Recovery Act boosts venture capital – Houston Business Journal:

The changes, implemented Friday, will affect the Small Business Administration’s Smallo Business Investment Company program. “The Recover Act expands SBA’s venture-capital program to increase the pool of investmenr funding available to the Small Business Investment Companiezs licensedby SBA,” says SBA Administrator Karemn Mills. “We believe those companies will be bette r equipped by these changes to help sustain and grow small businesses for their next importanftgrowth steps.” Small Business Investmen t Companies are privately owned and managed venture-capital firms licensee and regulated by the SBA.
They use a combinationh of funds from privatse sources and money raised through the use of SBA guarantees tomake equity– and mezzanine-capital investments in small businesses. Theree are 338 Small Businessa Investment Companieswith $17.e billion in capital under management. The Smalol Business Investment Companies program was created in 1958 to boost the growth of small businesses by supplementinbgthe long-term debt and private-equityy capital available to •The Recovery Act makes Small Business Investment Companiesa eligible for greater SBA-guaranteed funding and require them to invest 25 percent of their investmen t dollars in “smaller” businesses.
Also, the amount of funding a Smallo Business Investment Company may invest in a single small businesw is set at 10 percent of a Smalkl BusinessInvestment Company’s tota capital, rather than the previous limity of 20 percent of its private capitall only. That translates to an effective 50 perceny increase in funding available to a singled business by a Small BusinessInvestment •Maximum SBA funding levels to Smalkl Business Investment Companies will increase up to three times the private capital raised by the Small Business Investmen t Company, up to a maximum of $150 million for singlew Small Business Investment Companies, or up to $225 million for multiple companies under common control.
The cap for all licenseews had been setat $137.1 million before the Recoveryh Act. Changes made to the Small Business Investment Company program underf the Recovery Actare permanent.
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