sbic

The U.S. Small Business Administration (SBA) is implementing a final rule, effective Aug. 17, that adds a category of Small Business Investment Company (SBIC) that will make the program a better-fit for early-stage investment strategies. The most significant change in this direction is the creation of an accrual funding mechanism that enables licensed SBICs to receive a loan from SBA that is repaid only upon distribution events or at the end of a 10-year term. Additional changes include allowing fund investment strategies through a reinvestor SBIC license, modifying license fees, clarifying elements of nonprofit participation, and attempting to reduce program paperwork.

SSTI has written a response to the U.S. Small Business Administration’s (SBA) proposed revisions to the Small Business Investment Company (SBIC) program, which aim to increase program participation. The proposed changes include reductions in licensing fees for first- and second-time funds, exceptions to the conflict of interest rules for follow-on financing, increasing access to credit for leveraged funds and a new “accrual debenture” option for SBICs.