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Alabama Small Business Development Center Network
Alabama SBDC Network

SSBCI: State Small Business Credit Initiative

We are pleased to serve as the technical assistance resource for the State Small Business Credit Initiative (SSBCI) and Innovate Alabama.  Our technical assistance program will launch simultaneously with Innovate Alabama’s capital programs, in June 2024.

We work with eligible entrepreneurs and small businesses who are applying for, preparing to apply for, or have applied for capital from an Innovate Alabama SSBCI capital program or other eligible federal or jurisdictional programs. It is the intention of the program that by addressing the barriers at the start and throughout the length of the lending process – such as obtaining proper financial documentation, building business acumen, and cultivating business banking relationships – very small businesses and those owned by socially/economically disadvantaged individuals will have an increased likelihood of both obtaining capital and successfully managing the capital over time.

Register Now for SSBCI Assistance
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The AssistAL Team can help you:

Over 80% of younger, smaller firms rely on personal savings or funds from friends or family to fund their business.  This means that only 20% of small, younger firms have access to outside capital sources.
The Alabama SBDC has a team of business advisors who serve as small and micro business finance specialists. This team is tasked with working with market segments that often lack access to capital or have difficulty accessing traditional lending. Our business advisors are available to assist businesses through advisory services and educational training programs.

LendAL works with lenders across Alabama to provide Alabama-based small businesses with expanded access to capital. Through LendAL, small businesses headquartered in Alabama or with Alabama residents as founders are eligible for loans.  Business owners should have a relationship with a bank; if you don’t have one, the Alabama SBDC can help you identify participating lenders.  If your financial institution is not currently participating but would like to learn more, please refer them to the Innovate Alabama SSBCI website.

Collateral Support Program (CSP)

  • CSP is designed to enable financing that might otherwise be unavailable due to a collateral shortfall. The program supplies pledged cash collateral accounts to lending institutions to enhance collateral coverage of individual loans.  Maximum support is up to 50% of the loan. Loan amounts are expected to range from $10,000 to $5 million; interest rates are negotiated with the lender.

William Howard Wills (WHW LGP) Loan Guaranty Program

  • The LGP enables small businesses to obtain term loans or lines of credit to help them grow and expand their businesses. The program provides a lender with the necessary security, in the form of a partial guarantee, for the lender to approve a loan or line-of-credit.  Loan amounts are expected to range from $50,000 to $5 million; interest rates are negotiated with the lender.

Loan Participation Program (LPP)

  • The LPP enables small businesses to obtain medium to long-term financing, usually in the form of term loans, to help them grow and expand their businesses.  Loan amounts are expected to range from $50,000 to $5 million; interest rates are negotiated with the lender. The maximum participation amount is 30% of the total loan; exceptions will be considered on a case-by-case basis.

Eligible uses of loan proceeds:  The loan proceeds for all three program above must be used for a “business purpose.” A business purpose includes, but is not limited to, startup costs, working capital, business procurement, franchise fees, equipment, inventory, as well as the purchase, construction renovation or tenant improvements of an eligible place of business that is not for passive real estate investment purposes.

Ready to learn how you can use LendAL programs?

Register Now for SSBCI Assistance

InvestAL offers high match investments for venture capital organizations with fund-to-fund and co-investment options ranging from $.5 million to $2 million to scale. Early-stage, high-growth small businesses can apply to receive capital, primarily through equity investments, while early-stage venture capital funds can receive partner investments. Note: This is not a grant program, and it is not a matching program.

Background
Alabama’s State Small Business Credit Initiative (SSBCI) Venture Capital Equity Program has been allocated $25 million. Managed by Innovate Alabama, $16 million will be invested directly in Alabama-based startups and $9 million will be invested in venture funds that in turn will invest in Alabama startups. Per Treasury, 60% percent of the funds must be invested in startups majority owned by SEDI Americans, and the funding must be catalytic to the startup or venture fund’s capital raise. All investments require a 1:1 private capital investment and must be made no more than 90 days before the SSBCI investment. All program investors and investees must comply with Treasury’s certification and reporting guidelines on a quarterly and annual basis. The goal of SSBCI is to catalytically drive 10 dollars of investment for every 1 dollar invested over the 10-year life of the program.

Innovate Alabama Co-Investment Program
The Innovate Alabama Co-Investment Program invests directly in high-growth startup and small businesses alongside private investors that meet certain criteria. Eligible private investors include angels, angel groups, syndicates, accelerators, incubators and venture funds. The program targets pre-seed to early-stage companies and will consider supporting follow-on financing rounds in the most promising deals. There will be a programmatic emphasis on funding startups and small businesses majority owned by socially and disadvantaged individuals. Innovate Alabama requires the private investment to have the same standing as (pari passu) the SSBCI investment and will consider capital support up to 50% of an equity financing round. Investments will range from $5,000 to $1,000,000 in high growth startups that are raising less than $20 million and have less than 500 employees.

Innovate Alabama Fund Program
The Innovate Alabama Fund Program makes limited partner investments in seed to early-stage venture capital funds committed to investing in Alabama. Up to ten partner funds are expected to be competitively selected for participation in the program, with capital support ranging from $.5 million to $2 million. The SSBCI investment is expected to range from 5-10 % of the total fund size and will not exceed 50% of the total capital raised for each partner fund. Participating funds will target pre-seed to early-stage companies with an average first round investment size estimated between $25,000 and $1 million, with an emphasis on investing in investees majority owned by socially and economically disadvantaged individuals.

Application Process
All perspective high growth startup founders can submit an Apply to Pitch application form on the Innovate Alabama website; the application requires basic information on the proposed startup.  The Innovate Alabama VC team will review the data, data room (pitch deck, projections or financials, legal term sheet, corporate governance documents and invite the companies they consider venture-backable for a formal pitch. After the pitch, the Innovate Alabama investment team will complete further due diligence and confirm the private investors. If Innovate Alabama decides to invest, it will invest on the same terms of the current round on a 1:1 basis.

Ready to learn how you can compete for InvestAL support?

Register Now for SSBCI Assistance

The Alabama Small Business Development Center Network (ASBDC) provides technical assistance to eligible entrepreneurs and small businesses who are applying for, preparing to apply for, or have applied for capital from an Innovate Alabama State Small Business Credit Initiative (SSBCI) capital program or other eligible federal or jurisdictional programs.

It is the intention of the program that by addressing the barriers at the start and throughout the length of the lending process – such as obtaining proper financial documentation, building business acumen, and cultivating business banking relationships – very small businesses and those owned by socially/economically disadvantaged individuals will have an increased likelihood of both obtaining capital and successfully managing the capital over time.

The ASBDC does not provide grants or loans; our team of small business experts work with entrepreneurs and small business owners to help them identify and pursue possible funding options.

Ready to get started?

Register Now for SSBCI Assistance

The American Rescue Plan Act of 2021 (ARPA), provided funds to states, territories, and Tribal governments to expand access to capital for small businesses.

ARPA promotes:

  • Economic resiliency
  • Creating new jobs
  • Expanding economic opportunity

BACKGROUND:

Alabama participated in SSBCI 1.0 from 2012 through 2017

  • Completed 568 transactions, mostly under the Loan Guaranty Program
  • Facilitated $231 Million in Financing – 13th best in the country
  • Created 2,362 jobs and retained 4,050 jobs
  • Median size of businesses assisted had 3 full-time employees
  • CDFI Banks were the primary users of the SSBCI 1.0 program
  • Reached 8.11x Leverage

Innovate Alabama’s SSBCI 2.0 will focus on:​

  • Supporting Alabama-based businesses, lenders, and investors ​
  • Ensuring that small businesses will be complemented by technical assistance support​
  • Establishing a state-wide network to source loans and investments between vetted, eligible, and qualified Alabama-based sources of capital
  • Special emphasis and pricing for Borrowers who are Socially and Economically Disadvantaged Individuals – or businesses owned/controlled by SEDI (min 56.5% will be deployed to SEDI borrowers)

What is SEDI – Socially and Economically Disadvantaged Individuals?​

  • Business enterprises that certify that they are owned and controlled by individual(s) who have had their access to credit on reasonable terms diminished as compared to others in comparable economic circumstances
  • Business enterprises that are located inCDFI Investment Areas
  • Business enterprises that certify that they are owned and controlled by individuals whose residences are in CDFI Investment Areas
  • Business enterprises that certify that they will use the loan proceeds in a location that is a CDFI Investment Area

Under the ARPA, Alabama was allocated up to $97,943,015 in funding, which will be distributed in three tranches based on performance.

  • SSBCI 2.0 – $10 Billion vs SSBCI 1.0 – $1.5 Billion
  • SSBCI 2.0 for AL – $98 Million vs SSBCI 1.0 for AL – $31 Million

Ready to see if SSBCI is a good fit for your company?

Register Now for SSBCI Assistance

A portion of SSBCI capital will be invested into SEDI (Socially or Economically Disadvantaged Individual) owned and controlled businesses, meaning at least 51 percent of the business is owned and controlled by SEDI individuals meeting one or more definitions from the following criteria.  More than half of Alabama geographically qualifies as SEDI! SEDI-owned and controlled businesses are at least 51% controlled and owned by SEDI individuals who meet one or more definitions from the criteria.

  • Long-term residence in a rural community
  • Veteran status
  • Disability
  • Membership of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society, such as Black, Latino, and Indigenous and Native American persons; Asian Americans and Pacific Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual, transgender, and queer (LGBTQ+) persons
  • Gender
  • Limited English proficiency
  • Long-term residence in an environment isolated from the mainstream of American society
  • Membership of a federally or state-recognized Indian Tribe
  • Residence in a community undergoing economic transitions (including communities impacted by the shift towards a net-zero economy or deindustrialization)
  • Membership of another underserved community, such as persons otherwise adversely affected by persistent poverty or inequality.
  • Individuals whose residence and/or business address is located in Community Development Financial Institution-designated (CDFI) investment areas, or the business will operate a future location in a CDFI investment area.

The following businesses are NOT eligible:

  • Businesses engaged in speculative activities
  • Businesses that earn more than 50% of their revenue from lending activities unless a CDFI Loan Fund or Tribal Enterprise Lender
  • Businesses engaged in pyramid sales
  • Businesses engaged in activities that are prohibited by federal law
  • Businesses deriving more than 1/3 of annual revenue from gambling activities
  • Businesses that have a principal that was convicted of a sex crime against a minor
  • Business with more than 750 employees at the time of the loan. (The program average is not to exceed 500 employees at the time of the loan.)

Have questions about your eligibility?

Register Now for SSBCI Assistance

The Innovate Alabama SSBCI programs are not grants.

US Treasury provided funding to the states that would allow them to set up programs designed to increase the availability of capital to very small businesses and SEDI populations; the funding does not provide grants to entrepreneurs and small business owners.

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