State Small Business Credit Initiative (SSBCI)

State Small Business Credit Initiative (SSBCI)

As part of the 2021 American Rescue Plan, the State Small Business Credit Initiative (SSBCI) was reinstated with $10 billion in funding that can be used for debt or equity investment programs.

The main idea: The program provides capital to small businesses, startups, and fund managers in underrepresented regions and communities. 

Impact on VC: SSBCI has the potential to unlock significant capital for VC investment across direct, co-investment, and fund investing strategies, particularly in emerging ecosystems and underrepresented communities. This capital is intended to help solve inefficiencies and financing gaps in many emerging ecosystems, and ultimately lead to greater investment opportunities in these communities.

Venture Forward and NVCA are proud partners of the Initiative for Inclusive Entrepreneurship (IIE). Together, we are reshaping the industry by significantly increasing AUM led by VC fund managers of color. IIE.VC‘s goal is to promote equity and inclusion in the U.S. VC industry by aiding diverse fund managers in raising over $6 billion in AUM by 2025. 

Stay informed:

  • View the FAQ video series below to learn more about SSBCI.
  • View additional SSBCI resources from NVCA and Venture Forward.
  • Check out SSBCI programs, news, grants, and solutions desk at IIE.VC.

SSBCI FAQs - Video Series

IIE.VC collaborates with the U.S. Treasury Department, state leaders, and various private institutions, including family offices, limited partners (LPs), and philanthropic organizations to ensure the participation and success of diverse emerging fund managers.

Through this collaboration, IIE.VC plays a crucial role in the effective implementation of the nearly $10 billion State Small Business Credit Initiative (SSBCI) funds, fostering a more inclusive and dynamic venture capital landscape.

To learn more about the mission and impact, visit or follow on LinkedIn.

The State Small Business Credit Initiative, better known as SSBCI, is a federally funded program that partners with states, the District of Columbia, U.S. territories and tribal governments to provide capital and technical assistance to small businesses.

Participating jurisdictions were allocated a share of nearly $10 billion in funding to implement credit and/or equity support programs designed to catalyze private sector participation in small business financing transactions.

For venture capital fund managers, there are opportunities to manage SSBCI capital as an LP investment in a VC fund and to co-invest alongside SSBCI capital in eligible investments.

States and territories have stood up approximately 84 venture capital programs supported by SSBCI across the country, representing over $3 billion in federal investment.

Each of the 46 participating states and territories with an approved equity investment program is responsible for the program design and implementation.

While providing jurisdictions the flexibility to design programs that best meet local market needs is considered a valuable feature of SSBCI, this does require fund managers to learn about program details from each jurisdiction of interest.

Some jurisdictions will select participating funds through a single or ongoing RFP process, while others will not use an RFP process but rather have a rolling application process to identify, evaluate and select VC fund managers.

It is also important to note that for a VC fund to qualify for full support from SSBCI through a fund investment program (for example the 1.71), the fund must be a pooled capital fund that meets the SEC definition of a venture capital fund.

The SSBCI guidelines encourage jurisdictions to finance underserved businesses and many jurisdictions have designed equity investment programs that are designed to reach underserved fund managers and/or underserved small business owners.

Check with each participating jurisdiction for more information about strategies to reach underserved communities.

Yes, there are numerous examples of state programs that have designed their programs to reach underserved entrepreneurs or managers, or have already made commitments to funds with diverse or underserved managers or that focus on reaching underserved entrepreneurs. Pennsylvania, Minnesota, and Maryland are just a few examples.

The enabling statute for SSBCI requires that the SSBCI funds “cause and result” in private financing to a small business, and the participating jurisdictions are required to describe how each approved program satisfies this requirement.

Simply stated, the SSBCI funding must have a meaningful impact on attracting private capital to a small business equity investment or a venture capital fund.

SSBCI operational complexities are manageable, but venture capital firms must be motivated to incur the incremental costs and compliance risks that accompany program participation.

As a result, funds programs are generally more attractive to smaller funds where the SSBCI program serves as an anchor investor, funds investing in seed- and early-stage startups, and firms with diverse investment teams raising a fund for the first time.

Recognizing that VC fund managers are compensated with a market-standard 2 & 20 model, Treasury allows participating jurisdictions to use funds from the federal contribution to pay for certain qualifying fund management services (i.e., services to portfolio companies), up to a maximum of 17.1% depending on the life of the fund. It’s worth noting that the annual percentage can be greater than 1.71% in earlier years of a fund’s life cycle, so long as the average over the program remains under these limits (e.g., the 10 year total does not exceed 17.1%).

Many jurisdictions are also providing additional capital support to participating fund managers to pay for fund administration costs and match private LPs pro rata on all fund expenses. The SSBCI allowance for fund management services (up to 17.1% over ten years) and the ability to pay fund administrative costs allows for program designs that closely approximate fund economics under the 2 and 20 model. States may choose to be more conservative than this standard model or may be willing to incur additional fund expenses depending on their investment priorities.

SSBCI requires that the private capital is pari passu with, or junior to, the SSBCI investment in cash flow rights. Fund managers should consider this requirement when designing fund structures, including carried interest.

SSBCI guidelines require that no more than 10% of a jurisdiction’s total funding allocation can be deployed outside the jurisdiction. For example, if a jurisdiction’s total SSBCI funding allocation is $100 million, then up to $10 million can be used to support out-of-state investments so long as the investments are appropriately traced and reported on. In some cases, this provides an investment program enough flexibility to operate a regional or national investing strategy.

In other cases, jurisdictions with strict geographic constraints often seek to participate with regional VC funds using a side car structure.

SSBCI permits side cars that share substantially the same governance and economic terms with the main fund but restrict investment use of SSBCI funds to state-approved criteria. The most common restrictive criteria include state geographic restrictions and SSBCI constraints on using SSBCI capital in a round of investment larger than $20mm. There are several fund accounting methods jurisdictions and fund managers might consider when managing the changing pro rata participation of the SSBCI capital in portfolio transactions to ensure the SSBCI capital is fully expended by the fund manager.

Side car strategies are still required to meet the cause and result and minimum 1:1 of private capital to SSBCI capital at the fund level. A side car structure that complies with SSBCI guidelines is allowed to calculate the 1:1 financing ratio as if the side car commitments were made in the main fund.

Yes, there are some small business restrictions included in the statute or SSBCI guidelines that jurisdictions must comply with. For example, SSBCI-supported programs must target companies with 500 or fewer employees and cannot support a business with more than 750 employees. Equity investment programs must target an average investment amount of $5 million or less and cannot participate in a financing round that exceeds $20 million.

There are also some prohibited uses of SSBCI funds, such as purchasing owner’s equity or goodwill and investments in prohibited business activities such as gambling or illegal activities

SSBCI does have specific reporting requirements that are not expected to create a significant burden for participating investors. We have published guidance with all of the details. For example, at the time of investment in a small business, basic business identification information will need to be collected, along with demographic information, a summary of the investment terms, and SSBCI certifications necessary to document compliant transactions.

Yes. Several states have successfully completed commitments to invest SSBCI capital in private venture capital funds. Arizona, California, Colorado, Minnesota, and Pennsylvania are some early examples of successful implementations.

First, start with to identify which programs operate in the geography you are most likely to invest in.

Beyond that, next steps will vary by jurisdiction and program. We have included on our website certain contact information and program information to help you navigate these programs and potential opportunities. You might, for example, read up on the jurisdictions of interest by following the links to their websites or contact the program manager.

If the program is soliciting fund managers, they may have posted solicitation instructions.

If the program has already selected fund managers, you might also consider the current funds as potential syndication partners in new investments.

Treasury is working to publish detailed summaries of approved programs and keep this information updated and accessible, but the best way to learn more about the application process and funding status of specific programs is to contact the jurisdiction directly.


View the approved states, details on their programs, and who to contact:


Connect with the IIE.VC team for dedicated support in navigating the complexities of emerging fund manager issues. Access the Solutions Desk.

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