With nearly $10 billion allocated to states, territories, and Tribal Nations (“states”), the State Small Business Credit Initiative (SSBCI) is a unique federal funding program that fueled the development of innovative loan and venture capital programs. Together, these programs help expand access to capital for entrepreneurs and small businesses through the states as policy and program laboratories.
As the program moves towards its sunset, the next test for states is to learn key lessons from SSBCI to improve their entire economic development ecosystem. Here are a few highlights:
- Design for the market, not the program. SSBCI gives states flexibility to use different financing approaches (whether they are loan participation, collateral support, loan guarantee, capital access, direct equity, or equity fund investments) that are tailored to local needs. The broader lesson is important: economic development programs should begin with a clearly identified market failure or opportunity rather than with a predetermined program or incentive. Economic developers should use this lens to continually assess where private markets are failing and adjust products accordingly. There is no need to stay with a legacy program if it is not showing results. Flexibility and program modification should be viewed as management tools, not signs of failure.
- Build delivery systems, not stand-alone programs. SSBCI largely depends on networks of banks, CDFIs, investors, technical assistance providers, universities, and other intermediaries to reach businesses. The same principle applies to workforce, entrepreneurship, innovation, cluster development, and business retention programs. States can achieve greater impact when programs operate through connected networks rather than institutional silos. Partner recruitment, training, communication, and relationship management therefore become core economic development functions. A strong product has limited impact if users and stakeholders do not know how to use or leverage it.
- Connect services to program outcomes. SSBCI’s integration of technical assistance (TA) and capital illustrates another transferable lesson. TA is most valuable when it helps businesses reach a tangible next step whether it is financing, investment, contracting opportunities, expansion, or another measurable outcome. Treasury’s SSBCI TA Program explicitly connects technical assistance with capital and opportunities created by other major federal investments. Economic developers have long worked across agencies and building on those relationships to develop interconnected services can push projects to the finish line and improve the competitiveness of a region.
- Use data for management and adaptation. States should move beyond simple reporting activity like businesses served, dollars awarded, or projects completed. Data should instead focus on trying to understand at a more detailed level who is benefiting, what interventions work, where gaps persist, and when programs need adjustment. Treasury’s annual and quarterly SSBCI datasets provide an example of the evidence states can use for this type of management approach.
- Plan for sustainability from the beginning. Treasury describes sustainability as a key feature of SSBCI, with recycled capital potentially supporting state financing programs for years. Economic developers can apply the same thinking across their portfolios: when temporary federal funding arrives, ask not simply how to spend it, but what capabilities, institutions, partnerships, and financing mechanisms should those resources help create that will remain afterward. That means treating today’s investments as durable infrastructure. Experienced program staff, relationships, networks, technical assistance, and improved data systems can become the foundation for permanent economic development durability strategies.
Although SSBCI 2.0 was passed to help the nation recover from the COVID pandemic, the ultimate measure of SSBCI may be what remains after Treasury sunsets their program support in 2028. States that use these programs to institutionalize successful financing tools and partnerships can emerge with stronger capital ecosystems, and a more permanent capacity to respond to the next financing gap or economic disruption.
But the post-SSBCI question therefore extends well beyond capital access. States can apply what they have learned to workforce development, innovation, entrepreneurship, infrastructure, industry strategies, business assistance, and future federal initiatives. The goal should be to move from administering individual programs to building adaptive economic development systems. These systems that identify market needs, engage the right partners, connect services, measure results, adjust based on evidence, and preserve successful capacity after individual funding streams end.
If that happens, one of SSBCI’s most important legacies will not be a particular loan or investment. It will provide the broader foundation and lasting lessons for how states practice economic development.