The Biden administration says it is releasing new funding to help underserved small businesses.
The $50 million in funding, announced Tuesday (Nov. 21), comes from the American Rescue Plan and will go to programs in 20 different states via the State Small Business Credit Initiative’s (SSBCI) Technical Assistance Grant Program.
The funding will provide “legal, financial, and other advisory services that are expected to help more than 10,000 small businesses owned by individuals from traditionally underserved communities secure loans and investments to grow and expand,” the White House said in a news release.
“This announcement represents only a portion of the nearly $10 billion SSBCI funds deployed to states, tribes, and territories to launch and expand capital access programs for roughly 100,000 small businesses,” per the release.
The White House adds that each dollar from the SSBCI program “catalyzes $10 of small business lending and investments — resulting in tens of billions of new small business financing across the country through 2030.”
The administration’s announcement comes amid a number of reports facing small and medium-sized businesses (SMBs) amid sustained high interest rates and a drop in consumer spending.
For example, The Wall Street Journal (WSJ) reported last week that some business owners are holding off on expansions and equipment purchases, delaying hiring and speeding up their efforts to collect payments as interest rates remain at a 22-year high.
The report also points to figures from the National Federation of Independent Business that show the average interest rate small businesses paid on short-term loans has been at 9% or higher for the past three months, compared to 6.7% a year earlier and 4.6% in August 2021.
“Small businesses are generally in better financial shape than in times past when interest rates have risen sharply, but they still are financially fragile,” Mark Zandi, chief economist at Moody’s Analytics, told the WSJ.
Meanwhile, PYMNTS Intelligence has found that one of the troubles facing SMBs is access to credit, with just 47% of SMBs generating annual revenues of $10 million or less had access to business or personal financing as of July 2023.
And 53% reported having “no current access to credit,” an issue felt most acutely among the smallest companies surveyed, with yearly revenue of $150,000 or less.