	Overview

Congressional interest in small business access to capital has increased in recent years because of concerns that small businesses might be prevented from accessing sufficient capital to enable them to start, continue, or expand operations and create jobs. Some have argued that the federal government should provide additional resources to assist small businesses. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small businesses and create jobs. 111-240 , the Small Business Jobs Act of 2010, provided the Small Business Administration (SBA) additional funding, authorized several SBA pilot programs, and enhanced several of the SBA's lending programs in an effort to assist small businesses access capital. As a result, Treasury role in administering the program sunset on September 27, 2017. The SSBCI provided funding, allocated through a statutorily created formula and distributed in one-third increments (called tranches), to states, the District of Columbia, eligible territories, and eligible municipalities (hereinafter states) to expand existing or create new state small business investment programs, including capital access programs, collateral support programs, loan participation programs, loan guarantee programs, and venture capital programs. As of December 31, 2016, SSBCI participants had leveraged $8.95 in new financing for every $1 in SSBCI funds. There are 57 participants: 47 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 consortium of municipalities in Wyoming. 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 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 ecosystems, and evaluate results," and $500 million awarded "by formula based on economic factors such as job losses and pace of economic recovery." Legislation containing provisions similar to the Obama Administration's proposal was introduced during the 113 th Congress ( H.R. 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 audits suggested that states generally met the statute's requirements but that there were some compliance problems. They also indicated that Treasury's oversight of the program could have been improved and that performance measures are needed to assess the program's efficacy. H.R. SSBCI Funding

P.L. 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." As mentioned previously, 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.
Congressional interest in small business access to capital has increased in recent years because of concerns that small businesses might be prevented from accessing sufficient capital to enable them to start, continue, or expand operations and create jobs. Some have argued that the federal government should provide additional resources to assist small businesses. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small businesses and create jobs.
During the 111th Congress, P.L. 111-240, the Small Business Jobs Act of 2010, provided the Small Business Administration (SBA) additional funding and enhanced several SBA lending programs in an effort to assist small businesses access capital. The act also authorized the Secretary of the Treasury to establish and administer a $1.5 billion State Small Business Credit Initiative (SSBCI). Treasury's role in administrating the program ended on September 27, 2017.
The 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 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 FY2011. Most states received their second tranche during FY2013. As of December 31, 2016, 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 expected to leverage their SSBCI funds to generate new small business lending that is at least 10 times the amount of their SSBCI funds. As of December 31, 2016, SSBCI participants had 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 Islands; Puerto Rico; the U.S. Virgin Islands; Anchorage, Alaska; two consortiums of municipalities in North Dakota; and a consortium of municipalities in Wyoming participate in the program.
The Obama Administration recommended in its FY2015, FY2016, and FY2017 budget requests that another $1.5 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), and the 115th Congress (S. 1897).
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 that there were some compliance problems. They also indicate that Treasury's program oversight could have been improved and that performance measures are needed to assess the program's efficacy.