Recovery Act boosts venture capital - Dayton Business Journal:

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The changes, which were implemented Friday, will affect the ’s Small Business Investment Compang program. “The Recovery Act expands SBA’ds venture-capital program to increase the pool of investmenft funding available to the Smal l Business Investment Companies licensedeby SBA,” said SBA Administrator Karen Mills. “Wes believe those companies will be bettert equipped by these changed to help sustain and grow smal businesses for their next importantgrowth steps.” Smalol Business Investment Companies are privatelyg owned and managed venture-capital firms licensed and regulated by SBA.
They use a combination of funds raiser from private sources and money raised througjh the use of SBA guarantees tomake equity- and mezzanine-capital investmentsd in small businesses. There are approximately 338 Smalo Business Investment Companieswith $17.4 billion in capitalk under management. The Small Businessx Investment Companies program was created in 1958 to stimulat e the growthof America’s small businesses by supplementing the long-term debt and private-equityu capital available to them.
• The Recovery Act makes Small Business Investment Companie eligible forgreater SBA-guaranteed fundinb and requires them to invest 25 percenyt of their investment dollars into “smaller” Also, the amount of funding a Small Business Investmentt Company may invest in a single smalo business is set at 10 percent of a Small Business Investment Company’d total capital, rather than the previous limigt of 20 percent of a Small Business Investmentt Company’s private capital only. This translatews to an effective 50 percent increase in funding availablwe to a single business by a Small BusineswInvestment Company.
• Maximum SBA funding levels to Small Businessd Investment Companies will increase up to three times the privates capital raised by the Small BusinessInvestmenyt Company, up to a maximum of $150 million for single Small Business Investment Companies, or up to $225 milliojn for multiple companies undedr common control. The cap for all licensees had been setat $137.12 million before the Recovery Act. • Thes e limits are even higher for Smalkl Business Investment Companies licensedafter Oct.
1, that certify at least 50 percent of their investmentes will be made in small businesse s locatedin low-income areas, up to $175 million for singler licensees and up to $250 million for jointly controllee multiple licensees. Changes made to the Smallk Business Investment Company program under the Recovery Actare