What is an SBIC loan?

About the SBIC program An SBIC, or Small Business Investment Company, is a privately owned and managed investment fund that’s licensed and regulated by SBA. An SBIC uses its own capital, plus funds borrowed with an SBA guarantee, to make equity and debt investments in qualifying small businesses.

What is the purpose of the SBIC?

The Small Business Administration’s (SBA’s) Small Business Investment Company (SBIC) program is designed to enhance small business access to venture capital by stimulating and supplementing “the flow of private equity capital and long-term loan funds which small-business concerns need for the sound financing of their …

What are the two types of SBA loans?

SBA Loan Programs

• General Small Business Loans: 7(a) The 7(a) Loan Program, SBA’s most common loan program, includes financial help for businesses with special requirements.
• Microloan Program.
• Real Estate & Equipment Loans: CDC/504.
• Disaster Loans.
• Loan Programs.

What is SBIC in private equity?

A small business investment company (SBIC) is a privately owned and operated company that makes long-term investments in U.S.-based small businesses and is licensed by the U.S. Small Business Administration (SBA). The SBA presently provides financing to SBICs through the use of loans, or debentures.

How does an SBIC fund work?

An SBIC is a privately owned company that’s licensed and regulated by the SBA. SBICs invest in small businesses in the form of debt and equity. Those SBICs then use their private funds, along with SBA-guaranteed funding, to invest in small businesses.

What is SBIC leverage?

SBICs can obtain SBA leverage of up to the lesser of $175 million or 3X the SBIC’s private capital raised. The maximum SBA leverage for a family of affiliated SBICs is $350 million. The SBA debentures are unsecured notes issued by the SBA that have ten-year maturities and bear interest payable twice a year.

Do you have to repay SBA loan?

To summarize: If you received an Economic Injury Disaster Loan, you are required to pay it back in full. However, if you received your loan during the period when either of the Advance funds were offered and you were approved for either Advance, that portion does not have to be repaid.

Can SBA invest in stock market?

Because SBA requires the business to be the borrower, the loan cannot be made to an individual purchasing stock in the business, even if the individual is identified as a co-borrower with the business.

Can banks invest in SBIC?

Banks and their holding companies are permitted to invest in SBICs under the regulations implementing the Volcker Rule pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).