California State Assembly Agenda — Subcommittee No. 5 on State Administration (February 13, 2024)
Summary
Agenda and background paper of the California State Assembly Subcommittee No. 5 on State Administration and the Committee on Jobs, Economic Development and the Economy for an informational hearing on Tuesday, February 13, 2024, in the State Capitol. The hearing covers an overview of California's State Small Business Credit Initiative (SSBCI) Program and SSBCI Inclusive Economic Growth. The background states that SSBCI, created in 2010 and administered by the U.S. Treasury, allocated $1.5 billion to states, and that California received $168 million in SSBCI 1.0 funding. The second round, under the American Rescue Plan Act, provided $10 billion, of which California received about $1.2 billion.
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“California State Assembly Agenda — Subcommittee No. 5 on State Administration (February 13, 2024).”
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California State Assembly
Agenda
Subcommittee No. 5 on State Administration and
Committee on Jobs, Economic Development and the Economy
Assemblymembers Sharon Quirk-Silva and Carlos Villapudua, Chairs
Tuesday, February 13, 2024
1:30 P.M. – State Capitol, Room 447
Informational Hearing
I. Welcome, Introductions and Opening Statements
II. Overview of California’s State Small Business Credit Initiative (SSBCI) Program
Brian Uhler, Deputy Legislative Analyst, Legislative Analyst Office
Clint Kellum Chief Deputy Executive Director, California Infrastructure and
Economic Development Bank (IBank)
Shela Tobias-Daniel, Executive Director, California Pollution Control Financing
Authority (CPCFA)
Tara Lynn Gray, Director, California Office of the Small Business Advocate (Cal-
OSBA)
III. SSBCI Inclusive Economic Growth
Sanford Livingston, CEO, Northern California Financial Development Corporation
Bianca Bloomquist, California Policy Director & Northern California Outreach
Director, Small Business Majority
IV. Public Comment
V. Adjournment
February 13, 2024
0509 Governor’s Office of Business and Economic Development
0950 State Treasurer
Issue 1: State Small Business Credit Initiative and SSBCI Technical Assistance for Capitol
Readiness Program
This hearing will provide an update on the implementation of California’s State Small Business
Credit Initiative (SSBCI) 2.0 program and the California Office of Small Business Advocate plan
for the Technical Assistance Capital Readiness Program.
Background
The SSBCI created in 2010 and administered by the U.S. Treasury, allocated $1.5 billion to
states to develop state lending assistance programs that address the small business credit
needs specific to their states. This program provided significantly greater flexibility than the Small
Business Administration (SBA) and other federally backed loan programs. States were required
to develop a plan for increasing lending to underserved small businesses and underserved
communities. California received $168 million in SSBCI 1.0 funding.
The second round of SSBCI funding authorized through the federal American Rescue Plan Act
provided $10 billion, and of this amount, California received about $1.2 billion. About half of this
amount was allocated based on California’s 2020 unemployment rate. Other funds are available
to states that meet goals for funding to businesses owned and controlled by socially and
economically disadvantaged individuals (SEDI). Other amounts are reserved for tribal
government loan programs, technical assistance programs, and other administrative costs.
California will receive funding in three separate tranches.
In California, SSBCI-funded programs are administered by both the California Infrastructure and
Economic Development Bank (IBank), housed within the Governor’s Office of Business and
Economic Development, and the California Pollution Control Financing Authority (CPCFA),
housed within the California State Treasurer’s Office. Additionally, in August of 2023, the
California Office of Small Business Advocate (CalOSBA) was awarded $25.3 million for the
SSBCI Technical Assistance (SSBCI TA) Program, for a period not to exceed five years, by the
U.S. Department of Treasury. The SSBCI TA Program’s primary purpose is to help socially and
economically disadvantaged Individual (SEDI)-owned businesses, very small businesses
(VSBs), and small manufacturing enterprises (SME) access and apply for capital funding from
an SSBCI-supported program. The SSBCI TA Program will collaborate with the statewide
network of small business technical assistance centers to reach and support small business and
help entrepreneurs navigate the funding landscape and successfully access capital they need
to start and/or grow their business in California.
Subcommittee No. 5 on State Administration and Committee on Jobs,
Economic Development and the Economy 2
February 13, 2024
IBank Programs
IBank SSBCI 2.0 funds support two types of small business financing programs, the Loan
Guarantee and Venture Capital program.
IBank’s Small Business Finance Center (SBFC) features a loan guarantee program designed to
assist small businesses that experience capital access barriers. The Small Business Loan
Guarantee program encourages lenders to provide funds to small businesses to help them grow
and prosper.
Originally known as the Small Business Loan Guarantee Program (SBLGP), the SBFC received
seed money in 1968 in an effort to reduce unemployment by supporting entrepreneurship and
small businesses. The Finance Center promotes statewide economic development by increasing
opportunities for entrepreneurs, the self-employed, microbusiness and small business owners
to have better access to capital and other technical resources.
The SBLGP helps businesses create and retain jobs, and encourages investment in low- to
moderate-income communities. The SBLGP is available to small businesses throughout the
state of California and serves hundreds of small businesses each year.
IBank’s Expanding Venture Capital Access program is designed to create a more inclusive
venture capital ecosystem, by:
Supporting underrepresented venture capital managers.
Investing in underrepresented and underserved entrepreneurs and business owners.
Subcommittee No. 5 on State Administration and Committee on Jobs,
Economic Development and the Economy 3
February 13, 2024
Investing in geographic areas that are socio-economically disadvantaged or that receive
very limited venture capital funding.
Promoting climate equity and climate justice.
CPCFA Programs
The California Pollution Control Financing Authority (CPCFA) SSBCI funds support two credit
enhancement programs, the California Capital Access Program for Small Business (CalCAP SB)
and the CalCAP Collateral Support program.
The CalCAP for Small Business provides a post-disbursement risk management tool for financial
institutions when a small business presents a solid business plan but has underwriting
challenges. It is available to participating financial institutions for loans and lines of credit up to
$5 million, for a wide range of business needs.
The CalCAP Collateral Support provides a risk management tool to financial institutions for use
when a small business is in a strong position to obtain capital except for having too little
collateral. It is available to participating financial institutions for loans from $25,000 to
$20,000,000, for a wide array of business needs.
CalOSBA Technical Assistance
Through the SSBCI TA program, CalOSBA will partner with the statewide network of small
business technical assistance centers that represent geographic and service diversity, including
services in over thirty different languages, to further reach and support small business and
entrepreneurs navigate the funding landscape and successfully access capital they need to start
and/or grow their business in California. CalOSBA is committed to reducing barriers to resources
and information and will prioritize outreach and engagement with socially and economically
disadvantaged individually (SEDI) owned businesses and very small businesses (VSB). The
technical assistance services will include tailored free one-on-one counseling and no- to low-
cost training.
Additionally, new to SSBCI 2.0 is the Minority Business Development Agency’s (MBDA’s) Capital
Readiness Program, with $125 million in support, builds a nationwide network of 43 technical
assistance providers. California's SSBCI Technical Assistance Program, highlighted by the
CalOSBA, has been approved for up to $25.3 million. CalOSBA's SBBCI Navigators Network
Program aims to connect underserved businesses to a network of technical assistance
providers, contributing to the overall success of the SSBCI initiative.
The anticipated impact of CalOSBA's efforts is significant, with expectations to reach 113,000
small businesses through the provision of financial services. The technical assistance award is
projected to support 40,000 small business loans specifically targeting underserved and very
Subcommittee No. 5 on State Administration and Committee on Jobs,
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small businesses. This initiative reflects a concerted effort to foster economic growth and
resilience, particularly in sectors vital to the nation's development.
Staff Comments
The impact that the SSBCI 2.0 funding could have for small businesses and particularly for
minority-owned business is significant and crucial to California’s robust economy. California
boasts an impressive over 4 million small businesses, with approximately 1.9 million being
minority-owned. Minority-owned businesses constitute about 46% of all businesses in the state
and contribute $192.8 billion in economic output, which is more than the annual Gross Domestic
Product of 18 US States, generating $28.7 million in tax revenue, and supporting 2.56 million
jobs. Beyond the economic and fiscal contributions, small businesses have a vital role in local
capacity building, community engagement, empowering marginalized communities, supporting
cultural diversity, creating a more inclusive environment and therefore contributing to a more
diverse and inclusive
economy. Research
shows entrepreneurship
creates intergenerational
wealth-building
opportunities that is
particularly strong for
minority and women
owned businesses.
Despite the benefits and
many contributions of
minority and women
owned businesses,
according to the
Legislative Analyst Office
Overview of the State
Small Business Credit
Initiative, “research
shows that minority-owned and women-owned businesses face disproportionate challenges with
lending—most recently in the processing of federal Paycheck Protection Program (PPP) loans
in 2020. In some cases, this arises from lenders’ preferences for larger businesses and pre-
existing relationships. Sometimes this occurs because lenders use factors like the applicant’s
address to gauge creditworthiness. In other cases, a loan officer may discriminate against a
small business owner based on the officer’s implicit or explicit biases.”
The Legislature has a vital role in supporting long-term statewide economic growth while also
ensuring the gains from such growth are widespread throughout the entire State.
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Economic Development and the Economy 5
February 13, 2024
The Joint Committee may wish to consider the following questions:
How will IBank, CPCFA, and CalOSBA measure the success of the program?
Are there metrics that each entity is using to measure success? What data is the state
collecting on the types of businesses accessing the loans and other self- reported data?
What were the lessons learned from the PPP loans outreach, stakeholder partnerships
and data collection? How can those lessons be utilized to strengthen California’s
entrepreneurial ecosystem, outreach, stakeholder partnerships and SSBCI TA data
collection?
Who is a part of the current entrepreneurial ecosystem? How do these entities (FDCs,
CDFIs, SBDC, Small business centers) work together/complement each other with
SSBCI and SSBCI technical assistance? How will this change? How does this support
the current capacity of Technical Assistance?
Who are the current SSBCI capital providers?
How are small businesses identified to utilize the SSBCI program?
How will business that are not eligible for SSBCI TA services be connected to other small
business resources within the California’s entrepreneurial ecosystem?
For the initial completed business assessment that will be reviewed annually for each
participating business in the TA program-will there be a mechanism to aggregate the data,
track and identify economic trends, development, job growth and retention? Who will
conduct these reviews and track the data?
The SSBCI 1.0 program had a default rate of less than 1 percent? Has this changed in
the 2.0 program? What is driving the lending community to take on the risk?
How long does the state keep funds set aside for defaults? How are both IBank and
CPCFA recycling funds from 1.0? How much funds are available? Do they still flow
through the same programs?
Can you please explain why it could take 1 to 3 years from the grant agreement to
complete the technical assistance services?
Staff Recommendation: This items is presented for information only.
Subcommittee No. 5 on State Administration and Committee on Jobs,
Economic Development and the Economy 6
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