Legislation will help rural small businesses access long-term capital for growth and job creation
WASHINGTON – U.S. Senators John Hickenlooper and Roger Marshall introduced the bipartisan, bicameral Investing in All of America Act of 2024 to increase capital available to small businesses. Specifically, the bill would strengthen the Small Business Investment Company (SBIC) Program to include inflation adjustments and encourage further investments in rural and low-income communities and national defense industries.
“Small businesses are the engine of our economy. But they often struggle to get the capital they need to create jobs. Our bipartisan bill will help small businesses in rural and low-income communities flourish,” said Hickenlooper.
“Access to capital is crucial for businesses, yet rural communities across Kansas are finding it increasingly difficult to obtain,” Marshall said. “Excluding investments in rural communities from counting towards the maximum amount of debt SBICs can take will encourage more investment in underserved areas without costing taxpayers a dollar.”
For more than 60 years, SBICs have been providing capital to American small businesses to help them expand and create jobs. SBICs are privately owned companies that are licensed and regulated by the Small Business Administration (SBA). SBICs raise private capital that is then matched with leverage by the SBA. SBICs then deploy their private funds, along with the SBA-guaranteed funding, to invest directly in small businesses. The SBIC program operates at a zero-subsidy cost to the American taxpayer. Though the SBIC Program has been successful in responsibly deploying capital to small businesses, recent studies have shown that less than 20% of SBIC investment reaches low-middle income communities – the Investing in All of America Act of 2024 seeks to encourage the deployment of more capital in these areas.
Over the past ten years, SBICs have invested $58 billion in more than 11,300 U.S. small businesses across the country with 21% of the businesses located in Low-to-Moderate Income (LMI) areas. SBICs have invested $952.2 million in Colorado small businesses since 2019, with $157.8 million invested in fiscal year 2023 alone.
SBICs can access low-cost leverage up to two times the private capital they raise which they invest in U.S. small businesses. The amount of leverage is capped at $175 million for a single SBIC licensee and $350 for multiple licenses under common control, but these leverage caps have not been adjusted since 2015 and 2018, respectively.
Specifically, the Investing in All of America Act of 2024 would:
- Increase the licensee commitment levels by a factor of inflation from the last time they were adjusted in statute and adjust for inflation annually thereafter.
- Modernize bonus leverage to increase investment in rural, low-come, and national security-focused businesses. Investments eligible for bonus leverage under the legislation include smaller enterprises in low income or rural areas. These are businesses that are smaller than small businesses by definition and are in areas that are traditionally underserved.
- Make bonus leverage available for investments in small businesses that are in industries identified as critical to national security.
Companion legislation has been introduced in the House of Representatives by Representatives Dan Meuser and Hillary Scholten. The House Small Business Committee passed the legislation unanimously.
One pager on the bill is available HERE. Full bill texts are available HERE and HERE.
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