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Keyhorse Capital to Administer Venture Capital Programs as Part of Kentucky's $117M Federal Award

On February 27, 2023, Gov. Andy Beshear announced Kentucky will receive a $117 million award to expand access to capital for small businesses across the state through the U.S. Department of Treasury’s State Small Business Credit Initiative (SSBCI). Kentucky will use the award, allocated in three phases over a 10-year period, to launch a suite of initiatives known as KSBCI 2.0. The funding will support venture capital programs, loan support programs and Community Development Financial Institutions (CDFI), with an emphasis on access for underserved business owners.

The funding will be distributed through KY Innovation, the office within the Cabinet for Economic Development responsible for supporting entrepreneurs and small businesses. Qualifying businesses can access the support through certified lending institutions for the loan programs and Keyhorse Capital, the venture funding arm of the Kentucky Science and Technology Corporation (KSTC), for investment capital.

“SSBCI 2.0 is a huge opportunity for early-stage startups in Kentucky. These funds will give more founders the chance to succeed with access to capital at those critical early stages, particularly founders from underrepresented communities,” said KSTC President Terry Samuel. “Our venture finance arm, Keyhorse Capital, has been doing this work for over two decades through the Kentucky Enterprise Fund. We’re ready to hit the ground running and build upon the work we’ve done in partnership with the Cabinet for Economic Development and KY Innovation to back scalable businesses throughout the state.”

Keyhorse Capital will introduce two new initiatives as part of KSBCI 2.0. The Kentucky Matching Ventures Fund provides matching investments in early to growth stage, technology-based companies in Kentucky seeking private equity funding from angel and venture capital investors.

The Kentucky Strategic Ventures Fund provides matching investments in proven, professionally managed private equity and venture capital funds that commit to aggressive and visible deal prospecting and direct investment in Kentucky companies.

Commonly known as SSBCI 2.0, the Treasury Department program was authorized as part of the American Rescue Plan Act and builds upon the 2010 SSBCI initiative. Kentucky used previous funding to create the Kentucky Small Business Credit Initiative (KSBCI), which secures loans by covering gaps between lent capital and posted collateral of up to 20 percent. This allowed lenders to make loans that fall outside of their general purview or guidelines.

Funding will also support two programs administered by KY Innovation intended to make it easier for lending institutions to finance creditworthy businesses in need of additional capital. The Kentucky Collateral Support Program provides a pledged asset of up to 20% of the loan to enhance the collateral coverage of a small business borrower that would otherwise be qualified but unable to meet the lender’s security requirements. The Kentucky Loan Participation Program (KYLPP) will receive a portion of the funding as well. KYLPP allows the Kentucky Economic Development Financial Authority to purchase up to 20% of a small business loan to support a lender or CDFI in originating much larger loans that, on their own, would not have been possible.

For more information, visit and the Cabinet for Economic Development.


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