THE BLOG

Legislation Increasing Support to SBA Investment Program a Step Forward for Entrepreneurs Looking for Capital

03/26/2015 12:52 pm ET | Updated May 25, 2015

House legislation seeks to provide greater access to capital for entrepreneurs by expanding the amount available to small business investments through the SBA's Small Business Investment Company program

Our economy is on the upswing and reports show that business lending is on the rise, but many don't realize that small businesses are still being left in the dust when it comes to gaining critical access to credit. In fact, recent research shows that while lending for big businesses reached record levels last year, small business lending hasn't caught up with pre-recession levels. Our polling shows access to capital remains a persistent problem for entrepreneurs, particularly since the recession. And, while it has eased in some parts of the small business community, there are significant gaps that remain in critical areas, particularly in minority and rural communities and for women and veterans. House legislators recently introduced the Small Business Investment Company (SBIC) Capital Act of 2015 (H.R.1023), which can help address this problem by expanding the amount of capital available through small business investments.

Small Business Majority's opinion polling shows an overwhelming 90 percent of small business owners nationwide agree the availability of credit for small businesses is a problem, and 61 percent agree it's harder to get a loan now than it was in 2008. This bipartisan legislation can help fill in the gap by increasing support to the SBIC program run by the U.S. Small Business Administration (SBA). Specifically, the bill seeks to amend the Small Business Investment Act of 1958 to increase the limit that a "family of funds" can borrow with an SBA guarantee from $225 million to $350 million, at no cost to taxpayers.

Congress created the SBIC program in 1958 to facilitate the flow of long-term capital to America's small businesses. SBICs are privately-owned and managed investment funds, licensed and regulated by SBA, that use their own capital, plus funds borrowed with an SBA guarantee to make equity and debt investments in qualifying small businesses. SBA does not invest directly into small businesses through the SBIC program, but provides funding to qualified investment management firms with expertise in certain sectors or industries.

The SBIC program has been an important resource to entrepreneurs for nearly 60 years. Since its inception, SBICs have provided more than $67 billion to American small businesses through more than 166,000 investments. And during 2013 alone, SBICs invested $3.5 billion to small businesses. Nearly 1,100 small businesses received financing, 30 percent of which were in low-to-moderate income areas or were minority- or women-owned businesses.

Continuing to support and expand efforts like the SBIC program will help serve minority, women, veteran and rural entrepreneurs in their attempts to access capital. By expanding and opening new avenues of capital, we can help meet the existing needs of minority entrepreneurs in order for them to continue serving their function as job creators. Particularly for women, who account for only 16 percent of conventional small business loans, legislation like this would address this gender gap in lending by improving SBA programs that reach more women seeking business loans.

The SBIC Act will enhance the SBA's ability to support successful investors as they finance small business owners, and particularly minority and disadvantaged businesses that will continue to create more jobs and drive our nation's economy. We hope legislators move forward with this bill soon in order to help more of our nation's job creators access the capital they need to grow and thrive.