Program has helped more than 100 businesses
FRANKFORT, Ky. (Oct. 20, 2015) — Kentucky received nearly $5.3 million from the U.S. Treasury Department to help small businesses receive private-sector loans from banks and other credit institutions, Gov. Steve Beshear announced today.
“This loan funding gives Kentucky small businesses the extra backing they need to expand and create jobs,” Beshear said. “We designed a streamlined and easy-to-access program for banks and credit institutions to apply for these funds on behalf of businesses seeking loans. Through our program, we are helping more than 100 small businesses access almost $87 million in loans, $77 million of which are private-sector. That success led directly to this latest round of funding.”
The funding marks the third disbursement from the U.S. Treasury Department’s State Small Business Credit Initiative (SSBCI) since 2011 to the Kentucky Small Business Credit Initiative (KSBCI).
Banks and qualified lenders apply to KSBCI when a business of fewer than 500 employees applies for a loan and falls just short of the institution’s requirements. To fill that gap, eligible companies can receive loans of up to $20 million from lenders with 20 percent provided by the state. Loans exceeding $250,000 are subject to Kentucky Economic Development Finance Authority (KEDFA) approval. Kentucky’s program targets underserved regions to encourage business growth and hiring.
The SSBCI’s disbursement brings the commonwealth’s total allocation to nearly $15.5 million since July 2011. Kentucky unlocked its third disbursement after expending 100 percent of its first disbursement and 80 percent of the second round. To date, KSBCI helped Kentucky companies receive $86.8 million in loans.
The Small Business Jobs Act, signed into law by President Barack Obama in 2010, established the SSBCI program. The Treasury Department has disbursed more than $1.2 billion in SSBCI funds to participating states, municipalities and territories since the program began. Nationally, from 2011 to 2014, SSBCI funds spurred more than $6.4 billion in private sector lending and investments to small businesses. States have generated $7.36 in private sector lending and investments for every $1 of federal support. Business owners reported these funds will help them retain or create more than 140,000 jobs.
Kentucky’s SSBCI funding is administered by the Cabinet for Economic Development’s Office of Entrepreneurship. The innovative financing option works in partnership with participating lenders. Lenders can use three Kentucky-specific credit enhancement options to strengthen loan requests that are credit-worthy in nature but fall just outside acceptable underwriting standards. The credit initiative bridges the gap, making it possible for lenders to finance more small businesses.
“The first two disbursements of SSBCI funds allowed us to support more than 115 loans to over 100 small businesses throughout the state,” said Cabinet for Economic Development Secretary Larry Hayes. “We will continue that momentum by engaging financial services partners to put this funding to work in Kentucky.”