State Small Business Credit Initiative
Created by the “Small Business Jobs Act of 2010”, the SSBCI is aimed to increase credit availability for small businesses. Funded with $1.5 billion to be used by the U.S. Treasury to provide direct support to states and territories for use in programs designed to increase access to credit for small businesses and manufacturers, the SSBCI is expected to spur up to $15 billion in lending to small businesses. The SSBCI allows participating states and territories to use federal funds for programs that leverage private lending to help finance small businesses and manufacturers that are creditworthy, but are not getting the capital access necessary to expand and create jobs. Moreover, the SSBCI encourages states and territories to initiate or build on successful models for small business programs, including Capital Access Programs (CAPs), collateral support, loan participation/guarantee, and venture capital. Under this act, each state and territory is guaranteed a minimum allocation of 0.9 percent of the $1.5 billion. Any approved SSBCI program must ultimately generate $10 in private leverage for each SSBCI dollar awarded by the state/territory.
The U.S. Treasury approved the Territory’s amended SSBCI Allocation Agreement on August 6, 2014. The original Allocation Agreement of January 26, 2012, was modified in several aspects, the most salient being replacing the collateral support program with the current venture capital program.
American Samoa Venture Fund
Innovative Investing in Our Future
As a hybrid venture fund, ASVF’s portfolio companies and the structure of venture financing transactions will differ from those of conventional venture capital programs. For the most part, ASVF portfolio companies will provide publicly-mandated and financed services to American Samoa residents, firms, and public agencies. For example, the expansion of Medicaid funding will create significant opportunities for entities that provide health care services to the local citizenry. Although such entities will experience stable cash flows over time, they are unlikely to achieve rapid growth typical of most conventional venture funding candidates. Thus, the most likely form of exit will be recapitalization (in some cases through an ESOT) — rather than a public offering or acquisition.
ASVF investments are likely to be structured as hybrid or convertible debt, including royalty arrangements that provide relatively modest but stable returns of—and on—capital. Transaction-level debt and subsequent recapitalization funding will, in many cases, be provided by banks associated with U.S. Companies that form operating partnerships and alliances with ASVF portfolio firms located in American Samoa.
The ASVF program will also be designed to finance the entire “capital stack” of eligible borrowers–equity, subordinate debt, and senior debt. This three-part strategy has the following advantages:
- In the absence of a local bank, it provides the capacity to meet the full range of borrower financing needs.
- It will broaden the range of possible financing solutions that ASVF will be able to offer portfolio companies.
- It provides capacity to recapitalize ASVF portfolio companies, thus increasing the likelihood that venture investments can be successfully liquidated.
Over the next two years, American Samoa is expected to receive at least $50 million and as much as $80 million annually in additional Federal payments for welfare, social services, education, services provided to veterans, seniors, and other American Samoa residents. These increases will result from the Territory’s renewed eligibility for federal aid programs and from previously delayed compliance with funded Federal mandates. At the same time, Tri-Marine, a leading provider of services to the tuna industry, will open a new $200 million tuna processing plant.
These developments will create long-term revenues and contracting opportunities for:
- Providers of health care services. Increased health care funding for American Samoa’s large population of veterans and Medicaid-eligible residents will provide a market for local firms delivering a variety of medical services, such as out-patient dialysis, diagnostics, dental and urgent care.
- Education services companies. Compliance with Federal requirements will increase Federal education funding for providers of services to American Samoa’s significant population of children with special needs.
- Providers of construction services. The building and renovation of medical and education facilities and for the tuna industry will create opportunities for small firms that provide construction-related services to public and private organizations.
- Tuna processing-related services. Tri-Marine’s $200 million canning and processing facility is expected to create important expansion opportunities for small firms capable of supplying services to Tri-Marine and its customer base.
- Providers of homeland security and defense technologies. American Samoa is designated a Pacific Rim Fusion Center by the Department of Homeland Security (DHS). The designation of an All-Hazards Fusion Center with the Territory’s unique and strategic location enables it to play a vital role in Homeland Security and Customs.
- Other funding opportunities. Developments to American Samoa’s infrastructure include updates to air service and cargo service, sea transportation, energy management, telecommunications, manufacturing, agriculture, and tourism and eco-tourism. Additionally, workforce development is essential in building up capacity and growing any industry, and increased human capital and productivity is favorable.
For general inquiries, please check the Frequently Asked Questions link below.
For specific inquiries, please contact:
Director Keniseli Lafaele
office: (684) 633-5155 ext. 222
cell: (684) 252-5791