The COVID-19 crisis has put thousands of small businesses, from high-growth startups to Main Street employers, out of business. Importantly, the economic impacts of COVID-19 have not been equal. Minority-owned businesses and very small businesses are disproportionately concentrated in the industries most heavily impacted by the COVID-19 crisis such as restaurants, retail stores, and personal services. As a result, encouraging entrepreneurship, making it more equitable, and improving access to the financial resources needed to start and maintain a business must be a priority for policymakers as the economy recovers.
While a significant amount of attention has rightfully gone to the $350 billion in flexible funding provided to states, counties, cities, and tribes in the $1.9 trillion American Rescue Plan (ARP), this historic bill also contains an important separate investment aimed at supporting entrepreneurs and small businesses. The ARP’s reauthorization and expansion of the State Small Business Credit Initiative (SSBCI) can not only bolster business creation, but also rectify many of the longstanding entrepreneurship inequalities that exist by race, gender, and place in the United States. SSBCI provides $10 billion to states and tribal governments, providing them flexibility to design a portfolio of small business financing programs that meets the unique needs of local entrepreneurs and considers the conditions of local capital markets. Different than prior federal small business policies focused on relief, such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program, SSBCI will enhance recovery by providing states and tribes more flexible, patient capital to spur an inclusive entrepreneurship-fueled rebound.