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GAO Reports on Status of SBICs

March 28, 1997

The General Accounting Office (GAO) has released information on the status of Small Business Investment Companies (SBICs) for fiscal years 1990 through 1996. The report, Update of Information on SBA's Small Business Investment Company Programs, provides data on the performance of the programs and related investment activities.

The SBIC program was created to help small businesses obtain financing. SBICs, licensed by the Small Business Administration, are privately organized and privately managed investment firms. With a combination of their own capital and funds borrowed at favorable rates through SBA, SBICs provide venture capital and loans to small businesses. A specialized SBIC (SSBIC) program was also established to provide funding to socially or economically disadvantaged small business owners.

GAO data for fiscal years 1990 through 1996 show that:

  • the total number of SBICs and SSBICs decreased from 383 to 282
  • 127 SBICs and SSBICs entered liquidation from 1990 to 1996
  • the number of SBICs and SSBICs with more than $10 million in private capital and SBA funding increased from 70 in FY 1993 to 115 by FY 1996
  • the amount of private capital managed by the SBICs increased from approximately $2 billion in FY 1990 to more than $4.5 billion in FY 1996
  • cumulative SBA funding increased from $1.1 billion in FY 1990 to $1.4 billion in FY 1996

Data on SBIC and SSBIC investments show that:

  • SBICs invest primarily in manufacturing firms
  • SSBICs invest primarily in transportation, communications, and utilities

GAO data also show that SBA incurred $365 million in losses from liquidating failed SBICs and SSBICs. Projections indicate that there will be an additional $123 million in losses from liquidations in process.

Copies of the report, (GAO/RCED-97-55 ) are available from the GAO at 202/512-6000.