New Interim Final Rule Requires Demographic Reporting for Recipients of $10 Billion in SSBCI Funding for Small Business Assistance from the American Rescue Plan Act
The U.S. Department of the Treasury issued an Interim Final Rule that requires new reporting requirements for certain entities that received assistance under the State Small Business Credit Initiative (SSBCI), which was part of the American Rescue Plan Act (ARPA) of 2021. The interim rules apply to minority-owned or controlled small businesses that received an SSBCI loan, investment, other credit or equity opportunity, or technical assistance.
History of the SSBCI
The Small Business Jobs Act of 2010, which Congress passed during the Obama Administration, created the SSBCI, which disbursed $1.5 billion to 47 states, Washington, DC, five territories, and three municipalities. These state and local governments then disbursed the funds to eligible small businesses in their jurisdictions. The U.S. Department of Treasury oversees the SSBCI and the Community Development Financial Institutions (CDFI) Fund.
ARPA amended the Small Business Jobs Act of 2010 to give $10 billion to SSBCI to help shield small businesses from the impact of COVID-19. Congress earmarked $2.5 billion of the $10 billion allocation for small businesses owned by socially and economically disadvantaged individuals (SEDIs).
The New Reporting Requirements
The new reporting requirements under the Department of Treasury’s Interim Final Rule include:
- self-certified SEDI demographics related business status;
- minority-owned or controlled business status;
- women-owned or controlled business status;
- veteran-owned or controlled business status; and
- the race, ethnicity, gender, sexual orientation, Middle Eastern or North African ancestry, and veteran status with which principal owners identify
Purpose of the New Reporting Requirements
These reporting requirements concern the demographics of these businesses and are aimed to help better understand program outcomes. More specifically, the reporting requirements will help the Department of Treasury determine if the appropriate amount of SSBCI funds were used to support SEDIs as intended. A related purpose is to ensure compliance with nondiscrimination rules for federal funding.
Relationship Between SSBCI and the NMTC Program
The New Markets Tax Credit (NMTC) program and the SSBCI support economic and community development in low-income communities. The popularity of the NMTC program in recent years underscores the need for continued federal funding of similar initiatives, such as SSBCI funding opportunities.
CDFIs are some of the recipients of SSBCI funds. These funds act as an alternative source of capital for CDFIs and another means of expanding investments in low-income communities. Increased demographic reporting, as the Interim Final Rule requires, helps CDFIs and the Department of Treasury the impact of these funds and their usefulness in the future.
The SSBCI disbursement is a one-time program, and the NMTC program is scheduled to expire after its current five-year expansion unless Congress takes action to expand these programs further. Therefore, having additional data to support the effectiveness and impact of these programs can be critical to expanding and making these programs permanent sources of funding in the future.
Call Savage & Associates Today
If you want to find out more information about NMTCS and similar opportunities available to you, call our offices at 215.880.9441 in Philadelphia or 202.817.3941 in Washington D.C. and schedule a time to speak with us today. You also can find Savage & Associates online 24 hours a day, seven days a week, to learn more about the extensive range of services that we can offer you.
Dionne Savage is here to help you access the benefits of economic development tools such as New Markets Tax Credits, Low-Income Housing Tax Credits, C-PACE, and Historic Tax Credits. These programs can give you the resources to revitalize and build up communities across the United States. With our legal advice and your ideas, we can work to achieve the dreams that you have for your community.