Administrator Guzman Advances New Small Business Investment

Washington, Oct. 18, 2022 (GLOBE NEWSWIRE) — Today, Administrator Isabella Casillas Guzman, head of the U.S. Small Business Administration (SBA) and the voice in President Biden’s Cabinet for America’s 33 million small businesses, announced the Federal Register publication of SBA-proposed reforms to the Small Business Investment Company (“SBIC”) program designed to reduce financial barriers and increase access and diversity in the U.S. small business investment ecosystem.

“SBA’s SBIC program has helped generations of entrepreneurs bridge capital gaps to build and scale resilient businesses. Despite the program’s impact, we still see underinvestment in communities across America, and the Biden-Harris Administration is committed to filling those capital gaps,” said Administrator Guzman. “Our proposed reforms to the SBIC program aim to diversify our SBIC network and portfolio, and incentivize patient capital to support critical industries as we build a better America. I look forward to working with our private investment partners and receiving important feedback to make this vital program even stronger.”

The proposed rule, SBIC Investment Diversification and Growth, seeks to address structural aspects of the SBIC program which have historically limited the flow of SBIC regulatory capital to small businesses and startups not adequately served by private investors alone.

The proposed reforms published in the Federal Registry include:

• Reduce barriers to SBIC program participation for new private fund managers and private funds focused on equity and longer-term debt investments in small businesses and startups, especially those in underserved communities and geographies, capital-intensive industries, and technologies critical to national security.

• Establish an alternative borrowing structure to the traditional Debenture SBIC. This alternative is constructed to align with the cash flow patterns of equity-oriented investment funds…