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SB 1056

NC Small Business Capital and Jobs Act.

2025-2026 Session Introduced by Val Applewhite and 6 co-sponsors

The bill creates a comprehensive state program to expand capital access for NC small businesses, offering guarantees, direct investments, CDFI support, and tax incentives to spur g

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Bill Summary · SB 1056

Summary of SB 1056 (NC Small Business Capital and Jobs Act)

Jurisdiction: North Carolina | Session: 2025 | Filed: Apr 30, 2026
Short Title: NC Small Business Capital & Jobs Act

Purpose and Intent

  • Establish a comprehensive state framework to expand access to capital for small businesses and to serve underserved communities, disadvantaged areas, and persistent-poverty census tracts across North Carolina.
  • Create an integrated ecosystem of loan guarantees, direct equity/near-equity investments, support for community lenders (CDFIs), technical assistance, and private-investment incentives.
  • Improve regional economic opportunity, job creation, and business growth by reducing barriers to capital.

Key Provisions and Changes

New Program and Governance Structure

  • Office of Small Business Capital Access within the Department of Commerce.
    • Led by a Director (appointed by the Secretary of Commerce) with experience in small-business finance or economic development.
  • Small Business Capital Access Oversight Board (11 members) to guide and monitor program guidelines, deployment, and outcomes. Board duties include quarterly meetings and annual recommendations to the Governor/General Assembly. Terms are four years with staggered initial appointments.

Program Components (Part 20A)

The Act creates a multi-component program, each with implementing guidelines developed by the Office and overseen by the Board:
1. Small Business Loan Guarantee Program
- Private lenders offer loans to small/qualifying businesses.
- State guarantees: up to 90% for loans in development tier 1 or persistent poverty tracts; up to 80% for other eligible borrowers.
- Eligible lenders include community banks, credit unions, certified CDFIs, minority depository institutions, and other regulated small-business lenders.
Eligible borrowers: NC-based, operating at least 1 year, viable business model, unable to secure conventional financing, funds used for normal business purposes.
Loan loss reserve established; streamlined application process; required fees for sustainability.

  1. North Carolina Qualifying Business Growth Fund

    • Direct investments in growth-stage qualifying businesses.
    • Investments: $250k to $2 million per company; preferred co-investment from private investors.
    • Investments to create quality jobs; returns reinvested for sustainability.
    • A private fund manager with NC-relevant experience oversees the portfolio; regular reporting and post-investment support required.

  2. CDFI Support Initiative

    • Grants to certified CDFIs; low-cost loan capital for relending; capacity-building and partnerships with traditional lenders.
    • Priority to rural or underserved urban CDFIs with demonstrated performance and impact.

  3. Small Business Technical Assistance Network

    • Provides business development services, coordinates TA providers, expands capacity, and targets industry-specific needs.
    • Services include planning, financial management, market analysis, operations, technology adoption, government contracting prep, and capital-readiness work.
    • Develop simplified referral system; track TA outcomes against capital success.

  4. State Procurement Financing Initiative

    • Helps small/qualifying businesses win state contracts via:
      • Mobilization capital (short-term upfront costs),
      • Factoring to accelerate invoice payments,
      • Bonding assistance,
      • Quick-pay requirement: state agencies pay approved invoices within 15 days.

  5. Small Business Innovation Fund

    • Supports high-growth, innovative businesses.
    • Matching grants for SBIR/STTR award recipients; match up to 50% of federal award, not to exceed $100,000.
    • Regional innovation hubs to be established with universities/private partners; proof-of-concept funding and tech-transfer initiatives.
    • Guidelines to be developed with the NC Board of Science, Technology & Innovation.

Capital Fund and Funding

  • NC Small Business Capital Access Fund (special revenue fund at the Department of Commerce) sourced from:
    • General Fund appropriations, federal grants, private donations,
    • Loan repayments and investment returns, program fees, and interest earnings.
  • Fund accounts to be separated by component as needed.

Program Evaluation

  • Establish a comprehensive evaluation framework with metrics such as:
    • Demographics and scope of participants,
    • Capital deployed by component and region,
    • Jobs created/retained, revenue growth, follow-on capital,
    • Default rates and ROI for public funds,
    • Economic impact in underserved communities.
  • An independent evaluator contracted every three years; annual Governor/G.A. report due by Oct 1.

Tax Credits (Part 5, Article 4, Chapter 105)

  • Reinstates and reorganizes a North Carolina tax credit regime for investments in qualified small businesses (G.S. 105-163.010 et seq.), including:
    • Eligible investors and businesses, definitions (e.g., equity securities, financial institutions),
    • Credit amount: 25% of investment for individuals and eligible pass-through entities; caps per year ($50,000 for individuals; $750,000 per pass-through entity; scale adjustments and bonuses for investments in Tier 1/2 areas or MWBEs),
    • Application windows (timing rules), limits on carry-forwards (up to five years), and annual aggregate credit cap (range $7.5M–$10M, subject to adjustment),
    • Forfeiture rules for credit if investors participate in or redeem early, with exceptions for specific scenarios (e.g., motion picture projects).
    • Registration requirements for qualified ventures (venture registration with Secretary of State), renewal, revocation, penalties, and reporting by the Secretary of State.

Appropriations and Effective Date

  • $50 million in recurring funds for 2026-2027 onward, allocated across program components:
    • Guarantees ($20M), Growth Fund ($10M), CDFI Support ($5M), TA Network ($5M),
    • State Procurement Financing ($5M), Innovation Fund ($4M), Admin ($1M).
  • Effective date: July 1, 2026. Key milestones for appointments, guideline publication, and phased implementation occur over 180 days to 2 years post-enactment.

Potential Impact

  • Expands access to capital for NC small businesses, especially in rural and underserved areas.
  • Encourages private investment through guarantees, direct equity, and tax credits.
  • Strengthens support infrastructure (TA, CDFIs, procurement finance) to improve capital deployment efficiency.
  • Establishes state-level oversight and evaluation to monitor outcomes and inform policy adjustments.

Compiled from official sources — confirm details with the bill’s official record.

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