WASHINGTON– Administrator Isabella Casillas Guzman announced the U.S. Small Business Administration (SBA) Small Business Investment Company’s (SBIC) Diversification and Growth Final Rule is effective today. Under the new rule, which supports the Biden-Harris Administration’s economic and equity priorities, the SBA will implement regulatory and policy reforms to increase access to private equity and debt capital for:
- Underserved small businesses and startups,
- Undercapitalized critical technologies,
- Diverse and emerging fund managers, and
- Innovation investment.
Starting August 17, private market fund managers can apply for SBIC licenses designed for investing in American small businesses and startups with equity-oriented or long-duration strategies. The two new SBIC licenses – the “Accrual SBIC” and the “Reinvestor (Fund-of-Funds) SBIC” – expand the SBIC program network of private market financing partners and the SBA’s reach to historically underserved small businesses and startups. Critically, the regulatory and policy reforms are designed to reduce the financial burden for new program applicants and provide a more streamlined application experience.
“The Biden-Harris Administration is committed to ensuring small businesses can access capital for growth – especially aligned with our focus on equity, manufacturing, and innovation that will power our economy into the future. SBA’s partnerships with private funds in the SBIC program deliver so America’s small businesses can take advantage of opportunities as the President Invests in America, and these transformational reforms break down the structural limitations in the SBIC Program to increase the flow of equity and debt financing to underserved communities, capital-intensive industries, and technology areas critical to U.S. national security and economic development,” said Administrator Guzman.
“By strengthening, diversifying, and expanding our network of SBIC-licensed private funds, the reforms will help fill funding gaps and unlock potential in underserved small businesses, innovative startups, and businesses developing technologies critical to national security,” said SBA Associate Administrator for Investment and Innovation Bailey DeVries.
Since 1958, the SBA has licensed and regulated private market investment funds as “SBICs.” SBICs invest equity or lend private capital, plus funds borrowed with an SBA guarantee, to make equity and/or debt investments in small businesses and startups.
Today, the SBIC program is comprised of more than 308 discrete private funds across mezzanine, private credit, buyout, growth, venture, and multi-strategy, which collectively have more than $40 billion in public and private assets under management (AUM). Last year, SBICs invested $8 billion in more than 1,500 companies that created and sustained over 103,000 U.S. jobs.
Article Courtesy of the SBA