March 11, 2015

Small Business Investment Company Capital Act Of 2015

Mr. CARDIN.  Mr. President, I am pleased join my colleague, Senator Risch, in introducing the Small Business Investment Company Capital (SBIC) Act of 2015. And I am pleased that Congressman Chabot, Chairman of the House Small Business Committee, is introducing the same bill on the House side today. 

     This bipartisan legislation makes a common-sense change to the Small Business Investment Company (SBIC) program run by the Small Business Administration (SBA).  This change will provide increased support to some of the program’s most successful participants, SBICs that run multiple funds at a time. At no additional cost to the taxpayer, the SBIC Act will raise the limit that a “family of funds” can borrow with an SBA guarantee from $225 million to $350 million.

     The SBIC program guarantees loans to qualified investment funds, or SBICs. In turn, these SBICs invest in promising small businesses by combining the SBA loan with privately raised capital, often at a two-to-one ratio. It is important to note that while these SBICs are licensed and regulated by the SBA, they are privately owned and operated.

     Since its inception, the SBIC Debenture program has been incredibly successful. SBICs have invested more than $70 billion in nearly 170,000 small businesses. Recently, the program has experienced rapid growth. In 2013, SBA guaranteed loans to SBICs equaling $3.5 billion, a 70% increase in financing dollars from three years ago and the highest amount of financings in the past decade.

     This success is largely attributed to Congressional action that raised the ceiling for maximum investments for the SBIC program each year from $3 billion to $4 billion. Senator Landrieu, Senator Risch, and I worked with a bipartisan coalition to increase this ceiling and ensure SBIC funds have access to sufficient capital to invest in promising small businesses.

     Nowhere is the success of this increase seen more than in Maryland. Since the start of fiscal year 2015, SBICs have already invested nearly $65 million in Maryland small businesses. Yet, this success could be enhanced even more if Congress increased the amount SBICs with a family of funds can borrow from the SBA.

     SBICs that run multiple funds at a time are known as “families of funds.”  While many of our nation’s most successful and reliable SBICs have a family of funds, their success is being restricted by the current lending limit. Simply raising the limit from $225 million to $350 million would provide these proven fund managers the additional capital needed to invest in small businesses and stimulate local economies.

     Put simply, by increasing the “family of funds” lending limit to $350 million, proven investors can invest in more promising small businesses. The SBIC Act enhances the SBA’s ability to support these successful investors as they finance small businesses that will continue to create jobs in this country.