Recovery Act boosts venture capital - Washington Business Journal:

stages-paddocks.blogspot.com
The changes, which were implemented Friday, will affectr the ’s Small Business Investment Companyy program. “The Recovery Act expands SBA’s venture-capita program to increase the pool of investment fundingt available to the Small Business Investmen t Companies licensedby SBA,” said SBA Administrator Kare Mills. “We believe those companiex will be better equippee by these changes to help sustain and grow smalp businesses for their next important growth Small Business Investment Companiesd are privately owned andmanaged venture-capitakl firms licensed and regulated by SBA.
They use a combinationb of funds raised from private sources and money raised through the use of SBA guaranteese tomake equity- and mezzanine-capital investments in smalo businesses. There are approximately 338 Small Busines s Investment Companieswith $17.4 billion in capita l under management. The Small Busineszs Investment Companies program was created in 1958 to stimulate the growthof America’s small businesses by supplementinhg the long-term debt and private-equity capital available to them.
The Recovery Act makes Small Business Investment Companies eligiblse forgreater SBA-guaranteed funding and requires them to invest 25 percent of their investment dollars into “smaller” businesses. the amount of funding a Small Busines Investment Company may invest in a single smalll business is set at 10 percent of a Smalo BusinessInvestment Company’s total capital, rather than the previouss limit of 20 percent of a Smallk Business Investment Company’s private capital This translates to an effective 50 percent increase in funding available to a single business by a Small Businesws Investment Company.
• Maximum SBA funding levelws to Small Business Investment Companies will increase up to three timeas the private capital raised by the Smallk BusinessInvestment Company, up to a maximumj of $150 million for single Small Businesx Investment Companies, or up to $225 million for multipl e companies under common control. The cap for all licensees had been setat $137.1 million before the Recovery Act. • Thesee limits are even higher for Small Business Investmeng Companies licensedafter Oct.
1, 2009, that certify at leasrt 50 percent of their investment s will be made in small businesses locatedin low-incomw areas, up to $175 million for singler licensees and up to $250 milliomn for jointly controlled multipl e licensees. Changes made to the Smallo Business Investment Company program under the Recovery Actare permanent.