Small Business Investment Firms Reform Proposed by SBA to Address Diversity

The US Small Business Administration (SBA) recently announced that it published in the Federal Register its proposed reforms to the Small Business Investment Corporation (SBIC) program.

Small Business Investment Firms Reform Proposed by SBA to Address Diversity

The proposed reforms are designed to reduce financial barriers while increasing access and diversity to the U.S. small business investment ecosystem. Structural aspects of the SBIC program will be addressed by reforms aimed at improving the flow of his SBIC regulatory capital to small and medium-sized businesses and start-ups where retail investors alone are deemed insufficient.

SMEs benefit from reform

The proposed reforms will help small businesses and start-ups in underserved communities to benefit from reduced barriers to participation in SBIC programs. Priority will be given to businesses in capital-intensive industries and technologies critical to national security, as well as underserved communities and regions.

SBA also hopes to establish an alternative borrowing structure to the traditional corporate bond SBIC. New alternatives are structured around the cash flow patterns of equity-oriented investment funds and long-duration strategies.

Diversification of SBIC network

SBA administrator Isabella Casillas Guzman said: Despite the program’s impact, there is still a lack of investment in communities across America, and the Biden-Harris administration is working to close these capital gaps.

“Our proposed reforms to the SBIC program are intended to diversify the SBIC network and portfolio and to encourage patient capital to support critical industries in building a better America. We look forward to working with our private investment partners and receiving important feedback to further strengthen our important programs.”

Baillie DeVries, Deputy Commissioner for Investments and Innovation, added: We look forward to hearing from industry as we work to advance our shared mission of solving access to our nation’s capital challenges. ”

Next steps for proposed reforms

The proposed reforms were put under public scrutiny and made available in the Federal Register on October 19. Comments he must submit by December 19th.

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Image: sba