The team at Kentucky Cabinet for Economic Development has been waiting for months to be able to officially share the news that Gov. Andy Beshear announced on Monday in Frankfort: The Commonwealth is about to receive $117 million to expand access to capital for small businesses through President Biden's and the U.S. Department of Treasury’s State Small Business Credit Initiative (SSBCI).
The award, which will be allocated in three phases over 10 years, will be used as a catalyst for what is being called the Kentucky Small Business Credit Initiative 2.0 (KSBCI 2.0). This will include supporting venture capital programs, and Community Development Financial Institutions (CDFIs), with the intent to focus on supporting underserved business owners.
“These funds are a boost for businesses still recovering from the pandemic, but also represent a potential watershed for the future of innovative businesses in our state,” Beshear said in a release. “This significantly increases the capital available to promising businesses at critical early stages and helps lay the foundation for Kentucky’s innovative economy of the future.
“We must also acknowledge that while the talent and energy of our entrepreneurs and small-business owners are unmatched, the opportunity has not existed in equal measure. This funding will help more Kentuckians who may have been excluded from that opportunity in the past to realize their dreams of owning and growing a business.”
KY Innovation, a part of the Kentucky Cabinet for Economic Development, will distribute the funding. Businesses that qualify can access investment capital through certified lending institutions for the loan programs, as well as Keyhorse Capital, the venture funding arm of the Kentucky Science and Technology Center (KSTC).
“Back in 2010, Kentucky used these SSBCI dollars to increase loan security and saw tremendous success,” said Monique Quarterman, executive director of KY Innovation, in a release. “These funds enable us to build upon that success by strengthening that loan capital program and investing heavily into our venture capital community.
"Moreover, we are building a better commonwealth for all by ensuring that all Kentuckians, including those who have historically had difficulty accessing or have outright been denied access to capital, are able to get the resources needed to make their dreams a reality. It’s a great day for every Kentucky founder and for the future of entrepreneurship in our state."
Quarterman, who I recently profiled for our Black History Month series, first hinted at this news back in October 2022 during a Venture Connectors presentation in which she provided an overview of the state of entrepreneurship in Kentucky.
“I don’t mind sharing it out loud, because it’s something that I’m proud of,” Quarterman said at the time. “It is something that I have been living and breathing for the entire year.”
Those areas that KY Innovation has deemed as key areas of need will receive a large portion of the KSBCI 2.0 funding, including venture capital. Keyhorse Capital will create a series of educational programs to cultivate the next wave of venture capital fund managers, while also funding more businesses that have been started by “socially and economically disadvantaged founders,” according to a release.
“SSBCI 2.0 is a huge opportunity for early-stage startups in Kentucky. These funds will give more founders the chance to succeed with access to capital at those critical early stages, particularly founders from underrepresented communities,” said KSTC President Terry Samuel in the release. “Our venture finance arm, Keyhorse Capital, has been doing this work for over two decades through the Kentucky Enterprise Fund. We’re ready to hit the ground running and build upon the work we’ve done in partnership with the Cabinet for Economic Development and KY Innovation to back scalable businesses throughout the state.”
The second iteration of the U.S. Treasury’s SSBCI program resulted as part of the American Rescue Plan Act. It continues what was established with the initial 2010 SSBCI Initiative.
Previously, the state used funding from that initiative to create the Kentucky Small Business Credit Initiative (KSBCI), which affords lenderes to make loans outside of their general guidelines or purview by securing loans by covering possible gaps between lent capital and posted collateral of up to 20%.
“This is a historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally underserved communities,” said Secretary of the Treasury Janet L. Yellen in the release. “These SSBCI funds will promote equitable economic growth across the country.”
This story may be updated.
