicated that if American~~
~~Samoa’s funding is not terminated, Treasury “will not disburse additional funds before requiring~~
~~that the Territory first comply with the terms of the Allocation Agreement.”164~~
~~Officials with American Samoa’s Department of Commerce agreed with the recommendation to~~
~~disallow the questioned SSBCI administrative expenses, which, they noted, were made by a~~
~~previous American Samoa administration. However, they also noted that they were “somewhat~~
~~taken aback with the harshness and severity of the positions taken” in the OIG’s audit.165 They~~
~~pointed out that the OIG report did not reflect the “significant organizational issues facing the~~
~~Governor which necessitated his decision with respect to the location and management of this~~
~~vital program” and that “to the best of [their] knowledge Treasury SSBCI supported the decision~~
~~made by the Governor.”166 They also noted that since the audit they had filed with Treasury all~~
~~missing quarterly and annual reports, hired consultants to design and implement a compliance~~
~~program for American Samoa’s SSBCI program, and sent, in February 2014, a modified~~
~~allocation agreement for Treasury’s review. They requested that Treasury approve the program~~
~~modification changes this modified agreement requested and maintained that American Samoa’s~~
~~SSBCI program now “complies with all Treasury regulations and guidance and is fully positioned~~
~~to provide small businesses with credit assistance.”167~~
~~North Carolina~~
~~Treasury’s OIG examined a random sample of 45 SSBCI loans issued by North Carolina’s three~~
~~SSBCI programs (31 were from the North Carolina Capital Access Program, 9 were from the~~
~~North Carolina Loan Participation Program, and 5 were from the North Carolina Venture Capital~~
~~Fund-of-Funds Program), totaling $4.9 million, between the signing of the allocation agreement~~
~~on May 23, 2011, and December 31, 2012. The OIG also reviewed 46 of the state’s SSBCI~~
~~administrative cost transactions, totaling $720,257.168~~
~~The OIG found that North Carolina appropriately used most of its SSBCI funds “but [due to~~
~~misrepresentations by a lender] contributed $6,690 to a reserve fund under the Capital Access~~
~~Program for a loan that refinanced one previously made to the borrower by the same lender.”169~~
~~The OIG noted that “such refinancings are prohibited by the [Small Business Jobs] Act and~~

~~163 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 17.~~
~~164 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 17.~~
~~165 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 19.~~
~~166 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, p. 19.~~
~~167 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: American Samoa’s Administrative~~
~~Expenses and Reporting, pp. 14, 19-24.~~
~~168 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, March 27, 2014, pp. 1-2, 16, at https://oig.treasury.gov/~~
~~sites/oig/files/Audit_Reports_and_Testimonies/OIGSBLF14009.pdf.~~
~~169 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, pp. 3, 8-9.~~
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~~constitute a misuse of funds” but not an intentional or reckless misuse of funds due to the lender’s~~
~~misrepresentations.170~~
~~The OIG also found that North Carolina did not obtain fully compliant lender sex-offender~~
~~assurances for 19 (or 42%) of the 45 transactions tested, as required.171 The OIG noted that North~~
~~Carolina chose to rely on annual lender certifications of compliance with this requirement, which~~
~~is permitted, but it neglected to require lenders to notify the state should an event occur that~~
~~rendered the certifications obsolete.~~
~~In addition, North Carolina “inaccurately reported to Treasury the total amount of an enrolled~~
~~investment on three separate occasions because it misreported the private investor’s contribution~~
~~to the investment” and “reported $10.3 million in capital commitments with SSBCI funds to four~~
~~angel investment funds as obligated funds even though only $2.9 million had been pledged to~~
~~investees.”172 The OIG expressed concern that “while obligating funds on a multi-year basis~~
~~generally is an accepted practice,” using capital commitments to angel investment funds with~~
~~multiyear investment horizons “to measure performance and qualifying a state for additional~~
~~transfers of SSBCI funds is inappropriate and does not meet the intent of the Small Business Jobs~~
~~Act.”173 The OIG found that all 46 administrative cost transactions it reviewed were in full~~
~~compliance with SSBCI guidelines.174~~
~~The OIG recommended that Treasury (1) verify, as North Carolina had reported, that $6,690 in~~
~~SSBCI funds has been withdrawn from the prohibited loan and that the SSBCI account has been~~
~~reimbursed for the same amount; (2) determine whether there has been a general event of default~~
~~under North Carolina’s allocation agreement resulting from the state’s failure to fully comply~~
~~with the lender assurance requirements and for inaccurate reporting of venture capital investment~~
~~amounts; (3) revise the definition of funds obligated for venture capital programs to include only~~
~~funds that have been designated for specific investees; (4) require participants to distinguish in~~
~~their quarterly reports the venture capital funds previously reported as obligated to specific~~
~~investees from that obligated to angel funds but not yet disbursed to investees; and (5) adopt a~~
~~standard definition of funds used for all program-reporting purposes instead of defining~~ ~~funds~~
~~used~~ ~~differently for different purposes.175~~
~~Treasury informed the OIG that it will (1) verify that North Carolina has withdrawn SSBCI funds~~
~~from the prohibited loan and replenished the SSBCI account; (2) determine whether a general~~
~~event of default has occurred; (3) change its disbursement procedures to confirm prior to making~~
~~a disbursement that states are not holding excess idle cash that is not likely to be expended,~~
~~obligated, or transferred to small businesses within a reasonable time period; (4) explain in the~~
~~summary quarterly reports that funds “expended, obligated, or transferred” include obligations to~~

~~170 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, pp. 3, 8-9.~~
~~171 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, pp. 10-11.~~
~~172 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, pp. 3-4.~~
~~173 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, p. 14.~~
~~174 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, p. 16.~~
~~175 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, p. 17.~~
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~~venture capital funds not yet linked to specific small business investments; and (5) make every~~
~~effort to follow the definition of funds used in the SSBCI policy guidelines.176~~
~~Idaho~~
~~Treasury’s OIG examined a random sample of 30 SSBCI loans enrolled in the Idaho Collateral~~
~~Support Program (ICSP), totaling $50.3 million, for which Idaho provided $7.6 million in~~
~~collateral and 12 loans committed for enrollment into the ICSP, totaling $10.8 million, for which~~
~~Idaho had reserved $2 million in collateral as of September 30, 2013. Treasury had previously~~
~~reviewed Idaho’s administrative expenses from January 2012 to September 2012 and had reduced~~
~~Idaho’s final allotment by $31,806 for expenses that were not adequately supported in accordance~~
~~with OMB Circular A-87. Subsequent to that review, Idaho had reported an additional $272,744~~
~~in administrative expenses as of September 30, 2013. The OIG reviewed these additional~~
~~administrative expenses for compliance with SSBCI guidelines.177~~
~~The OIG found that Idaho appropriately used the $9.6 million in collateral support that was~~
~~reviewed but “mistakenly overstated by $111,923 the total principal for 3 of [the] 42 loans ...~~
~~reviewed because the amounts reported were not based on the final loan documents.”178 The OIG~~
~~also noted that Idaho “inaccurately reported $781,000 as Treasury-approved subsequent private~~
~~financing,” but Treasury acknowledged the mistake “was due to inconsistent guidance to the~~
~~State.”179~~
~~Idaho was provided a copy of the OIG’s audit prior to its deadline for submitting its 2013 SSBCI~~
~~annual report to Treasury. As a result, the state was able to correct its report prior to submitting it~~
~~to Treasury to account for two of the three loan principal amounts that were overstated. The state~~
~~also indicated that it had implemented new controls in February 2014 that “require a copy of the~~
~~Bank’s promissory note to verify the actual/final loan origination amount prior to funding the~~
~~collateral support account on the enrolled loan” to ensure the amount reported is the actual~~
~~amount of the executed loan.180 In addition, Idaho noted that it “will work with Treasury to rectify~~
~~the erroneous inclusion of subsequent private financing and incorrect loan origination amounts in~~
~~their 2012 report.”181 Treasury informed the OIG that it would work with Idaho to resolve the~~
~~issues identified in the audit.182~~

~~176 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Carolina’s Use of Federal~~
~~Funds for Capital Access and Other Credit Support Programs, pp. 18, 22-23.~~
~~177 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, May 19, 2014, pp. 2, 10, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF14010R.pdf.~~
~~178 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, p. 3.~~
~~179 I U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, p. 3.~~
~~180 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, pp. 16-17.~~
~~181 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, p. 14.~~
~~182 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Idaho’s Use of Federal Funds for its~~
~~Collateral Support Program, p. 14.~~
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~~Idaho’s $272,744 in administrative expenses reported since Treasury’s earlier audit were found to~~
~~be in full compliance with SSBCI guidelines.183~~
~~Indiana~~
~~At the request of Treasury SSBCI program officials, Treasury’s OIG was asked to determine~~
~~whether two investments made by the Indiana Angel Network Fund (IANF) under Indiana’s~~
~~Venture Capital Program complied with SSBCI policy guidelines. The OIG found that the two~~
~~IANF investments, one totaling $499,986 and the other totaling $300,000, involved transactions~~
~~between the board chairman of Elevate Ventures and the investees.184 Elevate Ventures manages~~
~~the IANF’s investments on behalf of the Indiana Economic Development Corporation (IEDC),~~
~~and it approved and executed the two investments in question.~~
~~The OIG found that the $499,986 investment constituted an “intentional” misuse of funds because~~
~~the board chairman of Elevate Ventures had a controlling interest and voting stock ownership of~~
~~more than 10% in the investee, which created a “prohibited related party interest.”185 The OIG~~
~~noted that “SSBCI Policy Guidelines prohibit an investee receiving SSBCI funds from a related~~
~~interest of any such executive officer, director, principal shareholder or immediate family.”186~~
~~Intentional misuse of funds “is defined as a use of allocated funds that the participating state or its~~
~~administering entity knew was unauthorized or prohibited.”187~~
~~The $300,000 investment was found to be in compliance with SSBCI guidelines. However, the~~
~~OIG noted that the closeness of the relationship between the Elevate board chairman and the~~
~~applicant (the board chairman’s adult son was the company’s chief executive officer), although~~
~~not prohibited, “may raise the appearance of partiality and should be addressed by SSBCI Policy~~
~~Guidelines.”188~~

~~183 The OIG also identified five loans, totaling approximately $9.8 million and supported by $1.3 million in SSBCI~~
~~collateral, that provided interim financing of real estate acquisitions, construction projects, or equipment purchases that~~
~~had been approved for the SBA’s 504/Certified Development Company (CDC) loan guaranty program. The OIG~~
~~expressed concern that Treasury’s reporting of jobs created or retained by recipients of SSBCI supported loans may~~
~~potentially duplicate the SBA’s reporting of jobs created or retained by 504/CDC loan program recipients. Treasury~~
~~agreed to explain clearly in the summary of states’ annual reports that there is a possibility for duplicate reporting of~~
~~job creation and retention figures in such circumstances. See U.S. Department of the Treasury, OIG,~~ ~~State Small~~
~~Business Credit Initiative: Idaho’s Use of Federal Funds for its Collateral Support Program, pp. 5-7, 11, 15.~~
~~184 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, June 18, 2014, pp. 2, 6-10, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF14011.pdf.~~
~~185 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 6.~~
~~186 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 6.~~
~~187 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 1.~~
~~188 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 10. The OIG noted that “the son is not considered an immediate family member~~
~~because he does not reside with his father nor is he a minor. Therefore, while the investment constituted a related party~~
~~transaction, it did not meet the criteria needed to establish it as a prohibited related party interest. The conflict of~~
~~interest existing for [the $300,000 investment] ... was disclosed to the Board of Elevate Ventures in accordance with~~
~~Elevate Venture’s conflict-of-interest policy, and the Board approved the investment without any review by the State.”~~
~~See U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 9.~~
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~~The OIG recommended that (1) Treasury recoup the $499,986 of federal funds “intentionally”~~
~~misused and declare a specific event of default of its allocation agreement with Indiana; (2)~~
~~determine whether the state’s funding should be reduced, suspended or terminated as a result of~~
~~the specific event of default; and (3) require the state to ensure that IEDC reviews each IANF~~
~~investment decision going forward.189~~
~~Treasury agreed with all three recommendations but indicated that it “would not characterize [the~~
~~$499,986] investment as an ‘intentional’ misuse of funds based on the facts set forth in the report”~~
~~because “intentional misuse requires knowledge that the use of the funds is contrary to the~~
~~program rules, and action taken must be in a knowing effort to violate those rules.”190~~
~~Indiana reported that it had completed an independent audit of the remainder of its SSBCI~~
~~investments and did not find any other prohibited party transactions or other violations. The state~~
~~also noted that the board chairman of Elevate Ventures had resigned, effective December 31,~~
~~2013; that the $499,986 investment had been repaid with a 15% return on February 6, 2014; and~~
~~that the investment “had led to the creation of numerous new jobs for the people of Indiana.”191 In~~
~~addition, Indiana reported that it “will independently review any future potential investment~~
~~conflict.”192~~
~~Tennessee~~
~~Treasury’s OIG examined a random sample of 20 SSBCI investments made by Tennessee’s~~
~~INCITE Co-Investment Fund, a venture capital program, totaling $13.5 million. The sample was~~
~~drawn from the 43 investments made by the fund between October 4, 2011 (the signing of the~~
~~state’s SSBCI allocation agreement), and September 30, 2013. The OIG also reviewed a sample~~
~~of the state’s SSBCI administrative expenses ($483,254 out of $685,880) that had been incurred~~
~~as of September 30, 2013.193~~
~~The OIG found that Tennessee had appropriately used all $13.5 million in SSBCI funds that were~~
~~reviewed but that “investor use-of-proceeds assurances were missing for all 20 transactions~~
~~reviewed, and investor sex offender assurances had not been executed prior to the transfer of~~
~~SSBCI funds for 12 of the transactions.”194 As a result, the OIG determined that the state had~~
~~inaccurately certified that it was in compliance with all SSBCI requirements in several quarterly~~
~~reports.~~
~~With the OIG’s consent, Treasury provided Tennessee a draft copy of the OIG’s findings.~~
~~Tennessee indicated that it “was made aware of possible inadequacies in their assurances after~~
~~attending the SSBCI annual training conference in 2012, and has since corrected their process to~~

~~189 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 10.~~
~~190 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, pp. 10-11, 14.~~
~~191 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, pp. 16-17.~~
~~192 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Indiana’s Use of Federal Funds for~~
~~Other Credit Support Programs, pp. 16-17.~~
~~193 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Tennessee’s Use of Federal Funds for~~
~~its Venture Capital Program, August 20, 2014, pp. 1-2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF14012.pdf.~~
~~194 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Tennessee’s Use of Federal Funds for~~
~~its Venture Capital Program, pp. 3, 5-7.~~
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~~ensure that assurances meet program guidelines.” The state claimed that “its assurances are now~~
~~100% complete.”195~~
~~The OIG found that all of Tennessee’s sampled administrative expenses were reasonable,~~
~~allowable, and allocable to the program.196~~
~~North Dakota Mandan Consortium~~
~~Treasury’s OIG examined a sample of 15 SSBCI loans made by the Mandan consortium’s Loan~~
~~Participation Program, totaling $8.6 million of the $8.9 million obligated or spent as of March 31,~~
~~2014. The sampled loans were made between August 31, 2012 (the signing of the consortium’s~~
~~SSBCI allocation agreement), and March 31, 2014. The OIG also reviewed the consortium’s~~
~~$194,101 in SSBCI administrative expenses.197~~
~~The OIG found that the Mandan consortium used all of the loan funds it reviewed appropriately.~~
~~The OIG also determined that the consortium’s administrative expenses were reasonable,~~
~~allowable, and allocable to the program.198~~
~~Rhode Island (Slater Technology Fund)~~
~~At the request of Treasury SSBCI program officials, the OIG audited Rhode Island’s Slater~~
~~Technology Fund. Treasury had informed the OIG that the Slater Technology Fund was~~
~~potentially in noncompliance with SSBCI program rules. A separate audit of Rhode Island’s~~
~~second capital venture program (Betaspring) is underway and will be reported at a later date.199~~
~~The OIG examined all six investments made by the Slater Technology Fund, totaling $1.5 million~~
~~in SSBCI funds, made between the signing of the allocation agreement on September 6, 2011,~~
~~and December 31, 2012. The OIG found that the Slater Technology Fund “properly used most of~~
~~the $1.5 million in SSBCI funds it had expended as of December 31, 2012, but misused $350,000~~
~~on two investments by failing to comply with the investor capital-at-risk requirement.”200 As the~~
~~OIG explained, SSBCI’s guidelines require venture capital funds and angel investor networks~~
~~receiving SSBCI funds to have a “meaningful amount” of their own capital resources at risk.~~
~~Treasury has determined that this requirement is met when “private lenders or investors bear 20%~~
~~or more of the risk of loss in any transaction.”201 As the sole investor on the two investments,~~
~~Rhode Island’s Slater Technology Fund, which funded the investments in stages, failed to invest~~

~~195 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Tennessee’s Use of Federal Funds for~~
~~its Venture Capital Program, p. 10.~~
~~196 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Tennessee’s Use of Federal Funds for~~
~~its Venture Capital Program, p. 8.~~
~~197 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Dakota Mandan Consortium’s~~
~~Use of Federal Funds for its Loan Participation Program, August 29, 2014, pp. 1-2, at https://oig.treasury.gov/sites/~~
~~oig/files/Audit_Reports_and_Testimonies/OIGSBLF14013R.pdf.~~
~~198 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: North Dakota Mandan Consortium’s~~
~~Use of Federal Funds for its Loan Participation Program, p. 7.~~
~~199 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, October 31, 2014, pp. 1-2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIGSBLF15001.pdf.~~
~~200 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 2.~~
~~201 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 2.~~
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~~any private capital over the course of the entire funding-commitment period for the first~~
~~investment and did not inject private capital until the date of final payment for the second~~
~~investment.202 The OIG also found that the Slater Technology Fund did not obtain required~~
~~investee and investor assurances for five of the six investments before the transfer of SSCBI~~
~~funds.203~~
~~Treasury indicated that it would, as the OIG recommended in its audit, provide guidance to~~
~~SSBCI participants that staged funding of a single investment requires that 20% of the capital-at-~~
~~risk must be from a private source when SSBCI funds are invested. Rhode Island acknowledged~~
~~that the private capital was not initially invested as required by Treasury guidelines but indicated~~
~~that the state “has implemented measures to ensure future compliance.”204 Rhode Island also~~
~~acknowledged that “certain investor and investee assurances were not timely obtained by Slater~~
~~and will now require that such assurances be obtained prior to the release of funds.”205~~
~~New York (Canrock Innovate NY Fund, LP)~~
~~The OIG audited Canrock Innovate NY Fund, LP, one of eight venture capital firms participating~~
~~in New York’s SSBCI venture capital program, called the Innovate Fund. The OIG found that the~~
~~firm’s SSBCI “investments in four of five beneficiary companies constituted a reckless misuse of~~
~~approximately $1.63 million of SSBCI funds because the investments were prohibited related~~
~~party interests of its general partner, Canrock Innovate Advisors, LLC.”206 The OIG noted that~~
~~“through a related entity, the three managing members of Canrock Innovate Advisors, LLC had a~~
~~controlling interest in each of the four beneficiary companies’ voting shares, which violated the~~
~~SSBCI Policy Guidelines, regarding conflicts of interest.”207~~
~~The OIG recommended that Treasury recoup the $1.63 million. Treasury indicated that in lieu of~~
~~recoupment, it would not disburse the remainder of New York’s SSBCI allocation. Treasury had~~
~~withheld the amount in question from New York’s final disbursement pending the results of the~~
~~OIG’s audit. The OIG responded to Treasury’s action by indicating that the withholding of the~~
~~funds met the intent of its recommendation.208~~
~~Concluding Observations~~
~~The original SSBCI was enacted as part of a larger effort to enhance the supply of capital to small~~
~~businesses. Advocates argued that the SSBCI would help to address the then-recent decline in~~

~~202 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 2.~~
~~203 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 3.~~
~~204 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 4.~~
~~205 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: Rhode Island’s Use of Federal Funds~~
~~for the Slater Technology Fund, p. 4.~~
~~206 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: New York’s Use of Federal Funds for~~
~~Other Credit Support Programs, January 24, 2017, p. 2, at https://oig.treasury.gov/sites/oig/files/~~
~~Audit_Reports_and_Testimonies/OIG-17-035.pdf.~~
~~207 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: New York’s Use of Federal Funds for~~
~~Other Credit Support Programs, p. 2.~~
~~208 U.S. Department of the Treasury, OIG,~~ ~~State Small Business Credit Initiative: New York’s Use of Federal Funds for~~
~~Other Credit Support Programs, pp. 6, 7.~~
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~~small business lending and create jobs. Opponents were not convinced it would enhance small~~
~~business lending and worried about the program’s potential cost to the federal treasury.~~
~~It is difficult to determine the full extent of the program’s effect on small business lending. As~~
~~mentioned, as of December 31, 2016, states had spent or obligated about 88% of the $1.45 billion~~
~~available ($1.27 billion of $1.45 billion), which is sufficient to provide some insight. For~~
~~example, as mentioned, Treasury reported that SSBCI funds supported more than 21,000 loans~~
~~and investments in small business amounting to over $10.7 billion, with more than 80% of the~~
~~funds and investments made to small businesses with 10 or fewer full-time employees. Treasury~~
~~also reported that small businesses indicated that SSBCI funds helped them to create or retain~~
~~240,669 jobs (79,193 new jobs and 161,476 retained jobs).209 But, as Treasury also noted,~~
~~determining the SSBCI’s influence on small business lending is likely to be more suggestive than~~
~~definitive because differentiating the SSBCI’s effect on small business lending from other,~~
~~exogenous factors, such as changes in the lender’s local economy and changes in the demand for~~
~~small business loans, is methodologically challenging, especially given the relatively small~~
~~amount of financing involved relative to the national market for small business loans.210 As~~
~~mentioned, the SSBCI’s $1.5 billion in financing at that time represented about 0.24% of~~
~~outstanding nonagricultural small business loans.~~
~~Treasury’s OIG’s audits of 24 states’ implementation of their SSBCI programs suggest that many~~
~~states experienced difficulty reaching full compliance with the program’s administrative~~
~~requirements, which were designed to reduce the likelihood of loan defaults, investment losses,~~
~~and fraudulent use of funds. That should no longer be an issue because states now have~~
experience with, and are accustomed to, the SSBCI’s rules and regulations. However, given the experience with, and are accustomed to, the SSBCI’s rules and regulations. However, given the
relatively large increase in proposed funding, the large number of small business investment relatively large increase in proposed funding, the large number of small business investment
programs receiving SSBCI funding, and the large number of entities involved in the program programs receiving SSBCI funding, and the large number of entities involved in the program
(state officials, hundreds of lenders and investment companies, and thousands of small (state officials, hundreds of lenders and investment companies, and thousands of small
businesses), SSBCI program oversight is likely to remain a congressional interest. businesses), SSBCI program oversight is likely to remain a congressional interest.

~~209~~63 U.S. Department of the Treasury, OIG, State Small Business Credit Initiative: Michigan’s Use of Federal Funds for Capital Access and Other Credit Support Programs, pp. 15-16. 64 U.S. Department of the Treasury, U.S. Department of the Treasury, State Small Business Credit Initiative: A Summary of States’ 2016 Annual
Reports, pp. 3, 15, at https://www.treasury.gov/resource-center/sb-programs/Documents/, pp. 3, 15, at https://www.treasury.gov/resource-center/sb-programs/Documents/
SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf. SSBCI%20Summary%20of%20States%20Annual%20Report%202016_508%20Compliant.pdf.
~~210~~65 U.S. Treasury, “Correspondence with the author,” June 22, 2012. U.S. Treasury, “Correspondence with the author,” June 22, 2012.
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Appendix. The Original SSBCI’s Legislative Origins
On January 27, 2010, then-President Obama announced in his State of the Union Address that On January 27, 2010, then-President Obama announced in his State of the Union Address that
because “financing remains difficult for small business owners across the country, even those that because “financing remains difficult for small business owners across the country, even those that
are making a profit,” he would send Congress several legislative proposals designed to enhance are making a profit,” he would send Congress several legislative proposals designed to enhance
small business access to capital, including a proposal to establish a $30 billion Small Business small business access to capital, including a proposal to establish a $30 billion Small Business
Lending Fund (SBLF).Lending Fund (SBLF).~~211~~66 On May 7, 2010, the Obama Administration sent Congress draft On May 7, 2010, the Obama Administration sent Congress draft
legislation to establish the SBLF and the State Small Business Credit Initiative (SSBCI).legislation to establish the SBLF and the State Small Business Credit Initiative (SSBCI).~~212~~67
On May 13, 2010, Representative (now Senator) Gary Peters introduced H.R. 5302, the State On May 13, 2010, Representative (now Senator) Gary Peters introduced H.R. 5302, the State
Small Business Credit Initiative Act of 2010. The bill would have authorized a $2 billion SSBCI Small Business Credit Initiative Act of 2010. The bill would have authorized a $2 billion SSBCI
modeled on the President’s SSBCI proposal. That same day, then-Representative Barney Frank, modeled on the President’s SSBCI proposal. That same day, then-Representative Barney Frank,
then-chair of the House Committee on Financial Services, introduced H.R. 5297, initially titled then-chair of the House Committee on Financial Services, introduced H.R. 5297, initially titled
the Small Business Lending Fund Act of 2010. Based on the President’s SBLF proposal, the bill the Small Business Lending Fund Act of 2010. Based on the President’s SBLF proposal, the bill
was designed to encourage lending to small businesses by creating a $30 billion SBLF to make was designed to encourage lending to small businesses by creating a $30 billion SBLF to make
capital investments in eligible community banks with total assets of less than $10 billion.capital investments in eligible community banks with total assets of less than $10 billion.~~213~~68 On On
May 18, 2010, the Committee on Financial Services held a hearing on H.R. 5297 and the May 18, 2010, the Committee on Financial Services held a hearing on H.R. 5297 and the
following day, approved the bill, 42-23, as amended.following day, approved the bill, 42-23, as amended.~~214~~69 Perhaps the most significant amendment Perhaps the most significant amendment
approved was an amended version of the $2 billion State Small Business Credit Initiative Act of approved was an amended version of the $2 billion State Small Business Credit Initiative Act of
2010. It was approved by a vote of 39-23.2010. It was approved by a vote of 39-23.~~215~~70
SBLF and SSBCI advocates argued that the programs were necessary because “many companies, SBLF and SSBCI advocates argued that the programs were necessary because “many companies,
particularly small businesses, claim that it is becoming harder to get new loans to keep their particularly small businesses, claim that it is becoming harder to get new loans to keep their
business operating and that banks are tightening requirements or cutting off existing lines of even business operating and that banks are tightening requirements or cutting off existing lines of even
when the businesses are up to date on their loan repayments.”when the businesses are up to date on their loan repayments.”~~216~~71 In their view, the SBLF and In their view, the SBLF and
SSBCI would promote economic growth and job creation by enhancing small business access to SSBCI would promote economic growth and job creation by enhancing small business access to
capital. capital.
The House Committee on Financial Services’ Republicans indicated in the report accompanying The House Committee on Financial Services’ Republicans indicated in the report accompanying
H.R. 5297 that they “were unanimous in our opposition to this misguided legislation.”H.R. 5297 that they “were unanimous in our opposition to this misguided legislation.”~~217~~72 They They

~~211~~66 U.S. President (Barack Obama), “Remarks by the President in State of the Union Address,” January 27, 2010, at U.S. President (Barack Obama), “Remarks by the President in State of the Union Address,” January 27, 2010, at
https://obamawhitehouse.archives.gov/the-press-office/remarks-president-state-union-address. https://obamawhitehouse.archives.gov/the-press-office/remarks-president-state-union-address.
~~212~~67 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, report to accompany H.R. 5297, 111th Cong., 2nd , report to accompany H.R. 5297, 111th Cong., 2nd
sess., May 27, 2010, H.Rept. 111-499 (Washington, DC: GPO, 2010), p. 17. sess., May 27, 2010, H.Rept. 111-499 (Washington, DC: GPO, 2010), p. 17.
~~213~~68 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 18. , p. 18.
~~214~~69 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, Incentives to Promote Small Business Lending, Jobs, and
Economic Growth, 111th Cong., 2nd sess., May 18, 2010, Serial no. 111-137 (Washington, DC: GPO, 2010). , 111th Cong., 2nd sess., May 18, 2010, Serial no. 111-137 (Washington, DC: GPO, 2010).
~~215~~70 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, report to accompany H.R. 5297, 111th Cong., 2nd , report to accompany H.R. 5297, 111th Cong., 2nd
sess., May 27, 2010, H.Rept. 111-499 (Washington, DC: GPO, 2010), pp. 21, 22. sess., May 27, 2010, H.Rept. 111-499 (Washington, DC: GPO, 2010), pp. 21, 22.
~~216~~71 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 16. , p. 16.
~~217~~72 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 18. , p. 18.
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argued that the SBLF and SSBCI did not address what they considered to be the core issue argued that the SBLF and SSBCI did not address what they considered to be the core issue
affecting small business job creation during the economic recovery—the need to stimulate affecting small business job creation during the economic recovery—the need to stimulate
demand for credit by small businesses.demand for credit by small businesses.~~218~~73 They argued that the bill would fail to help small They argued that the bill would fail to help small
businesses or create jobs, would succeed in adding billions of dollars to the national debt, and businesses or create jobs, would succeed in adding billions of dollars to the national debt, and
concluded that “the solutions to America’s economic problems do not lie in more taxpayer-concluded that “the solutions to America’s economic problems do not lie in more taxpayer-
funded bailouts.”funded bailouts.”~~219~~74 Instead of supporting federal spending programs to enhance small business Instead of supporting federal spending programs to enhance small business
access to capital, they advocated an extension of a series of small business tax credits as a more access to capital, they advocated an extension of a series of small business tax credits as a more
effective means to stimulate small business job creation and economic growth.effective means to stimulate small business job creation and economic growth.~~220~~75
On June 14, 2010, the House Committee on Rules issued a rule for H.R. 5297 (H.Res. 1436), On June 14, 2010, the House Committee on Rules issued a rule for H.R. 5297 (H.Res. 1436),
which provided that “in the engrossment of H.R. 5297, the Clerk shall add the text of H.R. 5486, which provided that “in the engrossment of H.R. 5297, the Clerk shall add the text of H.R. 5486,
as passed by the House, at the end of H.R. 5297 and that H.R. 5486 shall be laid on the table.”as passed by the House, at the end of H.R. 5297 and that H.R. 5486 shall be laid on the table.”~~221~~76
H.R. 5486, To Amend the Internal Revenue Code of 1986 to Provide Tax Incentives for Small H.R. 5486, To Amend the Internal Revenue Code of 1986 to Provide Tax Incentives for Small
Business Job Creation, and for Other Purposes, included several tax incentives for small Business Job Creation, and for Other Purposes, included several tax incentives for small
businesses and several revenue-raising provisions designed to offset the costs of the tax businesses and several revenue-raising provisions designed to offset the costs of the tax
incentives. Also, at that time, the House Committee on Rules posted on its website legislative incentives. Also, at that time, the House Committee on Rules posted on its website legislative
language for a proposed amendment in the nature of a substitute to H.R. 5297, as reported, which language for a proposed amendment in the nature of a substitute to H.R. 5297, as reported, which
included a proposed $1 billion Small Business Early-Stage Investment Program. included a proposed $1 billion Small Business Early-Stage Investment Program.
On June 17, 2010, the House passed H.R. 5297 by a vote of 241-182. The engrossed bill, retitled On June 17, 2010, the House passed H.R. 5297 by a vote of 241-182. The engrossed bill, retitled
the Small Business Jobs and Credit Act of 2010, included the language in H.R. 5486 and the the Small Business Jobs and Credit Act of 2010, included the language in H.R. 5486 and the
Small Business Early-Stage Investment Program, as well as the $30 billion SBLF and $2 billion Small Business Early-Stage Investment Program, as well as the $30 billion SBLF and $2 billion
SSBCI. SSBCI.
The arguments presented in the House report accompanying the bill, both for and against the The arguments presented in the House report accompanying the bill, both for and against the
bill’s passage, also were presented during House floor debate. For example, advocates argued that bill’s passage, also were presented during House floor debate. For example, advocates argued that
the SSBCI would “increase small business lending which will retain and create jobs.”the SSBCI would “increase small business lending which will retain and create jobs.”~~222~~77
Opponents argued that the bill “is repeating the same failed initiatives that have helped our Opponents argued that the bill “is repeating the same failed initiatives that have helped our
national debt grow to $13 billion in the past two years” and did not address what they viewed as national debt grow to $13 billion in the past two years” and did not address what they viewed as
the top problem facing small businesses—“the lack of sales and demand.”the top problem facing small businesses—“the lack of sales and demand.”~~223~~78
The House-passed version of H.R. 5297 was placed on the Senate Legislative Calendar on June The House-passed version of H.R. 5297 was placed on the Senate Legislative Calendar on June
18, 2010. Following a series of votes on motions to invoke cloture on several amendments in the 18, 2010. Following a series of votes on motions to invoke cloture on several amendments in the
nature of a substitute to H.R. 5297 and the August recess, the Senate passed an amended version nature of a substitute to H.R. 5297 and the August recess, the Senate passed an amended version
of the bill (S.Amdt. 4594, an amendment in the nature of a substitute for H.R. 5297) on of the bill (S.Amdt. 4594, an amendment in the nature of a substitute for H.R. 5297) on

~~218~~73 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 37. , p. 37.
~~219~~74 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 38. , p. 38.
~~220~~75 U.S. Congress, House Committee on Financial Services, U.S. Congress, House Committee on Financial Services, To Create the Small Business Lending Fund Program to
Direct the Secretary of the Treasury to make Capital Investments in Eligible Institutions in order to Increase the
Availability of Credit for Small Businesses, and for other Purposes, p. 38. , p. 38.
~~221~~76 H.Res. 1436. A second rule (H.Res. 1448) was issued on June 16, 2010, to allow consideration of two amendments H.Res. 1436. A second rule (H.Res. 1448) was issued on June 16, 2010, to allow consideration of two amendments
that were revised to comply with House “pay-go” rules. that were revised to comply with House “pay-go” rules.
~~222~~77 Rep. Melissa Bean, “The Small Business Jobs and Credit Act of 2010,” House debate, Rep. Melissa Bean, “The Small Business Jobs and Credit Act of 2010,” House debate, Congressional Record, vol. , vol.
156, no. 90 (June 16, 2010), p. H4514. 156, no. 90 (June 16, 2010), p. H4514.
~~223~~78 Rep. Randy Neugebauer, “The Small Business Jobs and Credit Act of 2010,” House debate, Rep. Randy Neugebauer, “The Small Business Jobs and Credit Act of 2010,” House debate, Congressional Record, ,
vol. 156, no. 90 (June 16, 2010), p. H4514, H4515. vol. 156, no. 90 (June 16, 2010), p. H4514, H4515.
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September 16, 2010, by a vote of 61-38. September 16, 2010, by a vote of 61-38.~~224~~79 The Senate-passed version of the bill, which included The Senate-passed version of the bill, which included
the SSBCI but funded at $1.5 billion instead of $2 billion, was passed by the House on September the SSBCI but funded at $1.5 billion instead of $2 billion, was passed by the House on September
23, 2010, by a vote of 237-187. The enrolled bill, retitled the Small Business Jobs Act of 2010, 23, 2010, by a vote of 237-187. The enrolled bill, retitled the Small Business Jobs Act of 2010,
was signed into law (P.L. 111-240) by President Obama on September 27, 2010.was signed into law (P.L. 111-240) by President Obama on September 27, 2010.~~225~~80
The arguments presented during Senate floor debate, both for and against the bill’s The arguments presented during Senate floor debate, both for and against the bill’s
passage, were similar to those presented during House floor debate. One difference was a passage, were similar to those presented during House floor debate. One difference was a
greater emphasis by the bill’s advocates in the Senate on the SSBCI’s support of state greater emphasis by the bill’s advocates in the Senate on the SSBCI’s support of state
loan collateral programs. Several Senators argued that the SSBCI’s support of state loan loan collateral programs. Several Senators argued that the SSBCI’s support of state loan
collateral programs was needed because, as one Senator pointed out, “just as the collateral programs was needed because, as one Senator pointed out, “just as the
recession has battered the value of our homes, it has also battered the value of business recession has battered the value of our homes, it has also battered the value of business
property such as real estate, factories, and equipment. That has damaged the ability of property such as real estate, factories, and equipment. That has damaged the ability of
small businesses to get bank financing because it has lowered the value of property they small businesses to get bank financing because it has lowered the value of property they
can offer as collateral.”can offer as collateral.”~~226~~
81

~~224~~79 On June 29, 2010, cloture on a motion to proceed to H.R. 5297 was invoked in the Senate by a vote of 66-33. That On June 29, 2010, cloture on a motion to proceed to H.R. 5297 was invoked in the Senate by a vote of 66-33. That
same day, Sen. Harry Reid proposed a motion to commit H.R. 5297 to the Senate Committee on Finance with same day, Sen. Harry Reid proposed a motion to commit H.R. 5297 to the Senate Committee on Finance with
instructions to report back forthwith S.Amdt. 4407, an amendment in the nature of a substitute, which included the instructions to report back forthwith S.Amdt. 4407, an amendment in the nature of a substitute, which included the
Small Business Lending Fund (SBLF) and most of the provisions later included in S.Amdt. 4594. In response to Small Business Lending Fund (SBLF) and most of the provisions later included in S.Amdt. 4594. In response to
perceived opposition to the SBLF, S.Amdt. 4407 was withdrawn on July 21, 2010. In its place, Sen. Harry Reid perceived opposition to the SBLF, S.Amdt. 4407 was withdrawn on July 21, 2010. In its place, Sen. Harry Reid
proposed for Sen. George LeMieux S.Amdt. 4500, to establish the Small Business Lending Fund Program. He also proposed for Sen. George LeMieux S.Amdt. 4500, to establish the Small Business Lending Fund Program. He also
proposed for Sen. Max Baucus S.Amdt. 4499, an amendment in the nature of a substitute, which contained S.Amdt. proposed for Sen. Max Baucus S.Amdt. 4499, an amendment in the nature of a substitute, which contained S.Amdt.
4407, with modifications, minus the SBLF. On July 22, 2010, cloture on S.Amdt. 4500 was invoked in the Senate, by a 4407, with modifications, minus the SBLF. On July 22, 2010, cloture on S.Amdt. 4500 was invoked in the Senate, by a
vote of 60-37. On July 27, 2010, Sen. Harry Reid withdrew S.Amdt. 4500 and introduced for Sen. Max Baucus vote of 60-37. On July 27, 2010, Sen. Harry Reid withdrew S.Amdt. 4500 and introduced for Sen. Max Baucus
S.Amdt. 4519, which included the SBLF, the provisions in S.Amdt. 4499, with modifications, $1.5 billion in S.Amdt. 4519, which included the SBLF, the provisions in S.Amdt. 4499, with modifications, $1.5 billion in
emergency disaster agricultural assistance, and additional revenue offsets. On July 29, 2010, a motion to invoke cloture emergency disaster agricultural assistance, and additional revenue offsets. On July 29, 2010, a motion to invoke cloture
on S.Amdt. 4519 failed by a vote of 58-42. Debate on the motion focused on differences concerning the SBLF and the on S.Amdt. 4519 failed by a vote of 58-42. Debate on the motion focused on differences concerning the SBLF and the
number of amendments to be offered. On August 5, 2010, Sen. Harry Reid introduced for Sens. Max Baucus and Mary number of amendments to be offered. On August 5, 2010, Sen. Harry Reid introduced for Sens. Max Baucus and Mary
Landrieu S.Amdt. 4594, an amendment in the nature of a substitute. It contained the provisions in S.Amdt. 4519, Landrieu S.Amdt. 4594, an amendment in the nature of a substitute. It contained the provisions in S.Amdt. 4519,
except that it removed a provision to eliminate the advance payment option for the earned-income tax credit that would except that it removed a provision to eliminate the advance payment option for the earned-income tax credit that would
have raised $1.1 billion, removed a provision that would have reallocated $500 million in future spending from P.L. have raised $1.1 billion, removed a provision that would have reallocated $500 million in future spending from P.L.
111-5, the American Recovery and Reinvestment Act of 2009, and removed a provision to provide $1.5 billion in 111-5, the American Recovery and Reinvestment Act of 2009, and removed a provision to provide $1.5 billion in
emergency agricultural assistance funding. On September 14, 2010, the Senate invoked cloture on S.Amdt. 4594, by a emergency agricultural assistance funding. On September 14, 2010, the Senate invoked cloture on S.Amdt. 4594, by a
vote of 61-37, and passed it on September 16, 2010, by a vote of 61-38. See Sen. Harry Reid, “Text of Amendments: vote of 61-37, and passed it on September 16, 2010, by a vote of 61-38. See Sen. Harry Reid, “Text of Amendments:
SA 4519,” SA 4519,” Congressional Record, vol. 156, no. 111 (July 27, 2010), pp. S6309-S6337; Sen. Kay Hagan, “Motion to , vol. 156, no. 111 (July 27, 2010), pp. S6309-S6337; Sen. Kay Hagan, “Motion to
Invoke Cloture on amendment No. 4519,” Roll Call Vote No. 221 Leg., Invoke Cloture on amendment No. 4519,” Roll Call Vote No. 221 Leg., Congressional Record, vol. 156, no. 113 (July , vol. 156, no. 113 (July
29, 2010), p. S6473; Sen. Harry Reid, “Small Business Lending Fund Act of 2010,” Remarks in the Senate, 29, 2010), p. S6473; Sen. Harry Reid, “Small Business Lending Fund Act of 2010,” Remarks in the Senate,
Congressional Record, vol. 156, no. 113 (July 29, 2010), pp. S6472, S6473; Sen. Mitch McConnell, “Small Business , vol. 156, no. 113 (July 29, 2010), pp. S6472, S6473; Sen. Mitch McConnell, “Small Business
Lending Fund Act of 2010,” Remarks in the Senate, Lending Fund Act of 2010,” Remarks in the Senate, Congressional Record, vol. 156, no. 113 (July 29, 2010), pp. S, vol. 156, no. 113 (July 29, 2010), pp. S
6472, S6473; Sen. Kay Hagen, “Motion to Invoke Cloture on H.R. 5297, the Small Business Lending Fund Act of 6472, S6473; Sen. Kay Hagen, “Motion to Invoke Cloture on H.R. 5297, the Small Business Lending Fund Act of
2010,” Rollcall Vote No. 236 Leg., 2010,” Rollcall Vote No. 236 Leg., Congressional Record, daily edition, vol. 156, part 125 (September 16, 2010), p. S, daily edition, vol. 156, part 125 (September 16, 2010), p. S
7158; and Sen. Al Franken, “Small Business Lending Fund Act of 2010,” Rollcall Vote No. 237 Leg., 7158; and Sen. Al Franken, “Small Business Lending Fund Act of 2010,” Rollcall Vote No. 237 Leg., Congressional
Record, daily edition, vol. 156, part 125 (September 16, 2010), p. S7158. , daily edition, vol. 156, part 125 (September 16, 2010), p. S7158.
~~225~~80 Sen. Al Franken, “Small Business Lending Fund Act of 2010,” Rollcall Vote No. 237 Leg., Sen. Al Franken, “Small Business Lending Fund Act of 2010,” Rollcall Vote No. 237 Leg., Congressional Record, ,
daily edition, vol. 156, part 125 (September 16, 2010), p. S7158. daily edition, vol. 156, part 125 (September 16, 2010), p. S7158.
~~226~~81 Sen. Carl Levin, “Small Business Lending Fund Act of 2010,” remarks in the Senate, Sen. Carl Levin, “Small Business Lending Fund Act of 2010,” remarks in the Senate, Congressional Record, vol. , vol.
156, part 124 (September 15, 2010), p. S7123. 156, part 124 (September 15, 2010), p. S7123.
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Author Information

Robert Jay Dilger Robert Jay Dilger
Grant A. Driessen Grant A. Driessen
Senior Specialist in American National Government Specialist in Public Finance Senior Specialist in American National Government Specialist in Public Finance

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