CLIENT ALERT: Small Business Financing and Investment Act of 2009 (H.R. 3854) Title IV: Small Business Investment Company Modernization

    1 November 2009

    Background

    The Small Business Financing and Investment Act of 2009 (Act) was introduced in the House of Representatives on October 20. The bill was approved by a vote of 389 to 32 in the full House on October 29.

    The Act is a compilation of several legislative initiatives addressing small business concerns. The following summary discusses Tile IV of the Act, which addresses changes to the Small Business Investment Company (SBIC) program designed to help meet the demand from states for safe and sound investment vehicles and increase the amount of capital available for SBIC investment in small businesses.

    Brief Summary 

    • Raises the cap on how much states can invest in SBICs from 33 percent to 45 percent of the private capital of the applicant or licensee. 
    • Creates an expedited SBIC licensing process, particularly for SBICs in good standing. 
    • Clarifies that venture leases, equipment leases, real estate sale leasebacks and similar arrangements qualify as loans that are authorized forms of financing for the SBIC fund. 
    • Revises the SBIC leverage limitations for successful SBICs. 
    • Authorizes the Small Business Administration (SBA) to make $5 billion in purchases of SBIC Participating Securities and $5 billion in debenture leverage for fiscal years 2010 and 2011.