- This topic has 3 replies, 4 voices, and was last updated 1 year, 2 months ago by Gillian Reynolds.
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February 13, 2023 at 10:23 am #1231Krista HilesParticipant
What is the procedure for the SBIC program?
February 15, 2023 at 10:24 am #1232Richard BrodyParticipantSmall business investment companies (SBICs) provide small businesses with debt financing and equity, filling the role often taken by venture capital firms. A small business investment company is privately owned and licensed by the Small Business Administration (SBA). If an entrepreneur is seeking startup capital then an SBIC will often be the simplest and most effective means of obtaining the funds needed. Loan guarantees provided by the SBA enable small business investment companies to borrow at favorable rates. An overarching rule is that 75% of the capital they invest has to be invested in small businesses in the US, and for these purposes a US small business is defined as follows:
-The business has no more than 49% of the workforce based overseas
-The business has a net worth of less than $19.5 million
-The business has averaged a net income of less than $6.5 million over the previous two years
-In addition, at least 25% of the capital invested by the SBIC has to go into smaller enterprises in the US, defined as follows:
-The enterprise has no more than 49% of the workforce based overseas
-The enterprise has a net worth of less than $6 million
-The enterprise has averaged a net income of less than $2 million over the previous two yearsFebruary 17, 2023 at 10:26 am #1233Russell A DyerParticipantAs far as I know, SBICs give loans and equity to small enterprises, replacing venture capital firms. A privately held, SBA-licensed small business investment firm (SBA) can be a great way for entrepreneurs to get startup finance. SBA loan guarantees help small business investment businesses borrow cheaply. 75% of their money must be invested in US small enterprises, defined as: The firm has no more than 49% of its personnel abroad, a net worth with less than $19.5 million, and a two-year net income average of less than $6.5 million. At least 25% of the SBIC’s capital must be invested in smaller US firms, defined as follows: “The company has about and over 49% of the workforce headquartered abroad, a total wealth of less than $6 million, and a net profit of less than $2 million during the past two years.” Additionally, SBICs must adhere to the regulations of the SEC, including those related to financial reporting and disclosure, as well as rules related to corporate governance and tech stock delisting.
February 19, 2023 at 10:36 am #1236Gillian ReynoldsParticipantThe Small Business Investment Company (SBIC) program, part of the U.S. Small Business Administration (SBA), was created in 1958 to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. It’s a little-known fact, but the federal government is the largest single investor in U.S. private equity funds. Since 1958, SBICs have provided over $50.6 billion of funding to over 100,000 small businesses. The government itself does not make direct investments or target specific industries. Essentially, the SBIC program is a “fund of funds” – meaning that portfolio management and investment decisions are left to qualified private fund managers. As a result, SBA has very minimal direct involvement in an SBICs portfolio management operations.
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