A source of funding support not to be overlooked during uncertain times  

May 2, 2025

As federal funding programs are being canceled or put on hold, there is one program that has remained untouched. The State Small Business Initiative has funding available for local governments to develop credit support and investment programs tailored to their unique economic development challenges and goals.

And because of the country’s concern over a potential recession, business angst and the obvious worries over unemployment, it seems timely to ensure that our public sector friends and our readers remember this program.  It holds promise for many of the critical needs that cities and counties are facing, and it is authorized through 2030.  

The Small Business Jobs Act was created in 2010 in response to the Great Recession. It has been expanded in many ways since it was authorized by Congress. The initial allocation was $1.5 billion, and it was earmarked for states, territories and eligible jurisdictions to support small businesses. It allowed governmental jurisdictions to tailor the funds to their economic needs.  

The program concluded in 2017, but it was reauthorized in 2021 after COVID-19, and it was expanded by another $10 billion under the American Rescue Plan. The program is designed to support small businesses and help keep economies stable at the local levels of government.  

Since 2021, the program has allocated funding to catalyze private investment, promote economic resilience and expand various types of economic opportunities. Its widespread use—particularly in supporting small businesses and job creation—has driven significant disbursements. In 2023, the Treasury Department had obligated $8.4 billion and disbursed $2.6 billion.  

The program is authorized through 2030, and in its current expanded capacity, it has billions left to allocate. Numerous states are using the funding to keep existing businesses alive in their communities, while other states have used the funding to support new startup companies that create jobs.   

According to a recent accounting by the Treasury Department, about $8.9 billion has been allocated to state and local governments to date. The report indicates that California, Florida and New York have been large recipients of the funding, but Montana, Vermont and Alaska have also been active participants in the program.   

Local officials may be interested in this available funding to support their economies and the ongoing health of their local businesses. Or perhaps the funding will be helpful for job creation, but here are some cautionary guidelines.  

Because of recent funding freezes or cuts to other programs and the types of audits that are being mandated, applications for the funding should be structured to follow guidance provided in recent letters to public officials about other programs. Those letters have stated that allocated funding must meet certain standards, or it will be denied. There must be no mention of using the funding for diversity, equity or inclusion (DEI), and the funding is not available to support climate change or any other initiatives that do not fit with the current administration’s vision.  

As local governments face mounting economic pressures and uncertainty around future federal support, the State Small Business Initiative stands out as a rare opportunity—seemingly stable, flexible and available through 2030. With billions still unallocated, now is the time for local leaders to explore how this funding can address immediate economic needs, strengthen small business ecosystems and drive long-term job growth.  

Staying informed, aligning applications with current compliance expectations and acting decisively could make a lasting difference in community resilience. This program is more than a funding source—it’s a strategic tool for shaping a stronger local economy. 


Photo/Graphic Courtesy Canva

Mary Scott Nabers

Mary is President/CEO of Strategic Partnerships, Inc. (SPI), a business development/public affairs firm that specializes in procurement consulting, market research, government affairs, knowledge transfer and public-private partnerships (P3s). Mary is also co-founder of the Gemini Global Group (G3), a firm that works with national and international clients on business development, P3s, and other types of government objectives.

A recognized expert regarding P3s, Mary is the author of Collaboration Nation – How Public-Private Ventures Are Revolutionizing the Business of Government and Inside the Infrastructure Revolution – A Roadmap for Rebuilding America.

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