The Hawai’i Technology Development Corporation, HTDC, announced this week that the State of Hawaii’s application has been approved by the US Treasury for the State Small Business Credit Initiative, a program that was part of the American Rescue Plan Act of 2021.
The SSBCI program is bringing Hawai’i up to $62 million in federal funding to expand access to capital for small businesses, startups and entrepreneurs. Hawaii is one of the first states in the country to be approved for participation.
“This is a valuable addition to the state’s economic revitalization efforts and provides much-needed support for our businesses to not only recover, but also grow post-pandemic. We anticipate the creation of quality jobs for our residents through this program. said Governor David Ige.
HTDC, a state agency attached to the State Department of Business, Economic Development, and Tourism (DBEDT) is the program lead and has partnered with the Hawai’i Green Infrastructure Authority, a division within of DBEDT to jointly administer this program, known as the Hawaii Small Business Capital Program (HI-CAP).
“Receiving federal funding that requires private matching funds will provide much-needed capital to our small business communities. It gives us a way to engage and continue to strengthen our efforts to diversify our economy,” added Mike McCartney, Director of DBEDT.
The funds will be released in three tranches, with a first tranche of $19.8 million. Additionally, as the program requires private sector investment, it is expected that more than $600 million in matching private investment will flow into Hawaii’s economy.
“The COVID-19 pandemic has been devastating for businesses and entrepreneurs in states like Hawaii, whose economy relies heavily on tourism. That’s why these investments through the US bailout are so critical,” said Under Secretary of the Treasury Wally Adeyemo. “Hawaii’s plan will help diversify its economy and spur innovation in key sectors, including renewable energy, to promote economic growth. The Treasury will continue to work with Hawaii to ensure that this capital has maximum impact in communities across the state.
“We are very grateful for all of the state support for HI-CAP, including an appropriation from the legislature this year. This will significantly reinforce HTDC’s mission to accelerate business growth through local innovation,” said Len Higashi, Acting Executive Director of HTDC.
There will be four types of offerings within HI-CAP available to Hawaiian small businesses:
“HI-CAP Collateral” will allow the state to work with local financial institutions to provide guarantees to small businesses when financing may be difficult or help them secure better terms.
HI-CAP Loans is a state-administered program that will lend directly to businesses for catalytic projects with community impact. Projects include, but are not limited to, renewable energy, innovation, local agriculture, dual-use technology, manufacturing or creative industry projects that drive economic development.
HI-CAP’s Community Development Financial Institutions (CDFI) Loan Pool Program is designed to work with Hawaiian CDFIs by providing loan capital to lend to very small businesses and to provide small loans, including micro -ready. This program will provide much-needed loan capital to the CDFI network in Hawaii, including underserved small businesses.
HI-CAP Invest will be a fund-of-funds venture capital program that is a continuation of the SSBCI 1.0 HSDC venture capital investment program. The program is designed to invest in high-quality investment managers with the ability to mentor and advise entrepreneurs and facilitate follow-on investments.
HI-CAP is expected to last until September 30, 2030.