Statements
Statement of Rep. Schneider on the Small Business Investment Company program
Washington, DC,
November 7, 2017
Statement of the
Hon. Brad Schneider, Ranking Member
House Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade
Tuesday, November 7, 2017 at 10:00 a.m.
Access to capital is essential for every business, and especially for smaller ones. Without it, most firms cannot make improvements, expand, or hire qualified workers they need to succeed. In 1958, Congress recognized a gap in the financial markets for long-term funding for growth-oriented small businesses and created the Small Business Investment Company program. SBICs are privately owned and managed investment funds, licensed by SBA, that use their own capital plus SBA guaranteed funds to make investments in small firms.
The SBIC program helps “fill the gap” in the capital markets for businesses that have outgrown SBA’s flagship 7(a) loan guarantee program -- but remain too small or high risk for the private equity industry.
The key to the program’s success is leveraging federal funds to expand the amount of private capital invested in promising small firms.
SBA provides funding to qualified SBICs with expertise in certain sectors of the economy. SBICs then use their own funds and leverage from SBA to invest in small businesses. Their actions have facilitated over 3 million jobs total and nearly $6 billion per year of investment in domestic small employers. To date, Small Business Investment Companies have assisted thousands of high-growth businesses, providing over $100 billion in capital.
In this Congress, the House passed two pieces of legislation out of this committee that expand the SBIC program. The “Small Business Investment Opportunity Act of 2017” (H.R. 2333) increases the cap for an SBIC that manages just once company from $150 million to $175 million, and the “Investing in Main Street Act of 2017” (H.R. 2364) increases the percentage of capital and surplus banks and federal and savings associations can invest in an SBIC. Both measures seek to increase the flow of much needed capital to small businesses.
Despite these efforts, more work needs to be done, in particular to diversify the program. Greater access for women and minority-owned funds would in turn increase the dollars flowing to women and minority-owned small businesses. Similarly, additional efforts to invest in rural small businesses could spur economic growth in these areas.
During today’s hearing, I look forward to hearing from our witnesses on how we facilitate investment in our nation’s entrepreneurs and small businesses, and thank them in advance for their testimony.
|
