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Democrats Promote Investment in Small Businesses, Women, Minority-Owned Firms

In a hearing today in front of the House Small Business Subcommittee on Agriculture, Energy, and Trade, Democrats took aim at one of the most pressing issues facing small firms—access to capital. Through a unique public-private partnership, the Small Business Investment Company (SBIC) program has helped thousands of high-growth businesses by providing over $100 billion of investment capital. Today, Democrats pressed panelists on how SBICs can be improved, especially to help women and minority-owned firms secure funding. 
“The SBIC program is on the front lines of helping today’s Main Street businesses become tomorrow’s Fortune 500 companies,” said Subcommittee Ranking Member Brad Schneider (D-IL). “Currently investing in some of our most promising new technologies across industries, the SBIC program is a bedrock of growth for America’s small firms.”
Created under the Small Business Investment Act of 1958, the SBIC program is an innovative approach to growing small businesses through an investment partnership with the Small Business Administration (SBA) and private funds. SBA is tasked with certifying and guarantying funds to SBICs, which are privately owned and managed investment funds. SBICs then use their funds to invest in promising small firms across sectors of the economy. 
“Capital is essential for every business, but is especially important for smaller ones,” said Schneider.   “Without it, most firms cannot make improvements, expand, or hire qualified workers they need to succeed. The SBIC program is often a game changer for small firms on the verge of bringing their product to commercialization.”
SBICs fill a crucial gap in capital markets by providing a financing opportunity for firms not quite ready to pitch the private equity industry but who may have already taken out other small business loans. 
During this Congress, the House has passed two legislative initiatives that strengthen SBICs. First, the Small Business Investment Opportunity Act of 2017 allows SBICs that manage just one company to invest more in small firms by raising the cap from $150 million to $175 million. Second, the Investing in Main Street Act of 2017 also increases the flow of capital for small firms by allowing institutions to invest greater amount of capital and surplus in SBICs. 
Unfortunately, as is the case with many avenues to capital, women and minority-owned businesses face challenges to securing SBIC investment funds. In 2016, just 2.9% of all SBIC financings went to minority-owned small firms, while only 1.2% went to women-owned small firms.  
“When it comes to diversifying the program, more work must be done,” said Schneider. “Greater access for women and minority-owned funds would in turn increase the dollars flowing to women and minority-owned small businesses. Similarly, additional efforts to invest in rural small businesses could spur economic growth in these areas.”
Additionally, Democrats sought ways to improve SBICs by increasing technical assistance, diversifying boards of directors and continuing to invest in the program’s growth. 
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