Investments to bring support and national attention to Kentucky?s growing entrepreneurial ecosystem



Kentucky State Seal

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*OFFICE OF GOVERNOR ANDY BESHEAR*

*COMMONWEALTH OF KENTUCKY*








*FOR IMMEDIATE RELEASE*




*Contact:*?

*Crystal Staley*
*502-545-3714*

*Brandon Mattingly
502-782-2006*






*************G*ov. Beshear: $117 Million Federal Award To Increase Access to Capital for Kentucky Small Businesses**************

""""""""""""""""""Investments to bring support and national attention to Kentucky?s growing entrepreneurial ecosystem""""""""""""""""""

*FRANKFORT, Ky. (Feb. 27, 2023) *? Today, Gov. Andy Beshear announced Kentucky will receive a $117 million award to expand access to capital for small businesses across the state through the U.S. Department of Treasury?s State Small Business Credit Initiative (SSBCI).

Kentucky will use the award, allocated in three phases over a 10-year period, to launch a suite of initiatives known as the Kentucky Small Business Credit Initiative 2.0. The funding will support venture capital programs, loan support programs and Community Development Financial Institutions (CDFI), with an emphasis on access for underserved business owners.

?These funds are a boost for businesses still recovering from the pandemic, but also represent a potential watershed for the future of innovative businesses in our state,? Gov. Beshear said. ?This significantly increases the capital available to promising businesses at critical early stages and helps lay the foundation for Kentucky?s innovative economy of the future. We must also acknowledge that while the talent and energy of our entrepreneurs and small-business owners are unmatched, the opportunity has not existed in equal measure. This funding will help more Kentuckians who may have been excluded from that opportunity in the past to realize their dreams of owning and growing a business.?

The funding will be distributed through KY Innovation, the office within the Cabinet for Economic Development responsible for supporting entrepreneurs and small businesses. Qualifying businesses can access support through certified lending institutions for the loan programs and Keyhorse Capital, the venture funding arm of the Kentucky Science and Technology Corporation (KSTC), for investment capital.

?Back in 2010, Kentucky used these SSBCI dollars to increase loan security and saw tremendous success,? said Monique Kuykendoll Quarterman, executive director of KY Innovation. ?These funds enable us to build upon that success by strengthening that loan capital program and investing heavily into our venture capital community. Moreover, we are building a better commonwealth for all by ensuring that all Kentuckians, including those who have historically had difficulty accessing or have outright been denied access to capital, are able to get the resources needed to make their dreams a reality. It?s a great day for every Kentucky founder and for the future of entrepreneurship in our state.?

The state plans to allocate the award toward areas KY Innovation has identified as lacking within its startup network.

A significant portion of KSBCI 2.0 funding will be allocated toward venture capital, which has been identified as a key area of need for Kentucky startups. In addition to funding more businesses owned by socially and economically disadvantaged founders, Keyhorse will create educational programs to foster a new generation of venture capital fund managers and give them the resources needed to be successful in Kentucky?s growing venture capital community.

?SSBCI 2.0 is a huge opportunity for early-stage startups in Kentucky. These funds will give more founders the chance to succeed with access to capital at those critical early stages, particularly founders from underrepresented communities,? said KSTC President Terry Samuel. ?Our venture finance arm, Keyhorse Capital, has been doing this work for over two decades through the Kentucky Enterprise Fund. We?re ready to hit the ground running and build upon the work we?ve done in partnership with the Cabinet for Economic Development and KY Innovation to back scalable businesses throughout the state.?

Commonly known as SSBCI 2.0, the Treasury Department program was authorized as part of the American Rescue Plan Act and builds upon the 2010 SSBCI initiative. Kentucky used previous funding to create the Kentucky Small Business Credit Initiative (KSBCI), which secures loans by covering gaps between lent capital and posted collateral of up to 20%. This allowed lenders to make loans that fall outside of their general purview or guidelines.

?This is a historic investment in entrepreneurship, small business growth and innovation through the American Rescue Plan that will help reduce barriers to capital access for traditionally underserved communities,? said Secretary of the Treasury Janet L. Yellen. ?These SSBCI funds will promote equitable economic growth across the country.?

Funding will also support two programs intended to make it easier for lending institutions to finance creditworthy businesses in need of additional capital. The Kentucky Collateral Support Program (KYCSP) provides a pledged asset of up to 20% of the loan to enhance the collateral coverage of a small-business borrower that would otherwise be qualified but unable to meet the lender?s security requirements.

The Kentucky Loan Participation Program (KYLPP) will receive a portion of the funding as well. KYLPP allows the Kentucky Economic Development Financial Authority to purchase up to 20% of a small-business loan to support a lender or CDFI in originating much larger loans that, on their own, would not have been possible.

For both the KYCSP and KYLPP, the state may participate up to 50% if the loan is used to meet the needs of a certified SEDI-owned business, a Very Small Business (VSB) or a Disaster Relief Effected Business locating or planning to locate in the counties declared Disaster Relief Areas by a state or federal agency as of or after Dec. 1, 2021.

?KY Innovation is using a creative solution for a common problem it hears when interacting with the entrepreneurial community which is: ?How do we get more money for our business??? said Jeff Noel, Secretary of KCED. ?This utilization of these funds is thoughtful, sustainable, will support Kentucky businesses at every stage of development and entice outside businesses to relocate to our beautiful commonwealth.?

The first round of funding is expected within 60 days. For more information about Kentucky?s plan and SSBCI 2.0, visit the KY Innovation site [ [link removed] ].

Since the beginning of his administration, Gov. Beshear has announced the creation of 43,200 full-time jobs and 828 private-sector new-location and expansion projects totaling $24.6 billion in announced investments.

With the books closed on 2022, the Governor has now secured the best two-year period in state history for economic growth.

In 2021, the commonwealth shattered every economic development record in the books. Private-sector new-location and expansion announcements included a record $11.2 billion in total planned investment and commitments to create a record 18,000-plus full-time jobs across the coming years.

That momentum continued strongly into 2022 with 248 new-location and expansion announcements totaling 16,000 full-time jobs behind nearly $10.5 billion in new investment.

The robust job creation has been accompanied by rising wages across the commonwealth. The average incentivized hourly wage in 2022 was $26.78 before benefits, the second-highest mark since 2010 and an 11.5% increase over the previous year.

Gov. Beshear also announced the two largest economic development projects in state history. In September 2021, Gov. Beshear and leaders from Ford Motor Co. and SK Innovation celebrated [ [link removed] ] a transformative $5.8 billion investment that will create 5,000 jobs in Hardin County. And in April 2022, the Governor was joined by leadership at Envision AESC to announce [ [link removed] ] a $2 billion investment that will create 2,000 jobs in Warren County. These announcements solidify Kentucky as the EV battery production capital of the United States.

Kentucky?s success has been noted by both S&P Global Ratings and Fitch Ratings, which have upgraded the state?s financial outlook to positive in recognition of the commonwealth?s surging economy. In addition, Site Selection magazine placed Kentucky at 6th in its annual Prosperity Cup rankings for 2022, which recognizes state-level economic success based on capital investments.

Gov. Beshear?s administration is projected to post the four highest years of budget surpluses in Kentucky history, and the state?s rainy day fund has a record balance of $2.7 billion.

Information on Kentucky?s economic development efforts and programs is available at "CED.ky.gov" [ [link removed] ]. Fans of the Cabinet for Economic Development can also join the discussion at "facebook.com/CEDkygov" [ [link removed] ]", on Twitter ""@CEDkygov" [ [link removed] ]", Instagram ""@CEDkygov" [ [link removed] ]" and ""LinkedIn" [ [link removed] ].

Read about other key updates, actions and information from Gov. Beshear and his administration at?governor.ky.gov [ [link removed] ],?kycovid19.ky.gov [ [link removed] ]?and the Governor?s official social media accounts?Facebook [ [link removed] ],?Twitter [ [link removed] ]?and?YouTube [ [link removed] ].

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