52nd Street in West Philadelphia


The Nowak Metro Finance Lab and Ewing Marion Kauffman Foundation have teamed up to help states maximize incoming federal State Small Business Credit Initiative funds (SSBCI), a $10.5 billion opportunity over the next 10 years to catalyze entrepreneurship and increase access to capital in underserved communities.


The two-year partnership will hone in on four states – Arizona, Missouri, Pennsylvania, and Wisconsin – to work alongside decisionmakers and practitioners as they deploy their allocations totaling more than $500 million in SSBCI funds targeting $5 billion in leveraged private capital. To meet program requirements for both dynamic and inclusive economic growth, state leaders must undertake extensive planning and engagement efforts across local and regional levels if they are to take full advantage of SSBCI dollars – strengthening and building critical capital delivery systems, reaching underserved entrepreneurs, and spurring catalytic innovation.


The project’s overarching objective, beyond informing SSBCI programs and policies in the four states, is to take this opportunity with historic federal investment to open new channels for capital to reach entrepreneurs excluded from our current financial system.

Current Capital Landscape

Access to capital is a persistent barrier for entrepreneurs, especially for women and founders of color. Eighty-three percent of all entrepreneurs lack access to traditional banking or startup capital; instead, they fall back on personal savings or credit cards, costly and risky methods for starting a business that further drive inequality. The rise of fintech has vastly expanded the reach of predatory lending, beyond the purview of current federal rules and regulations.  


As for venture capital, eighty percent of all investment is deployed in five, largely metropolitan centers of the country, even less representative of entrepreneurship and business ownership, let alone American society, as a whole. Our current capital landscape thus shows disparities at both the national and local scales with vast differences between regions but also adjacent neighborhoods.

The SSBCI Opportunity

This lack of access across the continuum of capital (from equity to debt) for a continuum of entrepreneurs (from Black and Brown businesses to rural communities; from fintech to food trucks) motivates the Nowak Metro Finance Lab and Kaufman Foundation’s overall work and particular interest in SSBCI. Kauffman’s Capital Access Lab has quantified these gaps and identified innovative funds and fund managers. Meanwhile, Blueprint Local and the Nowak Lab through our Innovative Finance project, funded by the US Economic Development Administration, have engaged practitioners on the ground to identify and scale better-fitting capital products. In its 2022 collaboration with the National League of Cities, the Nowak Lab built A Roadmap to Inclusive Entrepreneurship for local leaders. SSBCI offers the chance to further implement their work and expertise at a much larger scale.


First implemented in the shadow of the Great Recession, SSBCI 1.0 was a $1.5 billion program that gave states flexible capital to invest in a range of small businesses. When successful, states developed locally tailored interventions keyed into specific markets, from credit enhancements for main street lending to venture capital for tech-enabled start-ups. As the Nowak Lab has written and analyzed, program success varied widely by state: when used most effectively, state SSBCI investments stood up evergreen funds that continue to serve diverse entrepreneurs or seeded billion-dollar unicorns that spurred regional growth, while other states used funds less effectively for one-time uses with unclear payoffs.


Though less discussed than other parts of the American Rescue Plan Act, the March 2021 legislation rebooted the program with seven times the original funding but also a new remit to advance equity and focus on reaching underserved entrepreneurs. The $10.5 billion investment, if designed and deployed effectively, represents a new golden opportunity for every state to massively invest in bottom-up economic growth and unleash an entrepreneurial wave that is both inclusive and innovative as funds begin to flow to states in the coming months.

Program Basics – Unlocking a Continuum of Capital for a Continuum of Entrepreneurs

Per SSBCI’s program guidelines, states must hit a wide array of targets rarely achieved by a single investor or fund. They must attract private capital 10-times their initial investment, requiring them to identify dynamic firms with potential for exponential growth. At the same time, they must invest their dollars into underserved communities, including rural and urban areas, veterans, women founders, and entrepreneurs of color, long excluded from private investment.


Key provisions include:

  • Leverage Target: Maintains SSBCI 1.0’s 10x private-to-SSBCI leverage target and requires at least a 1:1 match on initial investment
  • (New) Very Small Business set aside: The Treasury set aside $500 million states must use to reach to Very Small Businesses (VSBs) with fewer than 10 employees
  • (New) SEDI set aside: The Treasury also set aside $1.5 billion states must use to reach businesses owned and controlled by Socially and Economically Disadvantaged Individuals (“SEDI” businesses), with potential for performance-based SEDI bonus funds

Taken alongside other historic federal investments set in motion by the American Rescue Plan Act and the bipartisan Infrastructure Investment & Jobs Act, states that implement sophisticated strategies blending and braiding federal programs along with private sources will yield transformative outcomes in the form of inclusive, sustainable long-term economic growth.

The Kauffman-Nowak SSBCI Partnership

The Kauffman Foundation and Nowak Lab will learn from the SSBCI experiences of these four states so broad-based American entrepreneurship can be a major driving force in our economic recovery. The $10.5 billion capital infusion represents a historic opportunity to build a fuller continuum of capital – from flexible equity to better-fitting debt, leveraging10-times from private sources – for a broader continuum of entrepreneurs, in economies in every state.


Over the next two years, this project will:

  • Coordinate with stakeholders statewide to assess opportunities for SSBCI funds;
  • Convene communities of practice within and across states for building best practices;
  • Innovate new and concrete programs and products that increase access to capital;
  • Codify and replicate best practices, such as reports, term sheets, and successful pilots;
  • Leverage potential follow-on private capital, both market- and mission-driven; and
  • Measure program and transaction data to understand the reach and impact of funds.

With success, this partnership will identify and scale new capital products at the entrepreneur level and new funds at the investor level that better reach all entrepreneurs, regardless of their background or zip code.