New Models for Scaling Investment in Start-Ups and Small Businesses

Small businesses are the backbone of the US economy, driving innovation, job creation, and local resiliency. But when it comes to securing financing, they face systemic hurdles that larger corporations rarely encounter. Because small businesses typically lack deep financial reserves, even minor shifts in the capital markets can create massive roadblocks to growth. These barriers to capital access are especially acute for entrepreneurs and small business owners who have historically been disconnected from traditional sources of financing. 

Enter the State Small Business Credit Initiative (SSBCI).

SSBCI, originally established in 2010 and robustly expanded with a $10 billion allocation under the American Rescue Plan Act in 2021, is essentially designed to operate as a public-private partnership (PPP) for small business financing programs. Importantly, the current iteration requires a portion of funding to benefit socially and economically disadvantaged individuals (SEDI), including veterans and those operating in rural and low-income communities.

Instead of the federal government lending money directly to entrepreneurs and small business owners, SSBCI funds are distributed to states, US territories, and Tribal governments. These jurisdictions then design unique financing programs that leverage the funds to back, de-risk, and coinvest alongside private lenders and private equity investors.

SSBCI is a historic federal investment in the American small business ecosystem. However, deploying billions of dollars effectively requires more than just funding; it requires a coordinated infrastructure capable of bridging the gap between public intent and private execution. The Milken Institute’s Initiative for Inclusive Entrepreneurship (IIE) was designed to build that infrastructure and launch new products, platforms, and programs that leverage PPP to expand access to capital for SEDI entrepreneurs and small business owners. 

By deploying a robust network of implementation partners—including Next Street, Founders First Capital Partners, Mission Driven Finance, Aspen Institute Business Ownership Initiative, Scale Link, and Accelerator for America—IIE has successfully launched scalable PPP models for real-world products, programs, and platforms. 

These models are ripe for adoption as ecosystem leaders seek to both accelerate capital deployment prior to the SSBCI program’s 2027 deadline and design new strategies for a post-SSBCI ecosystem. 

Financing Products: Filling the ‘Missing Middle’

Traditional small business financing often leaves a gap: businesses that are too large for microloans but too small or unconventional for commercial bank debt or venture capital. IIE partners have designed specific products to bridge this divide. 

• Hybrid Revenue-Based Financing (RBF): Developed by Founders First Capital Partners, this product combines RBF with a minimum payment term loan. Traditional RBF requires predictable recurring revenue, which bars many diverse suppliers who need upfront capital to secure large contracts. This hybrid structure expands capital access for SEDI suppliers while ensuring stable returns for private institutional investors.
• Flexible Growth Capital Suite: Mission Driven Finance created a suite of non-dilutive financing products—including contract financing and event-driven credit—tailored specifically to work alongside SSBCI programs, unlocking growth for local economic engines. 

Scalable Platforms: Connecting Borrowers, Investors, and Data

Capital cannot flow if borrowers do not know where to look, and investors are bogged down by administrative burdens. IIE partners have engineered digital platforms to streamline the pipeline.

• California Small Business Loan Match: Next Street partnered with the California Infrastructure and Economic Development Bank to launch a statewide platform that matches small businesses with vetted, mission-driven lenders participating in the state's SSBCI Loan Guarantee program.
• Unified Loan Guarantee Platform: Facilitating small-dollar lending programs is notoriously inefficient and costly for lenders. Scale Link and the Aspen Institute built a tech-enabled standardization platform that acts as a single integration point across multiple funding streams, including various SSBCI Loan Guarantee Programs. Utilizing an automated scoring model built from 85,000 historical loan records from Community Development Financial Institutions (CDFIs), the platform enables near-instant guarantee decisions and reduces underwriting risk for lenders.
• The IIE Hub and SSBCI Deployment Dashboard: To keep the national ecosystem connected, Next Street launched the IIE Hub, a centralized knowledge network with active working groups that allow SSBCI program administrators and technical assistance providers to share program designs and compliance strategies with their peers. This is complemented by Accelerator for America's SSBCI Deployment Dashboard, which aggregates data from the US Department of the Treasury, jurisdictions, and the press to map the current state of play.

Ecosystem Programs: Capacity Building and Readiness

Deploying capital requires an ecosystem of "investment-ready" businesses and highly capable institutional lenders. IIE partners have developed unique strategies to build the capacity of businesses and investment partners as part of the capital deployment model.

• Passport to Funding Readiness: To eliminate the financial knowledge gap that often locks diverse suppliers out of growth capital, Founders First created a fully digital, self-paced training platform. It delivers video modules, quizzes, and translated resources to prepare SEDI suppliers for capital matchmaking events hosted by Founders First.
• Building the Capacity of Native CDFIs: Traditional classroom technical assistance is often insufficient for scaling rapid capital deployment. Mission Driven Finance pioneered a "learning-by-doing" capacity-building program that embeds emerging Native CDFIs directly into live, real-world SSBCI transactions. Through shared deal rooms and collaborative underwriting, more than 20 Native lenders have been trained to independently structure and execute complex transactions, leveraging the Indigenous Futures Fund and accelerating the deployment of capital in Tribal communities.

The work of IIE proves that capital availability is only half the battle. Without standardized infrastructure, flexible funding products, and intentional ecosystem coordination, historic public investments like the SSBCI risk stalling in fragmented local pipelines. By constructing repeatable financial vehicles, digital readiness programs, and collaborative platforms, IIE has built a durable framework. This framework doesn't just deploy current federal allocations—it creates a permanent highway for private and public capital to flow for years to come.

Join our upcoming webinar on June 24, 2026, or contact us to learn more about how you can adopt and scale these solutions in your communities.