SBA to solicit for SBIC early-stage fund this fall, expanding investment leverage

U.S. Small Business Administration (SBA) administrator Karen Mills has announced the agency’s next solicitation for its Small Business Investment Company (SBIC) early-stage fund will open this fall.

In addition, the SBA has expanded by $50 million the amount of leverage it is investing in funds during this second early-stage solicitation from $150 million to $200 million.

Besides the new solicitation for the early-stage funds and increase in investment leverage, the SBA also announced that it had increased its allocation size for its impact-investment fund.

Previously, an impact-investment fund could only receive up to $80 million in SBIC leverage, but now these funds can get up to $150 million, an increase of $70 million.

The agency also recently expanded the definition of impact investing to include rural communities. Both funds operate through the SBA’s SBIC program.

Mills made the announcement during remarks at a group of eight (G8) session on social-impact investing in London, England. The G8 is a forum for the governments of the world’s eight wealthiest countries.

The SBIC program, which the SBA says operates at no cost to taxpayers, launched in 1958 to supplement the flow of private-equity capital and long-term loan funds to small businesses.

SBICs are privately-owned and managed-investment firms that the SBA licenses and regulates.

SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine-capital investments in small businesses, the agency said.

When an SBIC invests in a small business, it can scale up and create jobs. SBA estimates that SBIC financings created or sustained over 68,000 jobs during fiscal year 2012.

The SBA licenses and regulates nearly 300 SBICs with more than $18 billion in capital under management.

Contact Reinhardt at ereinhardt@cnybj.com