SBA Finalizes Small Biz Investment Program Modernization Rule; Isabella Casillas Guzman Quoted

The Small Business Administration has finalized its rule to increase access and diversify its existing funding program for small businesses and startups in underserved communities.

SBA said Monday the new rule will take effect Aug. 17 to modernize the Small Business Investment Company program by introducing an alternative borrowing structure to align with the cash flow patterns of long-term, equity-oriented funds.

The policy modifies licensing fees to reduce program participation barriers for new private fund managers and private funds that invest in marginalized small businesses and start-ups.

It also introduces a new type of SBIC based on a fund-of-funds model to invest equity in underlying funds and expedites the subsequent fund licensing process for eligible applicants.

“This final rule will unlock unrealized potential and strengthen, diversify, and expand our network of SBIC licensed private funds to address capital deficiencies in underserved small businesses, startups, and critical U.S. industries impacting our nation’s security,” SBA Administrator Isabella Casillas Guzman said.

SBA’s network of licensed SBICs has more than $40 billion in public and private assets under management to date.