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SBIC Program History
The U.S. Small Business Investment Company Program: 
 
History and Current Highlights
  • The U.S. Small Business Investment Company (SBIC) program was created by Congress over 50 years ago to help small U.S. businesses meet their requirements for growth and operating capital not available through banks or other private capital sources.  Small companies often require financing in the critical $250,000 to $5 million range in the form of either subordinated loans not made by banks or equity investments not generally available from non-SBIC private equity firms.  SBICs fill that gap—supporting thousands of U.S. small businesses each year.
  • The SBIC program is a unique partnership between the public and private sectors.  SBICs are private equity funds that invest in U.S. small businesses that meet size and operational criteria set by the federal government.  SBICs are licensed and regulated by the U.S. Small Business Administration (SBA), but privately managed by private sector management teams whose qualifications and business plans are approved in advance in a rigorous SBA licensing process.  Minimum capital required to establish an SBIC—$5.0 million—must come from qualified private investors.  Additional capital—as much as three times the private capital—is then potentially available to each SBIC through SBA by sale of SBA-guaranteed securities on an "as needed” basis to support fund investments and expenses.  The private capital is at risk in its entirety before any taxpayer money is at risk, and SBA examines SBICs regularly to ensure their financial soundness and regulatory compliance.
  • Since its beginning in 1958, the SBIC program has provided almost $60 billion of long-term debt and equity capital to more than 107,000 small U.S. companies, with $2.05 billion invested in 1,331 small U.S. companies in FY 2010 alone.  Many well-known U.S. companies received early financing from SBICs, including Intel, Apple Computer, Callaway Golf, Whole Foods Market, Staples, Quiznos, Federal Express, Outback Steakhouse, Costco, and Build-A-Bear Workshop.  Companies receiving SBIC financing have consistently figured prominently on a variety of "best of” business lists, including the Inc. 500, BusinessWeek’s "Hot Growth Companies” and "Hot Growth Hall of Fame,” Fortune magazine’s "Best Companies to Work For” and "Most Admired Companies,” and the FSB 100.
  • SBIC financing supports jobs and job growth.  In FY 2010 investments from SBICs helped create or retain more than 46,130 jobs
  • SBICs play an important role in financing local businesses in states and geographic regions not generally served by non-SBIC private equity firms.  Of the 1,331 U.S. small businesses that received FY 2010 SBIC financing, 29% were located in government-designated Low-to-Moderate Income (LMI) areas of the country or in minority or women-owned businesses. 
  • SBICs also play a vital role in the critical manufacturing sector of our economy. For the period FY 2006 through FY 2010, 21% of the SBIC Program Debenture Portfolio was invested in small manufacturing companies.
  • At year-end FY 2010, there were 307 SBICs of all types operating in 43 states, the District of Columbia, and Puerto Rico.  At that date, SBICs held $16.5 billion in capital resources.  Of that total, $8.6 billion was private capital and $7.9 billion was SBA-guaranteed capital or commitments.  In FY 2010, SBA licensed 23 new SBICs with $654 million in initial private capital.
  • SBICs—for over 50 years, providing capital for American small businesses and the American jobs they create.

 

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