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5/5/2020 Treasury Secretary Jacob J. Lew Remarks at Center for American Progress Entrepeneurship for All Event U.S. DEPARTMENT OF THE TREASURY Press Center Treasury Secretary Jacob J. Lew Remarks at Center for American Progress Entrepeneurship for All Event 10/13/2016 Thank you. It is a pleasure to be here with all of you to discuss a topic so vitally important to our nation’s economic progress: expanding opportunities and creating a more sustainable path forward for America’s entrepreneurs and small business owners. Let me begin by thanking the Center for American Progress for hosting us today and for their continued leadership advancing this critically important work, and Carmel Martin for that warm introduction. Today’s event provides an opportunity to examine three important reports. Two are being released by the Treasury Department and focus on the tremendous impact of the Small Business Lending Fund (SBLF) and the State Small Business Credit Initiative (SSBCI). Both of these programs have helped entrepreneurs and small business owners access capital in the wake of the Great Recession. Additionally, new research that CAP is releasing today details why these resources continue to be so critically important. Our gathering also marks just over six years since the passage of the Small Business Jobs Act that created SBLF and SSBCI. We are extraordinarily proud of these programs and the impact they have made and continue to make. This morning I am here to share a bit more about the success of both SBLF and SSBCI as these programs near their conclusion. For policymakers and small business advocates, these unique programs offer a number of important lessons. Six years ago, passage of the Small Business Jobs Act and other important steps taken by the President and policymakers led our nation out of the worst financial crisis since the Great Depression, helping us regain our economic footing, and putting us on a stronger, more sustainable path forward. The passage of the Small Business Jobs Act in particular reflected the need to address the sharp decline in small business lending in the wake of the financial crisis. Looking at the U.S. economy as a whole, businesses have created 15.3 million jobs; GDP is now more than 10 ½ percent larger than its previous peak; and millions of mortgage holders are back above water. We continue to make an historic economic turnaround, and entrepreneurs and small businesses have been a critical driver of this progress. Building on this success and ensuring that our economy is working for all of its citizens must also involve efforts to level the playing field for American entrepreneurs and small business owners. Such efforts should include increasing access to capital, which is essential to the success of any small business, allowing entrepreneurs to invest in and grow their businesses. Even for many highly-qualified candidates, securing capital can be an uphill climb. For others, it is simply out of reach. America’s small businesses are the life-blood of our economy. They create jobs, drive innovation, and produce the kind of inclusive, sustainable growth that is so important to our nation’s economic future. But, without capital, no matter how hard you are willing to work or how detailed your entrepreneurial vision may be, you cannot put your plan into action. That is why the Administration has moved so aggressively to ease the flow of credit. Small Business Lending Fund The Small Business Lending Fund, or SBLF, is a pillar of these efforts, continuing to help create jobs and promote economic growth in communities across the United States. The SBLF program encouraged small business lending by providing capital to Main Street banks and community development loan funds. Since the program’s inception in 2010, SBLF has helped to increase small business lending by a remarkable $18.7 billion, giving lift to more than 3,000 communities in 47 states and the District of Columbia. Importantly, SBLF’s inclusive approach has created opportunities for all citizens, regardless of geography or the scope of the idea being supported. SBLF investments have supported an estimated 76,000 in qualified small business loans, with nearly 80 percent in amounts of $250,000 or less, benefitting a wide array of businesses across many different industries throughout the life of the program. State Small Business Credit Initiative Many here today have also been important partners of Treasury’s State Small Business Credit Initiative, or SSBCI. As you know, SSBCI provides critical funds to state lending and investment programs. The Initiative has a unique ability to drive innovation—innovation created through states working with private lenders to design programs specific to the small business needs of their communities. With a relatively small investment, SSBCI has been able to leverage greater levels of private sector loans and investments and direct them to our nation’s small businesses. In total, the program has supported $8.4 billion in new small business lending or investing through almost 17,000 transactions, 42 percent of which were to businesses in low and moderate income communities. https://www.treasury.gov/press-center/press-releases/Pages/jl0576.aspx 1/2 5/5/2020 Treasury Secretary Jacob J. Lew Remarks at Center for American Progress Entrepeneurship for All Event SSBCI has helped to connect precious resources to more than 16,000 small businesses across a range of industries—from retail, trade, and manufacturing to accommodation and food services. Among the program’s many success stories is that of George Constantinou [Con-STAN-ti-new] and Farid Ali-Lancheros, who own a Latin bistro in Park Slope, Brooklyn. In 2013, they were in a position to expand and an SSBCI loan helped them do just that. Today, their bistro has created more than 70 community jobs, provides its employees with health insurance and 401k plans, and continues to serve Bogota-inspired cuisine in Brooklyn. George and Farid provide a powerful example of the inclusive, long-term economic benefits of small business success. While SBLF and SSBCI were borne out of unique circumstances, their creative structures and thorough execution offer lessons for future policy makers. Through an innovative SBLF dividend structure on invested capital, the rate paid by each bank on Treasury’s investment was inversely tied to the level of small business lending that an institution provided to its community. Again, this innovative approach allowed the program to take $4 billion in public investment and leverage it into $18.7 billion of private sector credit in communities across the United States, and at no net cost to the taxpayer. And understanding that three-quarters of private venture capital in the United States is typically directed to just three markets—San Francisco, New York, and Boston—SSBCI investment funds took a more inclusive approach, supporting investments in businesses and communities throughout the nation. In all, SSBCI provided more than $450 million in venture investment funds across 38 states. Both the SBLF and SSBCI demonstrate that the public and private sectors work best when they are working together. I was encouraged to see that the report released by the Center for American Progress today calls for the reauthorization, and even expansion, of SSBCI, which is set to expire in 2017. If Congress does not reauthorize the program, it will be a missed opportunity to build upon the progress SSBCI has made to date. It also will severely curtail the more than 140 active state small business financing programs around the country that were established or expanded through SSBCI funding to help Main Street entrepreneurs start and scale their business, and local economies grow. Critical Role of Financial Inclusion The Report CAP released today also notes that lower rates of entrepreneurship among minority communities and women are largely a result of a longstanding and persistent wealth gap. All too often, communities of color, women, and low-income families face stark challenges accessing credit. In particular, individuals in these communities often have a harder time securing business investment and financing and incur higher borrowing costs to start a business. Everyone deserves a chance to succeed in this economy. Moreover, we all succeed when everyone is included and actively contributing. But—as the CAP Report highlights—even in 2016, many Americans, especially low-income and minority families, remain virtually locked out of the financial system and lack access to safe and affordable financial products and services. Without a banking or credit history, it can be difficult, if not impossible, to qualify for the most basic home mortgage or small business loan. If you are cut off from the formal financial system, it is almost impossible to build the savings and investments that are essential for a secure financial future. And without a financial education, many do not understand the tools they need to build this future. At Treasury, we have undertaken a number of efforts to help more Americans participate safely in the financial system and build a credit history that can assist them in taking advantage of economic opportunities, such as starting a small business. Through resources provided by SSBCI, SBLF, and the CDFI Fund, Treasury has helped entrepreneurs access capital so that low-income areas can continue to benefit from the economic development that results from the success of small businesses. Indeed, in authorizing and implementing the Small Business Jobs Act, Congress and Treasury recognized the need to assist these communities by requiring SBLF participants to engage in outreach to minorities, women, and veterans. We have produced a report on the impact of SBLF on minority-, women-, and veteran-owned businesses. And we have required states applying for SSBCI funding to deliver a plan for how to support low and moderate-income, minority, and other underserved communities. These efforts yield tangible and important results. As CAP’s research attests, those who own businesses are doing comparatively better than nonbusiness owning households. African-American business owners earn more than $53,000 on average compared to just over $7,000 for non-business owners. The contrast is equally notable for Hispanic business owning households, with more than $41,000 in total wealth on average compared to $16,000 for non-business owners. Conclusion As we look ahead beyond the next three months, I would encourage all of you to continue to work with, and challenge, the next Administration in the same way that you have pressed us to respond to our nation’s most difficult issues. We continue to support the reauthorization of SSBCI with an additional $1.5 billion in funding as outlined in the President’s Budget. We are also encouraged that certain members of Congress already have introduced bills to extend the program, and we are hopeful that they will consider keeping SSBCI going in the near future. Thank you for all that you continue to bring to this work. I look forward to a day when anyone with an entrepreneurial spirit and the willingness to hard will have the opportunity to make their dream a reality. ### https://www.treasury.gov/press-center/press-releases/Pages/jl0576.aspx 2/2
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