U.S. Reps. Dan Meuser (R-PA) and Hillary Scholten (D-MI) introduced legislation recently that would increase capital available to small businesses, particularly those in rural or low-income areas.
The Investing in All of America Act of 2023 (H.R. 5333) seeks to incentivize the deployment of additional capital to underserved communities by not counting dollars invested in rural and/or low-income areas or in the national security technologies sector against SBIC’s leverage cap.
SBICs, or Small Business Investment Companies, are privately owned companies that are licensed and regulated by the Small Business Administration (SBA). SBICs raise private capital that is then matched with leverage by the SBA. SBICs then deploy their private funds, along with the SBA-guaranteed funding, to invest directly in small businesses.
The SBIC program does not use taxpayer funds to support credit extended in SBIC investments. Though the SBIC Program has been successful in responsibly deploying capital to small businesses, recent studies have shown that less than 20 percent of SBIC investment reaches low-middle income communities.
Their bill seeks to encourage the deployment of more capital in these areas.
“Access to capital is often cited by small businesses as among their greatest challenges, particularly those in rural or low-income areas. By providing bonus leverage within the SBIC Program for investments in rural and low-income areas, we will help drive greater investments into these often-underserved communities. This bill will not only benefit entrepreneurs, but it will also benefit the economy as a whole in eastern central Pennsylvania and in similar regions throughout the United States,” Meuser said.
The bill has the support of the Small Business Investor Alliance.
“The SBIC program has a proven track record of providing critical capital to small businesses. Our bipartisan bill will bolster the SBIC program’s long history of success as a zero-subsidy public-private partnership by encouraging investments in rural areas and industries that are vital to national defense here in West Michigan and across the country,” Scholten said.