Learning About Small Business Investment Companies

Business owners from around the state recently gathered at Miles College to learn more about small business investment companies.

Licensed by the U.S. Small Business Administration, a small business investment company (SBIC) is a privately-owned and managed investment fund that supplies small businesses with financing in both the equity and debt arenas.

SBICs are allowed to borrow from the federal government to augment the funds of private investors. Typical investments are made in the $100,000 to $250,000 range and usually provide better terms than other financial lenders. The standard debenture term is about 10 years. Investments must be made in small businesses, as defined by the Small Business Administration. Investments are not permitted for project finance, real estate or passive entities, such as partnerships or trusts.

Some benefits of investing in SBICs are the rapid deployment of funds, certain exemptions from registration requirements with the SEC and the possible eligibility for Community Reinvestment Act credits.

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The workshop, held on December 5, featured an interactive discussion with representatives from the SBA’s Office of Investment and Innovation regarding the SBIC program managers, bank, family and institutional investors, federal regulators, small businesses receiving SBIC capital and opportunities for SBIC applicants.

For more information on this SBA program, visit sba.gov/partners/sbics.

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