State Small Business Credit Initiative - Frequently Asked Questions (Faqs) - U.s. Department Of The Treasury Page 2

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U.S. Department of the Treasury
State Small Business Credit Initiative
institutions to participate in the program; create similar enrollment forms for each loan; set the same
rules for eligible borrowers and use of loan proceeds, which are consistent with the SSBCI Policy
Guidelines; standardize the amount of borrower and lender payments to the CAP reserve fund which
are consistent with the SSBCI Policy Guidelines; agree on the form and frequency of reporting from
lenders; and use similar forms to document the recovery of any loan losses from the CAP reserve fund.
The result could be savings for financial institutions on staff training, loan operations, back office
recordkeeping, and management expenses. In the end, lower CAP costs should motivate more lenders
to participate in the CAP and originate more loans.
More uniformity in CAP program design would also help smaller financial institutions because customers
would become more familiar with the CAP rules and the administration by the state, territory or eligible
municipalities would become more streamlined. The end result should be that CAPs becomes easier to
implement for financial institutions of all sizes.
A collateral benefit is that creating more uniformity across CAPs could encourage financial institutions to
participate in CAPs in smaller states. When CAP loan demand is uncertain, financial institutions are less
likely to make the effort to participate. However, if the programs are standardized across large and small
jurisdictions, financial institutions can offer CAPs in all locations with little extra cost. Ultimately, the
final design of CAPs is left to the discretion of states, territories, and eligible municipalities.
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5. May states, territories, or eligible municipalities contract for the administration of their CAP or
OCSP?
Yes. The Act allows a participating state to enter contracts in which its SSBCI-supported program (CAP or
OCSP) is administered by another state or by an authorized agent of, or entity supervised by, the state,
territory or municipality. This option allows states, territories or eligible municipalities that are launching
new programs to obtain the advantages of using an experienced public or private administrator. Using
an experienced administrator may facilitate the launch of a new program and save expenses.
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6. Are funds transferred under SSBCI considered a grant or other type of federal assistance?
No. Section 3003(c)(5) of the Act specifically states that funds transferred to states, territories, and
eligible municipalities under the SSBCI program are not considered federal assistance for the purposes
of subtitle V of title 31 of the United States Code. Because SSBCI funds are not considered federal
assistance or a grant, many federal assistance or federal grant reporting requirements do not apply.
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State Small Business Credit Initiative Application
Page 2 of 37
FAQs
April 21, 2016

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