If your small business or startup is thinking about taking on a climate-related project, there’s a good chance the federal government might kick in some cash.
The White House announced a new guidebook this week that maps out the government-wide web of grants and other entrepreneurial funding opportunities that have sprung up since the passage of the Inflation Reduction Act and the Bipartisan Infrastructure Law, among other appropriations.
The Small Business Administration (SBA) also announced it’s nixing a cap on the number of 504 loans a company can take out if the money is going toward certain clean-energy projects. Businesses were previously limited to three such loans, which can range up to $5.5 million each.
The goal of both announcements is to help level the playing field for startups and small businesses, which might not have the resources of a bigger corporation when it comes to identifying and taking advantage of these types of federal programs.
“There’s been historic levels of investments that we’ve seen under the Biden-Harris administration,” SBA Administrator Isabel Guzman told Tech Brew. “For small businesses, navigating the federal programs across the board is always challenging.”
The guide covers hundreds of billions of dollars in grants and other funding programs, ranging from Department of Energy financing for manufacturers that support the clean power transition to Department of Agriculture support for rural utilities.
Guzman said the SBA has a two-pronged mission when it comes to its support of the Biden administration’s wider climate goals, which includes reaching net-zero carbon emissions by 2050. Guzman said the funding provides new ways to back startups tackling green tech–related problems.
The efforts also aim to spur adoption of energy-efficient tech among small businesses of all kinds. “Small businesses represent a huge untapped potential for climate tech innovators in terms of their adoption,” Guzman said. “And historically, we know that small businesses are oftentimes late adopters for technology across the board.”
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A longer runway: In terms of fostering green tech startups, Guzman said she has overseen a reform of the SBA’s financing rules and programs to better accommodate the longer timelines sometimes needed for green tech startups. Those changes include a new type of SBIC that allows for up to a decade of deferment on principal and interest so that investors can focus on “those early-stage growth and patient capital needs,” Guzman said.
“We recognize—especially in this space—that these startups have longer time horizons, time to market, they have intensive capital needs. And definitely, it’s a young industry as well, where we still need to commercialize many innovations,” Guzman said. “And so we’ve reformed our capital programs at the SBA to better serve innovative startups.”
Guzman said many of these rule changes went into effect last summer and she expects it will start to yield even more investment in green tech startups in the coming months.
“We’re starting to see the marketplace gravitate toward this federally backed investment vehicle,” Guzman said. “And so remembering that this is a $4 billion annual investment from the federal government matched by over $4 billion in private investments that’s really going into this marketplace, you’re gonna start to see more investors in the marketplace. And we are incentivizing critical technologies, which includes, of course, renewable energy generation and storage.”