New Interim Final Rule Requires Demographic Reporting for Recipients of $10 Billion in SSBCI Funding for Small Business Assistance from the American Rescue Plan Act

Published by Peter Lawrence on Friday, March 18, 2022 - 12:00AM

The U.S. Department of the Treasury (Treasury) released an interim final rule requiring new reporting requirements related to the demographics of minority-owned or controlled small businesses that received a loan, investment, other credit or equity opportunity, or technical assistance under the State Small Business Credit Initiative (SSBCI) that was part of H.R. 1319, the American Rescue Plan Act (ARPA) of 2021. This new rule will facilitate the collection of demographics-related data from small businesses that participate in the SSBCI for purposes of implementation, compliance and reporting, and to better understand the program’s outcomes.

ARPA amended the Small Business Jobs Act of 2010 to provide the SSBCI $10 billion to help mitigate the effects of the COVID-19 pandemic on small businesses. Of the $10 billion, $2.5 billion were specifically allocated to small businesses owned by socially and economically disadvantaged individuals (SEDIs).

The SSBCI was created through the Small Business Jobs Act of 2010 under the Obama administration and gave a total of $1.5 billion to 47 states; Washington, D.C.; five territories, and three municipalities. The states, territories and municipalities then disburse their allotted funds to eligible small businesses in their jurisdiction. Treasury’s Office of Community and Economic Development oversees the SSBCI, and this office also oversees the Community Development Financial Institutions (CDFI) Fund.

North Dakota and Wyoming did not apply during the first round and Alaska withdrew its application, but municipalities in each of these states applied and received allocations. The allocations each state, territory and municipality received during this first round and the total allocations available to each state and territory under the ARPA are listed in the table below:

Click to Enlarge



Scope and Purpose of Interim Final Rule

In addition to facilitating the collection of demographics-related data from small businesses that participate in the SSBCI, this new rule will also help Treasury determine the extent to which the SSBCI funds from ARPA were provided specifically to SEDI-owned and controlled businesses. Some participants in the SSBCI partner with lenders and other financial entities that are subject to laws that prevent requesting of demographic information. This new interim final rule will work to close this gap by requiring the reporting of this information and help to ensure compliance with nondiscrimination rules regarding federal financing. Understanding the impacts of the SSBCI on SEDI-owned and controlled small businesses will help advance equity, a core goal of the Biden administration.

Requirements Under this Interim Final Rule

This interim final rule would require the reporting of:

  • self-certified SEDI demographics related business status;
  • minority-owned or controlled business status;
  • women-owned or controlled business status;
  • veteran-owned or controlled business status; and
  • the race, ethnicity, gender, sexual orientation, Middle Eastern or North African ancestry, and veteran status with which principal owners identify.”

The reported data would be required for all businesses that receive financial support and/or technical assistance under the SSBCI. 

The SSBCI and NMTC Both Support Community and Economic Development

Recipients of the New Markets Tax Credit (NMTC) incentive also promote economic and community development in low-income communities and the NMTC allots $5 billion in annual allocation. In calendar year 2021, community development entities requested a total of $14.7 billion in NMTC allocation authority, nearly triple the amount available in this application round. The popularity of the NMTC incentive illustrates the demand for federal assistance in providing funding to small businesses in underserved communities. The SSBCI can also help to finance small businesses in low-income communities, showing the need for federal financing incentives to encourage economic investments into these communities.

Impacts on CDFIs

CDFIs are among the recipients of SSBCI funds and the SSBCI provides CDFIs more access to needed capital so CDFIs can expand their ability to meet the capital and credit needs in low-income communities. The partnership between CDFIs and the SSBCI has been crucial to the SSBCI’s success. From 2011 to 2013, the SSBCI allowed CDFIs to provide $229.8 million in investments and loans. As of 2021, 81% of SSBCI loans were made via CDFIs. CDFIs are mission-driven organizations that provide loans, investments, financial services and technical assistance to businesses in low-income communities and more data on the demographics of small businesses that receive support under the SSBCI will help CDFIs better target their lending and investing. The CDFI Fund was created to support and invest in CDFIs and its mission is to expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors and financial service providers. The SSBCI, along with the NMTC as discussed above, provides needed investments into underserved communities and requiring demographic reporting for the SSBCI ARPA funding will help CDFIs and Treasury understand the impacts of these funds and how they should allocate these funds in the future.


The expansion of the SSBCI is important to the recovery for small businesses from the pandemic, but this is only a one-time allocation. Unless Congress authorizes more funding for it in the future, there will not be subsequent state allocations. The NMTC will also be expiring after its current five-year expansion ends unless Congress expands the incentive again or makes it permanent. Congress is considering legislation to make the NMTC permanent. The most recent effort was a provision in the September House Ways and Means Committee version of the Build Back Better Act, and there is a chance that such a proposal may be added to future reconciliation legislation. Expanding both the SSBCI and the NMTC would help small businesses with their pandemic recovery and encourage further investments into low-income communities. The expansion and potential permanence of these incentives would also ensure funding for economic development in low-income communities and small businesses following the pandemic.

This interim final rule became effective March 9 and is open for public comments that must be received by April 11, 2022.


Learn more about Novogradac's expertise and many services