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.