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The American Rescue Plan Act Provides Massive Funding to Tribes for Small Business Credit Support and Investments

Indian Law and Policy Pilar Thomas

The Victoria government building beside an aboriginal totem pole.

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARP Act). Tucked in Title III, Section 3301, of the ARP Act is the resurrection of the State Small Business Credit Initiative (SSBCI) program. Included in this resurrection is the addition of tribal governments to the SSBCI, with a direct appropriation of $500 million dollars for tribal governments to begin economic recovery for tribal small businesses, including tribal owned and tribal member owned businesses. Tribes have until April 10 to file a Notice of Intent to participate, so time is of the essence for Tribal government action.

Background on the SSBCI

The SSBCI — originally enacted in 2010 to "strengthen state programs that support financing of small businesses" — provides federal funding for state credit support or venture capital support programs. 12 U.S.C. 5701 et. seq. Federal funds can be used for: credit access programs (loan loss reserves), loan guarantee programs, loan collateral support, loan participation, or equity investment financing. Business eligibility include any small business or non-profit with less than 500 employees. Programs have loan or equity investment limitations. More information about the SSBCI can be found at: https://www.treasury.gov/resource-center/sb-programs/Pages/ssbci.aspx.

Tribal Participation

The ARP amends the SSBCI to define states to include Indian tribal governments, thus making tribal governments eligible to use the funds for the same purposes and programs as states.

The Tribal government funds will be allocated by Secretary of Treasury considering employment and economic data. Tribes have 30 days to give notice of intent to participate (April 10). Single tribes or multiple tribes can participate. Treasury must distribute funds within 60 days of enactment (May 10). Tribes are also eligible for technical assistance in setting up programs.

Some examples of how tribal governments might be able to use these funds:

  • Provide "collateral support" for tribal member owned small businesses that don't have sufficient collateral for necessary debt financing;
  • Participate directly in debt financing for tribal member owned, or tribal owned small businesses;
  • Lend funds to Native CDFI, or provide loan guarantees to CDFI loans to small businesses
  • Develop and implement a loan guarantee program;
  • Make equity investments in tribal member or tribal owned small businesses

Tribes can directly administer these programs. Even if a Tribe does not have the governmental capacity to start or operate these credit support programs, tribes can enter into an inter-tribal consortium, create a non-profit to administer or hire a third party administrator. All these options can be funded by the federal contribution of funds to the Tribe.

Time is of the essence to file a Notice of Interest with Treasury. We stand prepared to assist our tribal clients with accessing this important - and substantial - funding to invest in tribal small businesses.

If you have any questions, please contact your Q&B Attorney, or;