Tennessee is expanding its help for startup and small businesses with nearly $117 million of new lending, investment and business assistance programs funded under a federal grant announced Monday by the U.S. Treasury Department.
Stuart McWhorter, the commissioner for the state's Department of Economic and Community Development who has helped recruit nearly $7.5 billion of major new businesses to Tennessee in his first eight months in office, said the new initiative should make a significant difference in helping grow hundreds of small businesses across Tennessee over the next decade.
"It's great to see these big projects, but at the end of the day there are so many small businesses and sole proprietorships in the state that drive our economy and we know that access to capital is one of the greatest challenges," McWhorter said Monday at an announcement event for the new initiative known as Fund Tennessee at the Business Development Center in Chattanooga. "With one of the top business climates in the country, Tennessee is the ideal location to create, launch and grow a business."
As co-founder and chairman of the Nashville venture capital firm Clayton Associates, McWhorter has worked in entrepreneurship and early-stage investing for more than 25 years.
"We've made a lot of progress in Tennessee over the years, but as a state, we still have a long ways to go," McWhorter said. "This new program will allow the state to be able to do some things we haven't previously been able to do."
Under the $10 billion State Small Business Credit Initiative approved as part of the American Rescue Plan adopted by Congress two years ago, Tennessee has been allocated $116.9 million of federal funds and for the first time will be making investments, not just loans, through a new InvestTN program. The new equity investment fund will allocate $70 million for startups and venture capital funds and will reinvest proceeds in other new investments.
The new initiative will also provide $47 million over the next decade in loans through Community Development Financial Institutions and other lenders under a new LendTN program.
Staff Photo by Robin Rudd / On June 19, Stuart McWhorter, Tennessee's commissioner of Economic and Community Development speaks at a public event in Chattanooga.The loans and equity investments must be matched with private funds, and the government aid is intended to leverage at least 10 times its loan or equity value for small businesses. The new program is expected to start making investments and loans by this spring, although program organizers said Monday that some of the details of the new initiative are still being finalized.
The new funding will also help LaunchTN finance a new AssistTN program to offer legal, accounting and fiscal advisory services for growing small businesses through Tennessee Small Business Development Centers such as the one housed in the Hamilton County INCubator on the North Shore.
"Small businesses are the backbone of our economy, and they play a central role in building strong communities throughout Tennessee," said Bill Lee, who headed his family's home services and construction company, Lee Co., before becoming Tennessee governor four years ago.
In a statement Monday, Lee said Fund Tennessee "will help expand the growth of small businesses ... and promote economic growth in our state."
Lee said he was "pleased with this funding," which came through the American Rescue Plan adopted by the U.S. Congress without any Republican votes in 2021. GOP lawmakers objected to the overall cost of the COVID-19 relief package when it was approved by a narrow 50-49 vote in the U.S. Senate and a 220-211 vote margin in the U.S. House.
In a statement Monday, U.S. Treasury Secretary Janet Yellen said the initiative "is a historic investment in entrepreneurship, small business growth and innovation that will help reduce barriers to capital access for traditionally underserved communities."
Lindsey Cox, the former head of The Company Lab in Chattanooga who now heads the statewide LaunchTN, said she is "eager to help founders across the state access this capital so they can continue innovating."
"Access to investment capital has been a challenge in Tennessee, so these funds will fill an immediate demand and support growth in startups that are primed to reach their potential," she said in an interview at the announcement event.
More information about the new program is available at www.tn.gov/ecd.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.