A state agency soon will sprinkle millions of dollars in seed capital around to Hawaii small businesses under a federally funded program aimed at job creation and economic recovery.

The U.S. Treasury approved up to $62 million for the Hawaii Technology Development Corp. to distribute under the State Small Business Credit Initiative.

HTDC expects to initially make available $19.8 million, with the balance coming over two later phases and ending by Sept. 30, 2030.

Under the program, minimum matching investment from the private sector is required, and this is expected to produce more than $600 million in initial and long-term private capital contributions.

“This is a valuable addition to the state’s economic revitalization efforts and provides much needed support for our businesses to not just recover but grow post-pandemic,” Gov. David Ige said in a statement. “We anticipate the creation of high-quality jobs for our residents as a result of this program.”

Mike McCartney, director of the state Department of Business, Economic Development and Tourism, added, “Receiving federal funding that requires private matching funds will provide needed capital to our small business communities. It gives us a way to engage and continue strengthening our efforts toward diversifying our economy.”

Hawaii is one of five initial states to have applications approved for the program, which was authorized by Congress in March as part of the American Rescue Plan Act coronavirus relief measure and provides $10 billion to invest nationwide.

The Treasury department announced the initial awards Thursday.

“The COVID-19 pandemic was devastating for businesses and entrepreneurs in states like Hawaii, whose economy relies heavily on tourism,” Wally Adeyemo, deputy secretary of the Treasury, said in a statement. “That’s why these investments through the American Rescue Plan are so critical. Hawaii’s plan will help diversify its economy and spark innovation in key sectors, including renewable energy, to promote economic growth. Treasury will continue working with Hawaii to help make sure this capital is having maximum impact in communities across the state.”

To administer the program, HTDC is partnering with another state entity, the Hawaii Green Infrastructure Authority. The Legislature also appropriated $500,000 this year for HTDC to get the program running.

Money from what HTDC is calling the Hawaii Small Business Capital Program, or HI-CAP, will be distributed through different channels.

Some money will be passed to local venture capital funds that will pick companies, often startups led by entrepreneurs, in which to invest with at least an equal amount of private capital. Such equity investments will give the state ownership stakes in companies receiving capital.

Money also will be distributed to commercial lending institutions to supplement no more than half of a loan to individual small businesses that can’t qualify to borrow the whole loan amount.

Some of the funds also will be reserved as cash collateral that helps businesses qualify for commercial loans in cases where the businesses don’t have enough collateral, such as property or equipment, required by a lender to secure a loan on their own.

And last, some funding will be passed to financial institutions for lending to companies that need very small amounts of money, as well as companies whose owners are economically or socially disadvantaged.

The four strategies for capital distribution represent an expansion of an earlier version of the federal program, which was first established in 2010 on a smaller scale in response to the Great Recession.

Hawaii received and invested $13.2 million in that first go-round entirely focused on venture capital investments. Among companies that received funding was the free electric vehicle charging station developer Volta Inc., which in August got listed on the New York Stock Exchange in a transaction that raised about $400 million for the company, in which the state owns some equity.

Overall, the $13.2 million was spread over more than 120 investments that got paired with over $100 million in private investment. Companies that received funding included some that failed, though overall they attracted more than $300 million in follow-on private investment and created or retained at least 678 jobs, according to Len Higashi, HTDC’s acting executive director.

Higashi said in a statement that HI-CAP will greatly strengthen HTDC’s mission to accelerate business growth with local innovation.

“We are very appreciative of all of the state’s support for HI-CAP, including an appropriation from the Legislature this year,” he said.