---
kind: "section"
citation: "12 U.S.C. § 5705"
title: "12"
title_heading: "Banks and Banking"
number: "5705"
heading: "Approving collateral support and other innovative credit access and guarantee initiatives for small businesses and manufacturers"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5705"
units:
  - "Chapter 54 — State Small Business Credit Initiative"
---

# §5705. Approving collateral support and other innovative credit access and guarantee initiatives for small businesses and manufacturers

- (a) **Application—** A [participating State](/usc/12/5701.md?p=6) that establishes a new, or has an existing, [credit](/usc/12/5481.md?p=7) support [program](/usc/12/5701.md?p=7) that meets the eligibility criteria in [subsection (c)](#c) may apply to the [Secretary](/usc/12/5701.md?p=14) to have the [State other credit support program](/usc/12/5701.md?p=12) approved as eligible for [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, the [State program](/usc/12/5701.md?p=13).
- (b) **Approval—** The [Secretary](/usc/12/5701.md?p=14) shall approve such [State other credit support program](/usc/12/5701.md?p=12) as eligible for [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, the [program](/usc/12/5701.md?p=7) if—
  - (1) the [Secretary](/usc/12/5701.md?p=14) determines that the [State](/usc/12/5701.md?p=10) satisfies the requirements of paragraphs (1) through (3) of [section 5704(b) of this title](/usc/12/5704.md?p=b);
  - (2) the [Secretary](/usc/12/5701.md?p=14) determines that the [State other credit support program](/usc/12/5701.md?p=12) meets the eligibility criteria in [subsection (c)](#c);
  - (3) the [Secretary](/usc/12/5701.md?p=14) determines the [State other credit support program](/usc/12/5701.md?p=12) to be eligible based on the additional considerations in [subsection (d)](#d); and
  - (4) within 9 months after March 11, 2021, the [State](/usc/12/5701.md?p=10) has filed with Treasury a complete application for Treasury approval.
- (c) **Eligibility criteria for State other credit support programs—** For a [State other credit support program](/usc/12/5701.md?p=12) to be approved under this section, that [program](/usc/12/5701.md?p=7) shall be required to be a [program](/usc/12/5701.md?p=7) of the [State](/usc/12/5701.md?p=10) that—
  - (1) can demonstrate that, at a minimum, $1 of public investment by the [State program](/usc/12/5701.md?p=13) will cause and result in $1 of new private [credit](/usc/12/5481.md?p=7);
  - (2) can demonstrate a reasonable expectation that, when considered with all other [State programs](/usc/12/5701.md?p=13) of the [State](/usc/12/5701.md?p=10), such [State programs](/usc/12/5701.md?p=13) together have the ability to use amounts of new [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, all such [programs](/usc/12/5701.md?p=7) in the [State](/usc/12/5701.md?p=10) to cause and result in amounts of new small business lending at least 10 times the new [Federal contribution](/usc/12/5701.md?p=4) amount;
  - (3) for those [State other credit support programs](/usc/12/5701.md?p=12) that provide their [credit](/usc/12/5481.md?p=7) support through 1 or more [financial institution](/usc/12/5701.md?p=5) lenders, requires the [financial institution](/usc/12/5701.md?p=5) lenders to have a meaningful amount of their own capital resources at risk in their small business lending; and
  - (4) uses Federal funds allocated under this chapter to extend [credit](/usc/12/5481.md?p=7) support that—
    - (A) targets an average borrower size of 500 employees or less;
    - (B) does not extend [credit](/usc/12/5481.md?p=7) support to borrowers that have more than 750 employees;
    - (C) targets support towards loans with an average principal amount of $5,000,000 or less; and
    - (D) does not extend [credit](/usc/12/5481.md?p=7) support to loans that exceed a principal amount of $20,000,000.
- (d) **Additional considerations—** In making a determination that a [State other credit support program](/usc/12/5701.md?p=12) is eligible for [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, the [State program](/usc/12/5701.md?p=13), the [Secretary](/usc/12/5701.md?p=14) shall take into account the following additional considerations:
  - (1) The anticipated benefits to the [State](/usc/12/5701.md?p=10), its businesses, and its residents to be derived from the [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, the approved [State other credit support program](/usc/12/5701.md?p=12), including the extent to which resulting small business lending will expand economic opportunities.
  - (2) The operational capacity, skills, and experience of the management team of the [State other credit support program](/usc/12/5701.md?p=12).
  - (3) The capacity of the [State other credit support program](/usc/12/5701.md?p=12) to manage increases in the volume of its small business lending.
  - (4) The internal accounting and administrative controls systems of the [State other credit support program](/usc/12/5701.md?p=12), and the extent to which they can provide reasonable assurance that funds of the [State program](/usc/12/5701.md?p=13) are safeguarded against waste, loss, unauthorized use, or misappropriation.
  - (5) The soundness of the [program](/usc/12/5701.md?p=7) design and implementation plan of the [State other credit support program](/usc/12/5701.md?p=12).
- (e) **Federal contributions to approved State other credit support programs—** A [State other credit support program](/usc/12/5701.md?p=12) approved under this section will be eligible for receiving [Federal contributions](/usc/12/5701.md?p=4) to, or for the account of, the [State program](/usc/12/5701.md?p=13) in an amount consistent with the schedule describing the apportionment of allocated Federal funds among [State programs](/usc/12/5701.md?p=13) delivered by the [State](/usc/12/5701.md?p=10) to the [Secretary](/usc/12/5701.md?p=14) under the allocation agreement.
- (f) **Minimum Program Requirements for State other credit support programs—**
  - (1) **Fund 1 to prescribe—** The [Secretary](/usc/12/5701.md?p=14) shall, by regulation or other guidance, prescribe [Program](/usc/12/5701.md?p=7) requirements for approved [State other credit support programs](/usc/12/5701.md?p=12).
  - (2) **Considerations for fund—** In prescribing minimum [Program](/usc/12/5701.md?p=7) requirements for approved [State other credit support programs](/usc/12/5701.md?p=12), the [Secretary](/usc/12/5701.md?p=14) shall take into consideration, to the extent the [Secretary](/usc/12/5701.md?p=14) determines applicable and appropriate, the minimum [Program](/usc/12/5701.md?p=7) requirements for approved [State capital access programs](/usc/12/5701.md?p=11) in [section 5704(e) of this title](/usc/12/5704.md?p=e).

## Footnotes

[^1]: So in original. Probably should be “Secretary”.

## Source credit

(Pub. L. 111–240, title III, § 3006, Sept. 27, 2010, 124 Stat. 2577; Pub. L. 117–2, title III, § 3301(a)(1)(D), Mar. 11, 2021, 135 Stat. 69.)

## Notes

### Editorial Notes

### Amendments

2021—Subsec. (b)(4). Pub. L. 117–2 substituted “March 11, 2021” for “September 27, 2010”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2021 Amendment

Amendment by Pub. L. 117–2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117–2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117–2, set out as a note under section 5701 of this title.