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house Bill H.R. 1023

Should Small Business Investment Companies Give More Loans to Small Businesses?

Argument in favor

Letting SBICs invest more in small businesses with the SBA’s guarantee will benefit small businesses, their current and future employees, and their customers.

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07/12/2015
To disallow such investment associations to fund small businesses is to force such businesses to rely on corrupt banks who have proven unreliable during financial crisis while also preventing millions of dollars to be invested into small businesses. If we are so willing to use trillions in taxpayer funds to bail out large and corrupt banks, the least we can do is prevent those affected from losing their businesses when they (large banks) screw up again.
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saitias's Opinion
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07/14/2015
Been trying to secure an sbl for several months now and it's nearly impossible. I own a profitable company, I should be able to secure a low interest loan if the big banks are failing and borrow at 0% from Uncle Sam.
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John's Opinion
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07/13/2015
Yes, But only if there are NO MORE BAILOUTS. If the banks do the risk analysis and want to give the loan, there should not exist quotas that prevent them. But if the loan goes bad, we the tax payers should not be on the hook!
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Argument opposed

Raising the cap on leveraged SBA funds for SBICs could lead to bigger losses if the economy were to experience another significant downturn.

Brent's Opinion
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07/13/2015
Keep the government out of the economy. The economy runs it self.
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Curmudgeon's Opinion
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07/12/2015
This is a duplication of a previous discussion. To use taxpayer capital as an investor in private start ups is a Fascistic idea that leads to corruption and Statism. If our government wants to see growth it must pursue lower capital gains taxation policy, which cannot be sold by the party of populist pander.
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bmitchell4217's Opinion
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07/17/2015
Most SBA loans are not SBA funded, but rather SBA guaranteed or insured. If we think the SBA needs to insure loans differently, just change the underwriting criteria. Leave the bank funding the loan with some moral hazard and you've fixed the problem. Free money from the government is not the solution.
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What is House Bill H.R. 1023?

Through changes to the Small Business Investment Act, this bill would to increase the maximum amount of debt available by the Small Business Administration (SBA) to two or more commonly controlled Small Business Investment Companies (SBIC).

SBICs are privately owned and managed funds that use private money, leveraged by a Small Business Administration (SBA) guarantee to invest it in qualified small businesses.

Currently, the maximum amount of debt (aka "outstanding leverage) — or loans that have been disbursed but not fully paid back — available to SBICs is $225 million. This bill would raise that figure to $350 million. This $250 million restriction applies to SBICs that have multiple licenses under the same management umbrella — known as “Family of Funds.”

This funding would be made to available by the SBA to SBICs that aren’t under capital impairment (meaning that their loan portfolio is worth less than its stated value).

Impact

Small businesses receiving funding from SBICs, their customers, SBICs, and the Small Business Administration.

Cost of House Bill H.R. 1023

$0.00
The CBO estimates that this bill would not have an impact on federal spending or revenues.

More Information

Of Note: According to the National Association of Small Business Investment Companies (NASBIC), SBICs were one of the only remaining ways that small businesses could access capital during the depths of the financial crisis, after many banks had cut off lending.


In-Depth: In its letter of support for this legislation, the Chamber of Commerce called the SBIC program:

“An important source of early funding for entrepreneurs. [It] plays an important and vital role in providing an alternative means of obtaining capital where funding has not been available through conventional lending methods.”

The Small Business Investor Alliance estimates that passing this legislation could lead to an increase in small business investing of $750 million per year. It also foresees about 30 percent of “Family of Funds” debentures in the SBIC program are either at their cap or will hit their cap if they raise their next fund.

Sen. Jim Risch (R-ID) — the sponsor of this bill's identical Senate companion — notes that the SBIC

“Has provided an incredible amount of investment and support to small businesses over the past 50 years. These investments in small businesses have helped drive the growth engine that continues to carry America forward.”
The House Small Business Committee approved this legislation via voice vote.

Media:

Summary by Eric Revell
(Photo
Credit: Flickr user Wonderlane)

AKA

Small Business Investment Company Capital Act of 2015

Official Title

To amend the Small Business Investment Act of 1958 to provide for increased limitations on leverage for multiple licenses under common control.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house Passed July 13th, 2015
    Passed by Voice Vote
      house Committees
      Committee on Small Business
    IntroducedFebruary 24th, 2015

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    To disallow such investment associations to fund small businesses is to force such businesses to rely on corrupt banks who have proven unreliable during financial crisis while also preventing millions of dollars to be invested into small businesses. If we are so willing to use trillions in taxpayer funds to bail out large and corrupt banks, the least we can do is prevent those affected from losing their businesses when they (large banks) screw up again.
    Like (7)
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    Been trying to secure an sbl for several months now and it's nearly impossible. I own a profitable company, I should be able to secure a low interest loan if the big banks are failing and borrow at 0% from Uncle Sam.
    Like (5)
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    Share
    Yes, But only if there are NO MORE BAILOUTS. If the banks do the risk analysis and want to give the loan, there should not exist quotas that prevent them. But if the loan goes bad, we the tax payers should not be on the hook!
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    Keep the government out of the economy. The economy runs it self.
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    For small business investment companies to distribute an increase amount of loans to their primary source allies (in this case small businesses) would greatly be investment companies cup of tea. Due to the reasoning that private sector investment companies have a preference to invest in thriving, innovative and influential business is so their profits can boom from the benefit. Investment companies occupation is to evidently invest in business that have been funded to develop innovations to prosper! Coming from a financial and economic perspective of investment companies they want to see their shares profusely growing to have low interest rates and hopefully dodge a downfall as well. Let me ask you something: if it's investment companies due diligence to invest in business that are innovative and thriving wouldn't funding an increase amount of money for these businesses give the entrepreneurs more capabilities to establish thriving resources to boom the profit of investment companies? In other words funding and increase amount of funding on the behalf of investment companies would increase the ability for new resources to be develop so in return investment companies can greatly avoid erratic downfalls and replace them with IMPECCABLE RESULTS FOR FUTHER PROSPERITY IN THE INVESTMENT MARKET AND PRIVATE SECTOR AS WELL. Overall, it behooves investment companies to escalate funding for their shared-business to thrive finically for future influence and growth, especially taking advantage of the private sector in cosmopolis cities (or urban regions, cities). Thank you for your time
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    All small to grow needs help
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    Alright, I'm willing to get behind legislation that claims it can increase small business investing. However, I'd warn against too many deregulation a like this which would open up the market to another crash.
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    That's what they are suppose to do! BREATHE SOME LIFE INTO SMALL BUSINESSES AND FOSTER THEIR GROWTH AN INNOVATIONS!!!!!!!!!!!!
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    This is a duplication of a previous discussion. To use taxpayer capital as an investor in private start ups is a Fascistic idea that leads to corruption and Statism. If our government wants to see growth it must pursue lower capital gains taxation policy, which cannot be sold by the party of populist pander.
    Like (1)
    Follow
    Share
    Most SBA loans are not SBA funded, but rather SBA guaranteed or insured. If we think the SBA needs to insure loans differently, just change the underwriting criteria. Leave the bank funding the loan with some moral hazard and you've fixed the problem. Free money from the government is not the solution.
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    No requirements
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    I don't think but there is any reason to believe that small business loans will contribute significantly to another economic meltdown. If congress actually cared about economic catastrophe, they would break up the too-big-to-jail-or-fail banks, the huge financial institutions & implement Dodd-Frank. Since that seems to be an alternate reality to our elected officials, perhaps it would be wise not to nickel & dime small businesses in the guise of being fiscally responsible. No one believe you even know what fiscal responsibility looks like so let's not pretend!!
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    It will show support for the American companies. And the companies can benefit from it to get a profit. They can get paid so they can pay the bills and pay taxes let the small businesses have a chance to grow.
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    Sorry but 350 million is not small.
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    Small means Small. Now you only have to define SMALL
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    My opinion.
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    Small companies should be given opportunities to acquire other loans to build their business to provide more jobs for the unemployed
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    Yes, to the extent possible without creating a replay of 2008.
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    What are banks, savings and loans and credit unions for?
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    Let the free market decide
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