Access to Capital

CSG South

The federal Small Business Jobs Act of 2010 is designed to generate critical resources to help small businesses drive economic recovery and create jobs. An important component of this new legislation involves the State Small Business Credit Initiative (SSBCI), a formula grant program structured to assist local entrepreneurs and small business owners secure the necessary credit to expand their businesses, create jobs and generate revenue. Specifically, the SSBCI provides $1.5 billion in federal funding to states to initiate programs that expand credit opportunities for small businesses. State commitment to involve the private sector in implementing these programs remains a critical element of the SSBCI, and states are required to demonstrate and help facilitate $10 in new private lending for every $1 in federal funding. In total, it is anticipated that the $1.5 billion federal commitment will lead to a minimum of $15 billion in additional private sector lending to spur small businesses.

NOW, THEREFORE BE IT RESOLVED, that The Council of State Governments acknowledges the recent dialogue rating agencies have conducted with state treasurers and other issuers in this regard and recommends that: (1) rating agencies should utilize a single rating scale for all debt instruments such that a rating applied to a municipal bond indicates the same credit risk as that same rating applied to corporate bonds, while also recognizing the need for relative ratings amongst municipal issuers; and (2) ratings should measure the ability of an issuer to meet its obligation to investors as promised in the bond documents, such obligation primarily being to pay debt service on time and in full.