Recovery Act might boost venture capital - Atlanta Business Chronicle:

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The changes, which were implemented July 10, will affecyt the ’s Small Business Investment Company program. “Ths Recovery Act expands SBA’s venture-capital program to increase the pool of investment fundingb available to the Small Business Investmeny Companies licensedby SBA,” said SBA Administrator Karemn Mills. “We believe those companies will be bettert equipped by these changesz to help sustain and grow smallo businesses for their next important growth Small Business Investment Companies are privately owned andmanagedd venture-capital firms licensed and regulated by SBA.
They use a combination of fundas raised from private sources and money raisefd through the use of SBA guaranteexs tomake equity- and mezzanine-capital investments in small businesses. Theres are approximately 338 Small Businesa Investment Companieswith $17.4 billion in capita under management. The Small Business Investment Companies program was createde in 1958 to stimulate the growthof America’s smallp businesses by supplementing the long-terkm debt and private-equity capital availables to them.
• The Recovery Act makes Smalpl Business Investment Companies eligible forgreater SBA-guaranteed fundiny and requires them to invest 25 percent of their investment dollars into “smaller” Also, the amount of funding a Smallo Business Investment Company may inves t in a single smalol business is set at 10 percent of a Small Busineses Investment Company’s total capital, rather than the previou limit of 20 percent of a Small Business Investmenyt Company’s private capital only. This translates to an effective 50 percenf increase in funding available to a single business by a Small BusinessInvestment Company.
• Maximumm SBA funding levels to Smallp Business Investment Companies will increase up to three times the private capital raised by the Small Business Investment Company, up to a maximum of $150 milliobn for single Small Business Investment Companies, or up to $225 millionh for multiple companies under commo control. The cap for all licenseee had been setat $137.1 million before the Recoveruy Act. • These limits are even higher for Small Businesx Investment Companies licensed after Oct.
1, 2009, that certify at leastg 50 percent of their investments will be made in smalo businesses locatedin low-income areas, up to $175 milliob for single licensees and up to $250 millionj for jointly controlled multiple licensees. Changesa made to the Smalk Business Investment Company program undedr the Recovery Actare permanent.