SBA program provides record financing for small businesses
At a time when access to capital was tight for small businesses, financing from the Small Business Administration's (SBA's) growth capital program increased 23 percent in fiscal year 2010, providing a record $1.59 billion to help small businesses grow and create jobs.
The fiscal year 2010 volume is the highest single-year volume in the 50-year history of SBA's Small Business Investment Company (SBIC) debenture program. The increased volume resulted in part from changes made by the American Recovery and Reinvestment Act of 2009, which contributed to an increased number of new SBIC licenses, decreased license processing times and significant increase of initial capital to new funds.
The SBIC program was created to stimulate the growth of U.S. small businesses by supplementing the long-term debt and private-equity capital available to them. SBA's SBIC fiscal year 2010 results included:
- Record-high financing to small businesses: Total financing to the SBA SBIC debenture program reached a 50-year record high of $1.59 billion during fiscal year 2010—23 percent more than an average $1.29 billion during the previous four years. Debenture program obligations grew to $1.17 billion from an average $750.6 million, which was another 50-year record high.
- More licensed SBICs and faster processing times: Twenty-one new SBIC licenses were issued during fiscal year 2010, which was 130 percent more than the four-year average of 10 per year. Additionally, SBIC license processing time was 5.8 months in fiscal year 2010, which was a nearly 60 percent decrease from an average of 14.6 months in 2009.
- Record-high capital commitment to support small businesses: SBA capital commitments to new funds broke yet another 50-year record, increasing to $1.23 billion during fiscal year 2010—a 135 percent jump from an average of $524.3 million during the previous four years. The programs also attracted record levels of private capital commitments, increasing to $615 million in 2010 from $262.1 million in previous years. Combined total initial capital to new funds increased to $1.845 billion during fiscal year 2010 from an average $786.4 million.
SBICs are privately owned and managed investment firms that are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses.
Date : 10/15/2010