REGIONAL- With White House officials reporting that more people than ever before are starting new businesses, the U.S. Treasury on Tuesday announced the release of up to $1 billion for small business development in 11 states, including $97 million for Minnesota entrepreneurs.
“We are thrilled,” said Minnesota Department of Employment and Economic Development (DEED) Commissioner Steve Grove. “This funding allows DEED to carry out its commitment to helping small businesses across the state grow and succeed.”
Grove explained that the Minnesota award represents a multi-year investment in supporting entrepreneurs throughout the state.
“Minnesota will receive these State Small Business Credit Initiative (SSBCI) funds in three disbursements over several years. The initial disbursement from the Treasury is approximately $29.5 million. In the weeks ahead, DEED will share details about the six Treasury-approved programs under the SSBCI initiative to benefit small businesses.”
Specific details are yet to be announced but the Treasury Department provided a preliminary outline of how the funds are intended to be used:
Minnesota will operate a new loan participation program with an allocation of $12.5 million that provides loans to businesses purchasing machinery, equipment, or software to increase productivity and automation.
$12.5 million will be allocated to a multi-fund program, the Growth Loan Fund, that will invest in Minnesota-based venture capital funds that will target seed and early-stage investments in start-ups related to key sectors such as information technology, software, life sciences, agriculture, clean technology, and manufacturing.
Two additional venture capital programs, administered by the University of Minnesota Office of Investments and Banking, have a combined allocation of $34.5 million. The funds provide equity support to small businesses by co-investing in early-stage funding rounds alongside private investors and to small businesses by investing SSBCI capital in venture capital funds.
The existing SSBCI program was expanded by the Biden Administration’s American Rescue Plan to provide nearly $10 billion to states, territories, and Tribal governments to increase access to needed capital, especially in underserved communities. The fund is intended to be a catalyst for up to $100 billion of private investment, yielding $10 of private capital for every dollar SSBCI provides. Overall, 31 states have received awards totaling $4.8 billion so far.
U.S. Senator Amy Klobuchar participated in the announcement.
“We must continue to rejuvenate our economy,” she said. “Minnesota is going to be getting a significant amount of funds to leverage millions of dollars for small businesses and entrepreneurs. So much of this early capital money has been going to the same places, to Northern California, to New York, and it is time to make sure that the rest of the country continues to have startups as well.”