Peters, Stabenow Urge U.S. Treasury Department to Leverage Small Business Assistance from American Rescue Plan to Strengthen Domestic Manufacturing

WASHINGTON, DC – U.S. Senators Gary Peters (MI) and Debbie Stabenow (MI) urged the U.S. Treasury Department to work with states to use American Rescue Plan Act relief funds for small businesses to restore and strengthen domestic manufacturing, helping to prevent further delays and disruptions to U.S. supply chains and lower prices for Americans. In a letter to U.S. Treasury Secretary Janet Yellen with 13 of their Senate colleagues, Peters and Stabenow stressed the need to utilize the American Rescue Plan-funded State Small Business Credit Initiative (SSBCI) to bolster financial support for small- and medium-sized manufactures to help revive American manufacturing and fill supply chain shortages for critical technologies like semiconductors.

Peters and Stabenow championed the original language that established the program in the Small Business Jobs Act of 2010 as members of the U.S. House and Senate, respectively. The Senators additionally authored legislation as part of the American Rescue Plan Act that reauthorized and provided $10 billion in federal funding for the SSBCI to help small businesses in Michigan and across the country hit hardest by the pandemic to grow and create jobs.

“We write to request that the Department of the Treasury work with states to use funds from the American Rescue Plan Act-funded State Small Business Credit Initiative (SSBCI) to address the urgent need to bring manufacturing back to the United States to strengthen domestic supply chains, prevent delays and disruptions, and lower prices for American families,” said the Senators. “The manufacturing sector accounted for the largest share of total loans and investments under the previous round of SSBCI funding, and we hope to see robust investments in domestic manufacturing using the funding provided through the American Rescue Plan.”

“The SSBCI is an important tool for strengthening America’s small manufacturers, including providing the capital to expand the domestic production of critical goods that can fill immediate and future supply chain gaps in technologies like semiconductors, batteries, and other innovation industries,” the Senators continued. “We have already worked together on reviving American manufacturing, and our collective efforts have delivered real results: 367,000 new American manufacturing jobs were created last year, the most in nearly 30 years, fueled by an expansion of manufacturing activity every month that has recovered domestic manufacturing growth to pre-pandemic levels… We believe that funding from the SSBCI will support more resilient domestic supply chains and lead to a stronger manufacturing sector that will strengthen our economy and communities for generations.”

Peters and Stabenow have been leading the charge in the Senate to strengthen U.S. manufacturing and address supply chain shortages, particularly the ongoing semiconductor shortage that has hurt workers and industries across the country – including the Michigan auto industry. In the U.S. competitiveness package that passed both the Senate and House of Representatives, Peters and Stabenow authored and secured a provision to create a $2 billion supplemental incentive fund to support the domestic production of mature semiconductor technologies in the coming years and ensure that semiconductor projects that support critical manufacturing industries are given priority status, which would include the automotive sector. This was in addition to $50 billion already in the bill to incentivize the production of semiconductors of all kinds in the U.S.—for a total of $52 billion. Congress must now work to finalize the competitiveness the bill, negotiating differences between the House and Senate-passed bills.

You can read the full text of the letter below and here.

Dear Secretary Yellen:

We write to request that the Department of the Treasury work with states to use funds from the American Rescue Plan Act-funded State Small Business Credit Initiative (SSBCI) to address the urgent need to bring manufacturing back to the United States to strengthen domestic supply chains, prevent delays and disruptions, and lower prices for American families. The manufacturing sector accounted for the largest share of total loans and investments under the previous round of SSBCI funding, and we hope to see robust investments in domestic manufacturing using the funding provided through the American Rescue Plan.

Treasury has taken an important step in the right direction by including in the initial SSBCI guidance direction to states to consider the benefits of investments in small and mid-size enterprise manufacturing and supply chain resiliency as they design other capital support programs. We appreciate that the Administration recently expressed an interest in convening a roundtable of key stakeholders, and we ask that Treasury consider hosting regional workshops to share best practices for helping states adopt investment strategies targeting supply chain weaknesses, particularly investment in minority-owned and rural small businesses.

We have already worked together on reviving American manufacturing, and our collective efforts have delivered real results: 367,000 new American manufacturing jobs were created last year, the most in nearly 30 years, fueled by an expansion of manufacturing activity every month that has recovered domestic manufacturing growth to pre-pandemic levels. Challenges remain, however, especially for smaller and disadvantaged manufacturers. Manufacturers have larger capital requirements than many other sectors and need access to ready capital.

Small and medium-sized manufacturers, which account for 98 percent of domestic manufacturers, face particular difficulties accessing capital to invest in equipment and facility upgrades, affecting their productivity. A National Science Foundation-funded study found that only 0.4 percent of private venture capital dollars invested in the U.S. went to manufacturing, starving the sector of the investment needed for scaling production here in America. Minority owned, rural, and other socially and economically disadvantaged manufacturers face additional hurdles in accessing the capital they need to succeed.

The SSBCI is an important tool for strengthening America’s small manufacturers, including providing the capital to expand the domestic production of critical goods that can fill immediate and future supply chain gaps in technologies like semiconductors, batteries, and other innovation industries. Along with encouraging venture capital investments, the SSBCI can also provide collateral support programs, loan guarantee, and loan participation programs which can support smaller manufacturers.

In addition to regional roundtables to help states make use of the SSBCI to support manufacturing, we request that Treasury help coordinate other federal resources to support state efforts like the Commerce Department’s Manufacturing Extension Partnership, Manufacturing USA institutes, and Minority Business Development Agency centers. State agencies implementing the SSBCI can turn to intermediaries, working with federal partners to help educate lenders and venture capital investors about the unique needs of manufacturers, to support capital flowing to manufacturing and supply chain needs. For example, states should plan interventions that deploy SSBCI towards ownership transitions among the estimated 125,000 small manufacturers that are at risk of closure when their owners are expected to retire, helping to prevent the loss of these companies. Treasury should also consider support for jurisdictions adding innovative financing tools to deploy SSBCI program dollars effectively in supporting the unique cash flow attributes of manufacturers and supply chain industries.

The SSBCI application for technical assistance (TA), due in late June 2022, also creates a window of opportunity to target support to small manufacturers. Congress gave Treasury the flexibility to deploy these funds, including the authority to partner with the Commerce Department, on issues like manufacturing and diverse ownership. We believe Treasury should incorporate advice for manufacturers specifically in the forthcoming TA guidelines. TA funds will also be an important opportunity to strengthen the role of Community Development Financial Institutions (CDFIs) in manufacturing, as they will likely be one of the key entities deploying SSBCI-backed debt products. CDFIs also provide, or have strong partnerships with organizations that provide, technical assistance to support growing manufacturing businesses, particularly those in rural areas or those owned by Americans in traditionally-marginalized communities.

We believe that funding from the SSBCI will support more resilient domestic supply chains and lead to a stronger manufacturing sector that will strengthen our economy and communities for generations. We thank you for considering our perspective and we look forward to your response.

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