Obama Administration Announces Funds for Connecticut, Missouri, and Vermont to Spur at Least $534 Million in New Small Businesses Lending, Help Create Jobs

Obama Administration Announces Funds for Connecticut, Missouri, and Vermont to Spur at Least $534 Million in New Small Businesses Lending, Help Create Jobs

WASHINGTON – Today, the U.S. Department of the Treasury announced the approval of State Small Business Credit Initiative (SSBCI) applications from Connecticut, Missouri, and Vermont. The planned use of SSBCI funds by these states will help create new jobs and is expected to spur more than $534 million in additional small business lending. The SSBCI program, which supports state-level small business lending programs, is an important component of the Small Business Jobs Act that President Obama signed into law last fall.

“These critical funds will help small businesses access the capital they need to expand their operations, create new jobs, and continue supporting our nation’s economic recovery,” said Treasury Secretary Tim Geithner. “Public-private lending partnerships, such as the State Small Business Credit Initiative, have a proven track record of success, and I’m pleased that this funding is on its way to support economic growth in these states.”

Under the SSBCI, all states are offered the opportunity to apply for federal funds for state-run programs that partner with private lenders to increase the amount of credit available to small businesses. States must demonstrate a reasonable expectation that a minimum of $10 in new private lending will result from every $1 in federal funding. Accordingly, the $1.5 billion federal funding commitment for this program overall is expected to result in at least $15 billion in additional private lending nationwide.

Details on the applications approved today, which the states expect will generate a cumulative total of at least $534 million in new small business lending in Connecticut ($133 million), Missouri ($269 million), and Vermont ($132 million), are included below.

Treasury Secretary Tim Geithner announced the approval of this latest wave of SSBCI applications during a conference today at the Treasury Department entitled, “Access to Capital: Fostering Growth and Innovation for Small Companies.” The conference brings together policymakers, entrepreneurs, investors, academics, and other market participants to explore how both the public and private sectors can help promote access to capital at each stage of growth for a small business – from seed capital, to growth equity, to accessing the public markets.

Treasury has previously approved funding for SSBCI programs in California, Michigan, and North Carolina. Additional applications are expected to be approved in the coming weeks. For more information about the SSBCI, please visit link.

Connecticut (At Least $133 Million in New Small Business Lending)

With SSBCI approval of Connecticut’s application, can access up to $13.3 million in SSBCI funding, which Connecticut expects to generate more than $133 million in new small business lending in the state.

"Connecticut's economic recovery is driven by small businesses and their strong plans for growth. We need to ensure they have the capital necessary for hiring, purchasing of machinery and equipment and expansion of facilities in our state," said Connecticut Governor Dannel P. Malloy. "In partnership with the banks and the Connecticut Development Authority, Connecticut's small business owners will now have more resources for that growth."

Connecticut’s approved plan dedicates its $13.3 million in SSBCI funding to support its Capital Access Program (CAP), which provides loan portfolio insurance to encourage private financial institutions to lend to creditworthy small businesses. Connecticut has administered its CAP for more than 19 years. During this period, it has provided portfolio insurance for about 630 enrolled loans, totaling over $53.4 million, resulting in the creation of or saving of 6,120 jobs.

Missouri (At Least $269 Million in New Small Business Lending)

With SSBCI approval of Missouri’s application, Missouri can access up to $26.9 million in SSBCI funding, which it expects to generate more than $269 million in new small business lending in the state.

“Along Main Streets in every corner of Missouri, small businesses are a critical force for creating jobs and growing our economy,” Missouri Gov. Jay Nixon said. “These new resources will help Missouri entrepreneurs grow their operations and turn their dreams into bricks and mortar. We appreciate the leadership shown by President Obama and Secretary Geithner in providing these resources for our state, and we will invest these tools wisely and strategically in businesses that will transform Missouri’s economy for the 21st Century.”

Missouri’s approved plan dedicates $16.9 million of the state’s SSBCI funding to establish the hi-tech Missouri IDEA Seed and Venture Capital Funds (IDEA Funds). IDEA stands for Innovation, Development and Entrepreneurial Advancement.

The Missouri IDEA Funds promote the formation and growth of businesses that engage in the transfer of science and technology into job creation. The funds provide financing to eligible businesses through four components that correspond to the four stages of venture growth: (1) pre-seed capital stage financing; (2) seed capital stage financing; (3) venture capital stage financing; and (4) expansion stage debt.

Collectively, these four components will provide financing opportunities throughout the process entrepreneurs call the “continuum of capital.” In this way, the funds will support new venture formation and growth all the way from research and development to commercialization.

Missouri’s approved plan also dedicates $10 million of SSBCI funding to the Grow Missouri Loan Participation Fund. That program supports the formation and growth of businesses in the industrial, commercial, agricultural, and recreational sectors. It provides loans of up to $3 million to businesses with under 500 employees to help attract new enterprises and expand existing companies.

Vermont (At Least $132 Million in New Small Business Lending)

With SSBCI approval of Vermont’s application, Vermont can access up to $13.2 million in SSBCI funding, which it expects to generate more than $132 million in new small business lending in the state.

“This $13.2 million in federal small business funding is terrific news for Vermont,” said Vermont Governor Peter Shumlin, “and it would not have been possible without the strong advocacy efforts of our Congressional delegation. We thank Senator Patrick Leahy, Senator Bernie Sanders, and Congressman Peter Welch for their efforts, and also thank the U.S. Department of the Treasury for this well-timed award. With the help of Vermont’s private sector leverage, these federal funds will go far, giving our small businesses the critical boost they need to create jobs for Vermonters.”

Vermont’s approved plan dedicates $1 million of the state’s SSBCI funding to support its Financial Access Program (FAP), which provides loan portfolio insurance to encourage private financial institutions to lend to creditworthy small businesses. The remaining $12.2 million is allocated to three additional programs:

• Vermont has allocated a total of $5.9 million to its Commercial Loan Participation Program, which provides financing for the purchase of land; construction and renovation of facilities; and purchase and installation of equipment for eligible projects.
• Vermont has allocated $3.0 million to its Technology Loan Participation Program. This initiative supports loans to early stage firms primarily in the information technology and bioscience sectors.
• Vermont has also allocated $3.3 million to its Small Business Loan Program, which finances smaller commercial businesses’ fixed asset and working capital needs.

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Remarks by Treasury Secretary Tim Geithner at the Access to Capital Conference

Remarks by Treasury Secretary Tim Geithner at the Access to Capital Conference

As Prepared for Delivery

Good morning. Welcome to Treasury. We're very pleased to have everyone here today for our Access to Capital Conference.

I'd like to thank some of the people who are working so hard to help small businesses succeed in today's tough environment. At the SBA, Administrator Karen Mills, whose leadership has been key to so many of the Administration's initiatives.

And here at Treasury, Assistant Secretary Mary Miller, who organized today's conference; Don Graves, who's in charge of our small business programs; Treasurer Rosie Rios; and many others.

At the SEC, OCC, and other regulators, our colleagues are thinking about ways that they can help remove burdens and channel credit to small businesses. And we're pleased to be joined by our colleagues from the White House, Gene Sperling and Aneesh Chopra.

Finally, I want to acknowledge the entrepreneurs and investors who have joined us here today. As we consider ways to help small businesses from here at Treasury and throughout the Administration, we're going to need your expertise and creativity.

We're here because the ability of entrepreneurs to access financing is essential to building a more competitive economy.

Today, we want to explore how we can help make that happen.

What are the barriers to accessing capital? Where can the government do more or help eliminate barriers and where should we stay out of the way? What can the private sector and the public sector both do to help small companies get access to the capital that they need to grow?

The financial crisis caused a great deal of damage to the capacity of innovators to access capital, and we can't promote innovation and investment in the United States unless we help these innovative companies get the funding they need to succeed.

Now, we moved quickly in face of the crisis to restart economic growth, to re-open markets for capital and credit, and to build a stronger financial system that supports growth and innovation.

Alongside the broad measures we took to stabilize the financial system and financial markets, we supported three types of policy measures to help small companies – both start-ups and existing small businesses.

First, tax cuts and incentives – over the past two years, the President has signed into law 17 different tax cuts for small businesses, including eliminating capital gains taxes on key small business investments and raising the amount small businesses can expense to $500,000 – making it easier for small businesses to invest and hire more workers.

Second, we've put significant resources into support for innovation, particularly in health care and clean energy. And in those industries, small companies are often the most innovative.

And third, we have developed several special credit programs, through and alongside SBA, including loan guarantees and capital investments to encourage lending – such as the Small Business Lending Fund – and support for state small business credit programs.

Under the State Small Business Credit Initiative, for example, we've already announced funding for three states – California, Michigan, and North Carolina. Last week, the SSBCI contribution to North Carolina leveraged private capital to produce the first loan under the program – to J&S Reel Logging in Raleigh. And today, we are announcing funding for three more states – Missouri, Connecticut, and Vermont – that is expected to spur $534 million or more in new small business lending.

This program presents a low cost to taxpayers with a high impact for small businesses: to obtain the federal funds, each state demonstrates how it can leverage every 1 dollar of public investment into 10 dollars of new lending. Our $1.5 billion funding commitment nationwide is expected to spur $15 billion or more in additional small business lending.

These policies are making a difference. The cost of borrowing and credit terms are improving. Equity markets are open.

But it's still a tough financing environment out there for small companies, and we want to draw more attention today to the challenges facing start-ups and high-growth companies.

Over the past two decades, our financial system has undergone a significant transformation, and the way small start-ups find financing at each stage of growth has been part of that change.

At the earliest stages of funding, small companies have become more reliant on angel investors, universities, or sector-specific investment shops.

And as these small companies find their footing, they are waiting longer than ever to go public – financing themselves instead through multiple rounds of private equity or venture capital.

The number of IPOs in the U.S., for example, has decreased during the last two decades. And even though IPOs have picked back up in the wake of the financial crisis, an increasing number of U.S. companies are going public in other countries, or even deciding to stay private and access different sources of funding.

So, we want to get a better feel from you for where we need to focus the attention of policy makers going forward.

I want you to tell us not just what we can do, but how we can do it, especially if the ideas can be implemented quickly and don't require significant investments of taxpayer dollars.

This conference provides an opportunity to convene policymakers and market participants to gain insight and make progress on removing the barriers that stand before small companies today. It's an opportunity to find solutions that run from the traditional – such as tax incentives and direct lending – to the innovative and alternative, such as creating a way to efficiently pool investments in small companies.

We face a complex set of challenges – challenges that don't just affect small companies but the broader economy and the nation as a whole.

Today's conference is one more step in our work to address these problems.

I'd now like to turn the podium over to Administrator Mills. ​

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Market Impacting News

There's a lot of stuff going on out there. Here's some highlights.

Globally

• Internationally, equities have recovered somewhat. The Tokyo exchange is up about 4% on reports of progress in containing radiation leaks at Fukushima, but oil and gold were up on the fighting in Libya and the unrest in the Middle East. The euro hit $1.4249 on expectations that the European Central Bank will raise interest rates next month. JPMorgan analysts are also expecting to see crude oil prices rise further once the Japanese nuclear crisis is resolved and the nation shifts to reconstruction.

Japan

• Japan parts paralysis spreads as firms cut output. Sony has cut output at five more factories (bringing the total number affected to 15 out of 25), which produce digital and video cameras, televisions and microphones. A sixth plant could reopen Tuesday, but could be disrupted by rolling blackouts. Toyota has delayed restarting all 12 of its Japanese assembly plants until at least Saturday. Iron mining company Rio Tinto has warned that these supply disruptions are a threat to their expansion plans, and companies such as Apple, GM, and Nokia are also feeling the impact.
• Steam is venting from Fukushima reactor No. 2, and haze has been seen above reactor No. 3. On the up side, technicians have managed to attach power cables to all six reactors and have started at least one of the cooling pumps. Radiation has been found in seawater near the plant - specifically radioactive iodine (at 126.7 times the allowed limit) and cesium (at 24.8 times the allowed limit). However, according to a TEPCO official, "it would have to be drunk for a whole year in order to accumulate to one millisievert.[1]" The Japanese government has stopped shipments of milk, spinach, and kakina[2] from the area for the time being.
• On top of everything else, fuel shortages, icy rain, and power outages are slowing efforts to get humanitarian aid into Japan. Right now, estimates put damage at $250 billion with 21,000 dead or missing. 2.4 million people are without access to water, and 221,000 households remain without power.
• The Norwegian Institute for Air Research has detected traces of radioactive particles from Japan in Iceland. "It's only a matter of days before it disperses in the entire northern hemisphere," says Andreas Stohl, a senior scientist for the Institute, "Over Europe there would be no concern about human health."

Libya

• The Libyan military has attacked two towns in west Libya. The United States is currently in charge of the UN "no-fly" zone, but plans to cede control sometime soon. "We anticipate this transition to take place in a matter of days and not in a matter of weeks," said President Obama. A F-15E went down in Libya overnight, but the US military is reporting that the crew members have been rescued and that the crash was caused by mechanical failure.
• UN air strikes have destroyed a naval facility in the east of Tripoli.

Yemen

• The president of Yemen is warning that his country will descend into civil war if he is forced to quit. "Those who want to climb up to power through coups should know that this is out of the question. The homeland will not be stable, there will be a civil war, a bloody war. They should carefully consider this," said President Saleh.

Syria

• Syria is experiencing its fifth straight days of anti-government protests.

[1] A sievert, symbol Sv, is the SI derived unit of dose equivalent radiation. For comparison, public dose limits for exposure to radiation are usually at 1 millisievert (1 mSv) per year above background. The maximum permissible dose to radiation workers is an average of 20 mSv per year, with no more than 40 mSv in a single year. Sleeping next to a human being for 8 hours a night, every night, for a year exposes you to 0.02 mSv, eating a banana exposes you to 0.0001 mSv, the sky exposes you to 0.24 mSv per year, and smoking 1.5 packs per day exposes you to between 13 and 60 mSv per year. For a more visual look, check out this Radiation Dose Chart.

[2] Some sort of Japanese vegetable. I got nothing, here.

Redbook

Continuing the trend of retail sales figures of minor importance to the market, we now have the Redbook Report. The week ending 3/12 saw a year-over-year increase in chain store and department store sales of 2.0% Econoday is now reporting that, for the week ending 3/19, year-over-year sales are up 2.4%.

A Day In The Life Of A Financial Advisor

It's far more like this than you would think.

ICSC-Goldman Store Sales

Today, what metrics we have are pretty much retail sales figures. For the week ending 3/12, the ICSC-Goldman Store Sales survey showed week-over-week sales up 0.1% (which was rather mediocre), with year-over-year sales up 3.1% (which was fairly impressive). And for the week ending 3/19? Not a whole lot of change, according to Econoday. Week-over-week sales were down 0.1%, and year-over-year sales were up 3.0%.

Remember, this is store sales at major retail chains, so it only represents about 10% of total retail sales. Try not to draw too strong a conclusion from these results.

Treasury to Begin Orderly Wind Down of Its $142 Billion Mortgage-Backed Securities Portfolio

Treasury to Begin Orderly Wind Down of Its $142 Billion Mortgage-Backed Securities Portfolio

Treasury Will Authorize Sale of up to $10 Billion in Agency-Guaranteed Mortgage-Backed Securities per Month

Part of Continued Wind Down of Holdings Acquired as Part of the Financial Stabilization Actions in 2008 and 2009 to Help Combat the Financial Crisis

WASHINGTON – Today, the U.S. Department of the Treasury announced that it will begin the orderly wind down of its remaining portfolio of $142 billion in agency-guaranteed mortgage-backed securities (MBS). Starting this month, Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions.

"We're continuing to wind down the emergency programs that were put in place in 2008 and 2009 to help restore market stability, and the sale of these securities is consistent with that effort," said Mary J. Miller, Assistant Secretary for Financial Markets. "We will exit this investment at a gradual and orderly pace to maximize the recovery of taxpayer dollars and help protect the process of repair of the housing finance market."

Treasury acquired its portfolio of agency-guaranteed MBS under authority provided to it by Congress under the Housing and Economic Recovery Act of 2008. These purchases of agency-guaranteed MBS helped preserve access to mortgage credit and promote economic stability during a period of unprecedented market stress and volatility.

The market for agency-guaranteed MBS has notably improved since the time Treasury purchased these securities in 2008 and 2009. Based on current market prices, Treasury expects to make a profit for taxpayers on this investment. The sale of these securities will not alter our previously stated debt management objectives, nor change the path on which we intend to achieve those objectives.

In 2008, Treasury retained State Street Global Advisors to acquire, manage, and dispose of its agency-guaranteed MBS portfolio. That firm will manage the wind down of this investment. At the end of each month, Treasury will post on its website the total agency-guaranteed MBS sales it has made, broken down by coupon and agency.

The sale of these securities is part of Treasury's continued efforts to wind down emergency programs that were put in place in 2008 and 2009 to promote financial stability and restore economic growth. On October 3, 2010, new Troubled Asset Relief Program (TARP) purchasing authority expired, and Treasury is moving to exit its remaining TARP investments in private companies. In December 2010, Treasury sold its final share of Citigroup common stock, locking in a profit of more than $12 billion on that TARP investment. General Motors' (GM) recent initial public offering cut Treasury's common stock stake in that company nearly in half and brought in a total of $13.5 billion for taxpayers. Additionally, Treasury recently received $9.6 billion in TARP repayments through the sale of its Ally Financial trust preferred securities holdings and AIG's sale of its MetLife equity stake.

For a list of Frequently Asked Questions, please visit link.​

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