Press Releases

SBIC Program Helps Bridge Equity Gap for Small Businesses

WASHINGTON – Today, the House Committee on Small Business heard from government and private sector witnesses about the Small Business Administration’s (SBA) Small Business Investment Company (SBIC) Program.

“From my state of Ohio to Florida, and from coast to coast, small businesses are participating in the SBA’s programs to build, grow, and create jobs for our nation.  One option within the capital access toolbox at the SBA is the Small Business Investment Company Program, also known as the SBIC program.  This program helps bridge the equity gap for small businesses by combining investment funds with small businesses,” said Ranking Member Steve Chabot (R-OH).  “Just as Congress measures the efficiency and effectiveness of the program, the SBA must implement efficient and effective rules and regulations for program participants to follow.”

Concerns Persist with Licensing Timelines and Program Management

“During the past 18 years, the SBIC program has grown significantly, and in fiscal year 2018, surpassed $30 billion in capital… Since my arrival in 2017, I have led improvement efforts to ensure the technology, examinations process, and risk management practices are appropriate for a program of this size and complexity,” said Mr. Joseph Shepard, Associate Administrator, Office of Investment and Innovation, United States Small Business Administration, in Washington, DC.  “However, the number of SBIC examinations conducted by [the] SBA had been declining since FY 2015 and examinations were taking twice as long as they took in FY 2013.  This combination resulted in a steady decline in the number of SBIC examinations.  To remedy this situation, I implemented an immediate response to the problem through an intense focus on examinations.”

“Founded in 1968 by the Jung family, Colerain RV started as a small, family-owned RV dealership in Cincinnati with little more than 10 campers for inventory,” said Mr. Walt Rodgers, Chief Executive Officer, Family RV, in Cincinnati, OH.  “Today, Family RV is an over $180 million business that is continually looking to grow, improve and support the communities in which we operate… The SBIC program and its affiliated investment companies have been critical in allowing us to accomplish all of these tasks and goals.”

“In some cases, the SBIC processes work adequately and as they should, but in too many other cases random delays and unpredictable outcomes have been the growing norm.  There are numerous, interdependent steps in the many SBIC processes,” said Mr. Brett Palmer, President, Small Business Investor Alliance, in Washington, DC.  “Since many processes have multiple steps, the delays build upon other delays...”

“…[T]he consequences of small businesses not obtaining capital and financing are potentially severe and detrimental to overall economic health,” said Mr. John Paglia, Professor of Finance, Graziadio Business School, Pepperdine University, in Malibu, CA.  “The SBIC program is in a position to further address funding challenges cited by ‘worthy’ small businesses in need of financing and capital to continue to grow, hire and retain employees, and to promote economic growth.”

“We have been intentional about staying focused on smaller businesses who have limited access to capital where we can make a meaningful impact on growth,” said Ms. Ronda Penn, Chief Financial Officer, Plexus Capital, in Raleigh, NC.  “We believe strongly that firms with demonstrable success should be encouraged to seek additional licenses.”