Correct, the ban is only for federally funded stem cell research.
Problem with that is 90% of research is, in some way, federally funded.
Universities for example. If the school gets any money from the government they can't use any of that for stem cell research. And it's not as simple as some might think to separate the funds. How do you pay professors? That photocopier in the common area? If any federal funds were used to purchase it, you can't even use it to make a photocopy. The alternative is to setup a separate company. Who do you think will benefit from the discoveries to be made? The public, or pharmaceutical companies?
Personally, I'm surprised I haven't heard any conspiracy theories about pharmaceutical companies supporting the ban to stifle competition from other sectors.