By Tom Still

MADISON, Wis. – In Minnesota, about $97 million will be targeted to investments in early stage companies as well as loans and loan guarantees, all for small businesses.

Michigan will spread $237 million over direct equity-based capital investing as well as loans and loan guarantees, especially in manufacturing and technology industry sectors with the potential to create high-wage jobs.

Iowa will use its $96 million in four programs, including two venture capital funds, to invest in seed and early stage startups and to provide low-interest loans to similar young companies.

Those are just three examples of how the State Small Business Credit Initiative, a recently renewed federal program that works with private investors and lenders, is rolling out in the Midwest. It is a neighborhood that will now include Wisconsin.

Wisconsin joined about 40 states and territories Feb. 23, when the U.S. Treasury Department announced its allocation of $79 million to be spent over coming years in four programs, three of which will be managed through the Wisconsin Economic Development Corp. as it works with private entities and businesses.

It is part of a $10 billion federal program intended to eventually involve all states, territories, the District of Columbia and tribal governments, the latter being eligible separate grants. The money was included by Congress in the American Rescue Act to spur small business growth in the wake of the pandemic. Wisconsin’s approved plan calls for:

  • $50 million to create a Wisconsin Investment Fund, administered through WEDC, to partner with venture capital and early stage funds in Wisconsin. An application process will be renewed soon by WEDC to attract private fund managers who already invest in young companies and are willing to manage some of the federal money. Across the 40 states approved thus far, venture capital is the leading designated use.
  • $8 million will be used to expand WEDC’s Technology Development Loan program, which supports innovative businesses with flexible financing terms to launch and grow. It’s a well-used program but historically over-subscribed.
  • $6 million to support WEDC’s Capital Catalyst program, which provides matching funds to non-profit organizations that operate small-business loan programs. There is a longstanding network of such groups in Wisconsin.
  • $15 million for the Wisconsin Housing and Economic Development Authority to provide credit to small businesses that secure “microloans” from Community Development Financial Institutions, which help those businesses find loans for many purposes.

“The long-term benefit (of SSBCI) is using the private investment expertise to generate returns and grow a revolving pool of capital to be reinvested in new businesses again and again,” WEDC Secretary Missy Hughes said.

That’s what makes the refunded SSBCI (it was created during the Great Recession years) different from most other federal economic aid programs in the post-pandemic era. It is targeted exclusively to small businesses and is structured to prompt additional private investments over time.

Not every venture fund or lender will want to take part, of course, because federal programs come with their share of red tape. The expectation in most states, however, is that state agencies closer to local economies will help navigate most of those bureaucratic hurdles. That’s where WEDC and WHEDA will play roles in Wisconsin.

In addition to Minnesota, Michigan and Iowa, other Midwest states approved previously for SSBCI grants are Illinois, Indiana, Missouri, Ohio, Nebraska and the Dakotas. The program has been welcomed by groups such as the National Venture Capital Association, which has said SSBCI “has the potential to unlock significant capital for VC investment across direct, co-investment, and fund investing strategies, particularly in emerging ecosystems and underrepresented communities.”

Will this program solve all of Wisconsin’s small-business financing problems? No. There is still a significant gap between available capital and demand, which is why the 2023-2025 state budget includes a separate appropriation for a venture capital “fund of funds” that would lever state general-purpose revenue dollars with private investment.

The rollout of SSBCI took a while to reach Wisconsin, but the money will be put to work in ways that have been tested and which rely on private-sector expertise. That’s the careful way to do it.

Still is president of the Wisconsin Technology Council. He can be reached at