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One of the major aims of the Small Business Administration is to provide access to working capital for qualified new and growing companies. The SBA does not directly lend money to entrepreneurs however. In addition to its SBA loan program, it also offers a venture capital system called the Small Business Investment Company (SBIC.)

Here’s what you need to know about this program:

  • The SBIC was established in 1958 by Congress in order to get more financing to growing businesses. It allows private investors to get matching funds from the SBA to create professionally-managed investment funds (SBICs) to lend money to small companies.
  • For every $1 that an SBIC contributes, the SBA will provide $2 of borrowed debt. The total funds will then be distributed among several small businesses as loans.
  • Each SBIC must go through a licensing process that takes an average of 7 months from, start to finish. After an SBIC is approved and licensed, it has five years to invest and receive the return on its investment. At the end of the 5 years, the fund will wind down and the SBIC will return its license to the SBA and all the borrower SBA funds are repaid.
  • The benefits to small businesses include much needed working capital, loans with longer terms, and advice from qualified industry specialists.
  • The benefits to the investor include the ability to borrow money to invest at low interest rates through government loans and the ability to triple their own personal investment in small businesses. This allows SBICs more time to spend investing and guiding small firms and less time fund-raising.
  • The larger economy grows as small businesses receive working capital, resulting in job creation and the generation of tax revenues.

For those interested in applying for the SBIC program as investors or entrepreneurs, please visit www.sba.gov/sbic.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources