Changes implemented as of July 10 at the U.S. Small Business Administration are intended to make it easier for small businesses to secure venture capital or private equity, the SBA says.
The and were made as part of the American Recovery and Reinvestment Act.
SBIC are privately owned and managed VC firms that are licensed and regulated by the SBA. Some 338 SBICs across the country have $17.4 billion under management.
There are SBICs across North Carolina. Check here for the list{{/a}] from the SBA.
The changes as spelled out by the SBA:
• “The Recovery Act makes SBICs eligible for greater SBA guaranteed funding and requires SBICs to invest 25 percent of their investment dollars into “smaller” businesses. Also, the amount of funding an SBIC may invest in a single small business is set at 10 percent of an SBIC’s total capital rather than the previous limit of 20 percent of an SBIC’s private capital only. This translates to an effective 50 percent increase in funding available to a single business by an SBIC.
• “Maximum SBA funding levels to SBICs will increase up to three times the private capital raised by the SBIC, up to a maximum of $150 million for single SBICs, or up to $225 million for multiple SBICs that are under common control. The cap for all licensees was set at $137.1 million before the Recovery Act.
• “These limits are even higher for SBICs that are licensed after October 1, 2009, that certify that at least 50 percent of their investments will be made in small businesses located in low-income areas, up to $175 million for single licensees and up to $250 million for jointly controlled multiple licensees.”
“The Recovery Act expands SBA’s venture capital program to increase the pool of investment funding available to the Small Business Investment Companies licensed by SBA,” said SBA Administrator Karen Mills in a statement. “We believe those companies will be better equipped by these changes to help sustain and grow small businesses for their next important growth steps.”
