June 8, 2012
On June 6, 2012, Senate Small Business and Entrepreneurship Committee
Chairwoman Mary Landrieu, backed by the committee’s ranking member Olympia Snowe,
published the Expanding Access to Capital for Entrepreneurial Leaders (EXCEL)
Act.
Sen. Landrieu introduced the EXCEL Act, a bipartisan effort, during the 2012
National Small Business Week, stating that the EXCEL Act “will enhance the
already successful Small Business Investment Company [Program] ... that has
helped over 100,000 small businesses” at no cost to the taxpayer. The EXCEL Act
provides four main amendments to the SBIC Program:
- It raises the program’s annual authorization level from $3 billion to $4
billion, adjusted annually for inflation, to accommodate continued growth;
- It raises the total Small Business Administration (SBA) leverage limit
on “families of funds” from $225 million to $350 million, seeking to
encourage successful investment funds;
- It requires the SBA to publicly disclose through its website select
information with respect to each SBIC Fund. The disclosures include: (a) the
amount of capital deployed, (b) the amount of leverage drawn, (c) the number
of investments, (d) the number of businesses receiving capital, (e) industry
sectors receiving investment, (f) the amount of leverage principal repaid,
and (g) a basic description of its investment strategy; and
- It advises banks and other lenders, together with the Administrator of
the SBA, of ways in which to ensure that the maximum amount of eligible
small businesses may receive the benefits of the SBIC Program. Banks and
other lenders are encouraged to refer small business concerns to an SBIC
Fund if such banks or other lenders deny that small business’s loan
application. Additionally, the Administrator should reach out to banks and
other lenders to encourage investment in SBIC Funds, as well as partner with
governors, mayors, states and municipalities to increase SBIC Fund
investments in underserved and rural areas.
The SBIC Program has invested $60 billion in more than 109,000 small U.S.
businesses since its inception in 1958, including $2.14 billion in outstanding
commitments as of April 30, 2012. In addition, SBIC Funds have invested in 1,288
portfolio companies totaling $1.9 billion in FY 2012 to date (October 1, 2011,
through May 31, 2012) with an average investment of $1,520,575. Sen. Landrieu
believes that these “common sense” provisions should continue the SBIC Program’s
successful past while contributing zero dollars to the federal deficit.
The
Private Equity Practice Group at McGuireWoods LLP is dedicated to keeping
clients advised of new legislative and business developments as they occur. If
you have any questions regarding these issues, please feel free to contact Mark
A. Kromkowski (312.849.8170), Bryan P. Bylica (312.750.3617), your primary
attorney at McGuireWoods LLP, or any of the authors.