The SBA’s Small Business Investment Company (SBIC) program seeks to stimulate and supplement the flow of private equity capital and long-term loan funds to small businesses, which small business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization when such capital is not available in adequate supply.
The SBA, through the SBIC program, licenses privately and publicly managed investment funds that raise capital from private investors and then combine it with capital obtained through the SBIC’s issuance of a taxpayer-backed debenture guaranteed by the SBA. The SBIC invests this combined capital in qualifying small businesses through terms established between the SBIC and small businesses within the parameters of the SBIC program regulations and SBA oversight.
Small businesses seeking capital from SBICs are typically later-stage, mature, profitable businesses that are generating cash flows sufficient to service interest and sometimes principal payments. SBIC small business financings are primarily in the form of subordinated debt with equity enhancements. SBIC financings to small businesses typically range from $2.5 million to $10 million. However, each SBIC has its own investment profile in terms of targeted industry, geography, company maturity, and the type and size of financing the SBIC will provide to small businesses. Small businesses interested in the possibility of receiving investment capital from an SBIC are encouraged to contact SBICs directly.