The U.S. House of Representatives recently passed bipartisan legislation that would increase the percentage of capital and surplus a bank or federal savings association can invest in Small Business Investment Companies (SBICs).
The SBIC program is a Small Business Administration investment program with guarantee that increases access to low-cost, government-backed investment capital for high-growth, start-up businesses.
The Investing in Main Street Act would amend the Small Businesses Investment Act of 1958 to allow banks to invest 15 percent in SBICs. The current cap is 5 percent even though banking regulations permit financial institutions to invest up to 15 percent.
U.S. Reps. Judy Chu (D-CA), Brad Finstad (R-MN), Andrew Garbarino (R-NY), and LaMonica McIver (D-NJ) introduced the bill.
The Small Business Investor Alliance has endorsed the bill.
“Small businesses create two out of every three new jobs in America, yet they often face significant challenges in accessing growth capital,” Alliance President Brett Palmer said. “By modernizing outdated regulations and allowing greater investment in SBICs, this bill will ensure that small businesses have the capital they need to thrive.”
There are 319 certified SBICs nationwide. They have invested, or committed, more than $38 billion in small businesses. SBICs provided 1,142 small businesses and startups $7.2 billion in funding in 2023.