The SBA’s Small Business Investment Company (SBIC) program seeks to stimulate and supplement the flow of private equity capital and long-term loan funds to small businesses, which small business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization when such capital is not available in adequate supply.
The SBA, through the SBIC program, licenses privately and publicly managed investment funds that raise capital from private investors and then combine it with capital obtained through the SBIC’s issuance of a taxpayer-backed debenture guaranteed by the SBA. The SBIC invests this combined capital in qualifying small businesses through terms established between the SBIC and small businesses within the parameters of the SBIC program regulations and SBA oversight.
Small businesses seeking capital from SBICs are typically later-stage, mature, profitable businesses that are generating cash flows sufficient to service interest and sometimes principal payments. SBIC small business financings are primarily in the form of subordinated debt with equity enhancements. SBIC financings to small businesses typically range from $2.5 million to $10 million. However, each SBIC has its own investment profile in terms of targeted industry, geography, company maturity, and the type and size of financing the SBIC will provide to small businesses. Small businesses interested in the possibility of receiving investment capital from an SBIC are encouraged to contact SBICs directly.
To obtain SBIC financing, you should first identify and investigate existing SBICs that may be interested in financing your company. Use the SBIC directory as a first step in learning as much as possible about SBICs in your state, or in other areas important to your company’s needs. In choosing an SBIC, consider the types of investments it makes, how much money is available for investment and how much might be available in the future. You should also consider whether the SBIC can offer you management services appropriate to your needs. Only companies defined by SBA as “small” are eligible for SBIC financing.
If you are interested in becoming an SBIC, please Apply to be an SBIC.
Terms are privately negotiated between the SBIC and small businesses within the parameters of the SBIC program regulations and SBA oversight.
Find SBIC contact information.