The U.S. Small Business Administration’s Small Business Investment Company (SBIC) program provided a record $2.59 billion in fiscal year 2011 to small businesses, a 63 percent increase over last year’s $1.59 billion.

“Over the past two years, we’ve made SBIC work better than ever before,” said SBA Administrator Karen Mills.  “We cut licensing time in half, which has strengthened efficiency and made it possible to get capital into the hands of small businesses more quickly. When an SBIC invests in a company, it can scale up and create jobs.”

High-growth small businesses continue to face difficulty in accessing more specific kinds of patient, long-term capital to grow and create jobs. Since 1958, the SBIC program has helped fill these gaps and has invested approximately $60 billion in more than 109,000 small businesses in the United States.

The FY 2011 volume is the highest single-year volume in the 50-plus year history of SBA’s SBIC debenture program building on the FY 2010 volume, which was at that time the highest ever. Increased volume in the program is due in part to a number of improvements that contributed to an increased number of new SBIC licenses and reduced license processing times.

The SBIC program was created to stimulate the growth of America’s small businesses by supplementing the long-term debt and private-equity capital available to them.  SBA’s SBIC FY 2011 results included the following:

  • Record High Financing to Small Businesses: Total financings to small businesses by SBA’s SBIC debenture program grew to a 50-plus year record high of $2.59 billion in FY 2011 – 63 percent more than in FY 2010 and nearly double the average annual amount of financings for the previous five years.
  • Record High SBA Capital Commitment to SBIC Funds: SBA capital commitments to funds broke another record, increasing to $1.8 billion in FY 2011, up from $1.2 billion in FY 2010, a 50 percent increase.
  • Record High Private Capital Attracted to SBIC Program: The SBIC program has attracted more private capital in FY 2011 than in any year in the history of the program –$840 million compared to $654 million in FY 2010.
  • More Licensed Debenture SBICs and Faster Processing Times: Twenty-two new debenture SBIC and unleveraged licenses were issued in fiscal year 2011, more than double the five-year average of 10.6 per year. Additionally, SBIC license processing time improved to just 5.5 months in FY 2011, down from 14.6 months in 2009.

SBICs are privately-owned and managed investment firms that are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are nearly 300 SBICs with more than $17 billion in capital under management.

As part of the President’s Startup America initiative, the SBA leveraged the SBIC program to launch two $1 billion funds for impact investments and early stage investments. These funds will be made available to SBICs targeting early-stage firms in the so-called “Valley of Death,” the segment of the venture capital market in which companies are often seeking their first dollar of institutional capital. Earlier this year SBA announced the launch of InvestMichigan! Mezzanine Fund, the first licensed Impact Investment Fund in the SBA’s new Impact Investment Initiative.  The fund focuses exclusively on providing capital to businesses in Michigan.

For more information about the SBA’s Investment Division, SBIC program, Impact Investment Initiative and Early Stage Innovation Fund, go to www.sba.gov/INV. The web site offers much useful information including segments for: SBIC Applicants, SBIC Licensees, Private Partners & LPs, and Entrepreneurs & Small Business Owners. The site also includes useful SBIC forms, up-to-date news and reports, and detailed information and descriptions of the Impact Investment Initiative and Early Stage Innovation Fund.

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