The U.S. Treasury Department has granted Colorado nearly $105 million under its State Small Business Credit Initiative, according to a joint announcement made on Thursday.
The grant, which will be distributed over the next five years, can be leveraged up to 10 times to provide private financing to small businesses across the state, with an emphasis on reaching groups that are traditionally excluded from capital markets. Colorado is expected to retain or create 11,000 jobs with the federal funds, with those jobs expected to contribute $423 million per year to the Colorado economy.
“This is an historic investment in entrepreneurship, small-business growth, and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally underserved communities including those in rural areas,” said U.S. Secretary of the Treasury Janet L. Yellen in a release. “I’m excited to see how SSBCI funds will promote equitable economic growth in Colorado and across the country.”
Colorado was among four states to receive $750 million in the latest round of SSBCI funding, which has announced more than $2.25 billion in grants. New York received approval for $501.5 million, Oregon received $83.5 million, and Montana received $61.3 million. Colorado’s initial installment of $31 million was made this month.
The Colorado Economic Development Commission and the Colorado Office of Economic Development and International Trade’s Division of Business Funding and Incentives will administer the SSBCI funds in collaboration with the Governor’s Office, the State Treasurer’s Office, the Venture Capital Authority (VCA) and the Colorado Housing and Finance Authority (CHFA).
Although the money is extended to the state as a grant, it can’t be used to offer direct grants to small businesses. Instead, the money will be extended through programs where funds are repaid or returned, allowing the funds to be used over and over.
Of the amount awarded, nearly $60 million will go to the VCA, which partners with professional venture fund managers to reach growing companies with venture capital. The additional money is expected to create 2,900 jobs over the next 10 years.
The Cash Collateral Support Program run by CHFA will receive up to $35 million in funding to support small-business lending through a credit enhancement program, which provides lenders with cash deposits to boost the collateral borrowers are offering for business loans.
Over the past 10 years, the program has extended $37.4 million in collateral support for 376 loans worth $200 million. As the loans are repaid, the money goes back into the program, which has not suffered a loss of capital. The new infusion is expected to help create or retain 8,000 jobs over 10 years.
The final $10 million will go into the CLIMBER fund which is under the Colorado State Treasury and administered by CHFA and OEDIT. These funds are expected to create 800 jobs over the next 10 years.