American Rescue Plan Act Provides Massive Funding to Tribes for Credit Support and Small Business Investments
On March 11, 2021, President Biden enacted the American Rescue Plan Act (ARP Act). The resurrection of the State Small Business Credit Initiative (SSBCI) program is nestled in Title III, Section 3301 of the ARP Act. This resurrection includes the addition of tribal governments to SSBCI, with a direct appropriation of $ 500 million for tribal governments to begin the economic recovery of small tribal businesses, including businesses owned by tribes and tribal members. Tribes have until April 10 to file a Notice of Intent to Participate, so time is running out for tribal government action.
Context of SSBCI
The SSBCI – originally enacted in 2010 to “strengthen state programs that support the financing of small businesses” – provides federal funding for state credit or venture capital assistance programs. 12 USC 5701 and. that is. Federal funds can be used for: access to credit programs (loan loss reserves), loan guarantee programs, loan guarantee support, loan participation or equity investment financing . Business eligibility includes any small business or non-profit organization with fewer than 500 employees. The programs have loan or equity investment limits. You can find more information about SSBCI at: https://www.treasury.gov/resource-center/sb-programs/Pages/ssbci.aspx.
The ARP amends the SSBCI to define states to include Indian tribal governments, thereby making tribal governments eligible to use the funds for the same purposes and programs as states.
Tribal government funds will be allocated by the Secretary of the Treasury taking into account employment and economic data. Tribes have 30 days to notify their intention to participate (April 10). Single or multiple tribes can participate. The Treasury must distribute the funds within 60 days of promulgation (May 10). Tribes can also benefit from technical assistance in setting up programs.
Some examples of how tribal governments might be able to use these funds:
- Provide “collateral support” to small businesses owned by tribal members who do not have sufficient collateral for the necessary debt financing;
- Participate directly in debt financing for small businesses owned by tribal members or belonging to tribes;
- Lend funds to native CDFI, or provide loan guarantees for CDFI small business loans
- Develop and implement a loan guarantee program;
- Make equity investments in tribal-owned or tribal-owned small businesses
Tribes can directly administer these programs. Even if a tribe does not have the government capacity to initiate or operate these credit support programs, the tribes can enter into an inter-tribal consortium, create a non-profit organization to administer, or hire a third-party administrator. All of these options can be funded by the federal contribution of funds to the Tribe.
Time is of the essence to file a Notice of Interest with the Consolidated Revenue Fund. We stand ready to help our tribal clients access this important – and substantial – funding to invest in small tribal businesses.