$10 billion Treasury program to help small businesses, especially minority-owned or those in poor or rural areas

The Treasury Department is reviving a program to hand out $10 billion to small businesses in a bid to help the nation's economy recover from the pandemic. The State Small Business Credit Initiative will set aside $1.5 billion for businesses owned by rural and other socially and economically disadvantaged groups; another $500 million is earmarked for businesses with fewer than 10 employees, Amara Omeokwe reports for The Wall Street Journal. Funding for the program comes from the $1.9 trillion pandemic aid package Democrats passed in March.

SBIC "will direct money to states, territories and tribal governments for programs that provide venture capital or encourage private lenders to issue loans to small firms. The program revives a policy put into place following the 2007-2009 recession, when banks cut back on lending to small firms," Omeokwe reports. "The $10 billion is more than six times as large the cost of the earlier program, in part because the administration and Congress wanted to dedicate funds to disadvantaged groups, said Adair Morse, the Treasury Department’s deputy assistant secretary of capital access. The groups include racial minorities, rural communities and veterans, according to program guidelines."

The first payments are expected to begin in the next two months, but will vary as states and other recipients were given wide latitude to design their programs. "Some Republicans have countered that the $10 billion program was unnecessary, given that more than $1 trillion in federal funding has already been directed toward small businesses over the course of the pandemic," Omeokwe reports. But "a Treasury Department official said the funds under the State Small Business Credit Initiative aren’t meant to fill revenue holes caused by the pandemic, but rather to help small businesses find sources of capital to support their long-term recovery and growth."

The Small Business Administration's Paycheck Protection Program was meant to help small businesses get an economic boost with forgivable loans, but rural businesses and others owned by disadvantaged groups were less likely to receive the money, Omeokwe reports.