Committee Weighs Options to Improve Access to Capital

Committee Weighs Options to Improve Access to Capital


According to James Ballentine, an ABA senior vice president, the panel is considering including a capital backstop provision in upcoming 7(a) legislation that says that if a borrower goes to a local SBA lender that doesn’t provide a loan, the loan could be offered to a national lender. If the national lender also doesn’t provide the loan, the SBA can do so, which would, in essence, put the SBA in the direct lending business.

Steve Swartzman, a partner in a C3 Capital, which manages two small business investment companies in Missouri, testified on behalf of the National Association of Small Business Investment Companies. SBICs, which are licensed by the SBA, raise private equity funds that are invested exclusively in small businesses.

He advocated for reforms of the SBIC program that would include expanding fund limits and allowing SBICs to stay in the program longer to grow and start new funds larger than their previous fund. “These would-be repeat SBICs that become larger funds are solid investment vehicles with a wealth of experience and significant infrastructures that should be kept in the program,” Swartzman said, adding that funds should not be forced out of the program because of successful small business investing.

He encouraged Congress to increase the number of licensed SBICs across the nation, particularly in areas that need more SBIC coverage.

Carol Wayman, federal policy director for the Corporation for Enterprise Development, applauded the subcommittee’s recommendations to increase the cap on borrowing by SBA microloan intermediaries and the maximum loan size of microloans from $3.5 million to $10 million.

“Many of the highest performing, most capable intermediaries in the microloan program have reached their $3.5 million loan limit and are unable to make additional microloans despite heavy demand,” she said. In addition, Wayman recommended that the SBA and the subcommittee consider eliminating the requirement that prevents intermediaries from operating in more than one state.

“Permitting multi-use state of microloan dollars will facilitate regional economic development, something that is much needed in many parts of the nation,” she said.


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