Updated 12:45 p.m.
Last fall, the federal government said Missouri would get $26.9 million to help boost small business. Tuesday, Gov. Jay Nixon outlined exactly how.
Most of the money, allocated through the Treasury Department's $1.5 billion State Small Business Credit Initiative, will be used to plug what's long been called a gaping hole in Missouri's high-tech sector: Early-stage financing for startups.
In a visit to the Center for Emerging Technologies in St. Louis, Nixon said that $16.9 million of the federal money will be used to create a new set of state funds to help high-tech startups grow, "from seed capital to venture capital." The other $10 million will be put into a loan fund for general businesses with fewer than 500 employees, to help them expand.
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The high-tech funding has long been a priority of St. Louis-area business groups and high-tech incubators, who note that Missouri spends far less on state seed capital than most of its neighbors. That in turn makes it more likely that medical and biotech companies must leave Missouri to attract the kind of private venture capital they need to grow. This federal money is a chance to start to change that, Nixon said.
"Seed capital, early-stage funding, venture capital, these are all areas where there are huge needs," he said. "These are the areas where dollars are directly needed."
Marcia Mellitz, vice president for business development at the Coalition for Plant and Life Sciences, agrees. She and others have been pushing for this kind of money for years, and, while it wouldn't replace broader initiatives like the proposed Missouri Science and Innovation Reinvestment Act, it's a big step in the right direction.
"If you don't invest in these companies, they're not going to grow here," she said. "This fund enables us to make some big investments in companies where we're going to see a return."
The other loan program - the Grow Missouri Loan Participation Fund - is geared towards small businesses of all kinds, to help them expand and add employees.
Both are designed to attract private investment as well; the Treasury Department hopes that $10 in private money will come for every $1 in public money. The public money must be lent out within two years. Businesses can apply beginning April 8.
An earlier version of this story is below.
Missouri's small businesses will be able to access $26.9 million in additional funding as part of the federal Small Business Jobs Act approved last fall.
Nationwide, $1.5 billion federal funding is being made available through the State Small Business Credit Initiative.
The federal funds are designed for state-run programs to partner with private lenders to increase the amount of credit available to small businesses. States must demonstrate that at least $10 in new private lending will result from every $1 in federal funding.
Missouri economic development officials said the $26.9 million in new funds will spur more than $269 million in additional small business lending statewide.
Gov. Jay Nixon is visiting the Center for Emerging Technologies in St. Louis this morning to provide details on the funding and he'll be in Kansas City this afternoon.
"These new resources will help Missouri entrepreneurs grow their operations and turn their dreams into bricks and mortar," Nixon said in a statement.
In Missouri, $16.9 million of the funds will go toward establishing the Missouri IDEA Seed and Venture Capital Funds for science and technology firms. The funds will provide pre-seed capital stage financing, seed capital stage financing, venture capital stage financing and expansion stage debt.
The remaining $10 million will fund the Grow Missouri Loan Participation Fund for industrial, commercial, agricultural and recreational firms. Businesses with fewer than 500 employees will be eligible to apply for up to $3 million in loans to attract new enterprises and expand existing companies.
Applications for the funding, which will be available on the MO.gov website, will be accepted beginning April 8.