Small Business Investment Company Capital Act of 2015

Floor Speech

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Ms. VELÁZQUEZ. Mr. Speaker, I yield myself as much time as I may consume.

I, too, want to thank the chairman of the Small Business Committee for working in a bipartisan way to craft this legislation.

Indeed, Ileana Ros-Lehtinen is a good friend of mine from Florida. So I don't take any offense.

Small business investment companies have assisted thousands of high-growth companies over the years, providing nearly $75 billion in capital.

By design, the program fills the gap in the capital markets for business that has outgrown the SBA's 7(a) guaranteed loan program, but remain too small or too risky for traditional private equity markets to bear.

SBICs operate in a unique public-private partnership with SBA. Once managers raise enough private capital, the agency provides matching funds, which are pooled together and invested in high-growth small businesses.

To maximize the impact of the program, the most successful fund managers are permitted to hold more than one SBIC license at a time, known as a family of funds, with the benefit of drawing additional SBA leverage.

The current leverage caps, implemented in 2010, allow single licensees to draw $175 million and family-of-fund licensees to draw $225 million. H.R. 1023, the Small Business Investment Company Capital Act of 2015, would increase that cap by an additional 55 percent to $350 million.

According to SBA data, only seven SBICs would be able to take advantage of the increase, limiting the actual amount of capital that will reach our small business community. The roughly 150 other SBIC families are unlikely to ever need this increase.

Similarly, concentrating additional taxpayer-backed leverage in just a few asset managers necessitates the need for more oversight. I look forward to working with the chairman to strike the right balance ensuring this capital is deployed efficiently, but with less risk.

The SBIC program has done a lot of good for the small business community over the years. In fact, since 2010, SBICs have quadrupled their output to over $3.4 billion last year alone, but it is still coming up short in its assistance to women, minorities, and veterans.

These groups receive just 6 percent of total SBIC capital. It is my hope, as we work with the Senate on finalized language, steps can be taken to address this inequity.

Providing ways to get more capital into the hands of small business owners is a top priority for both sides of the aisle in this committee.

I want to thank Chairman Chabot for introducing this legislation, and I am hopeful the increase in leverage will provide new capital opportunities to entrepreneurs from every walk of life.

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Ms. VELÁZQUEZ. Mr. Speaker, I am prepared to close, and I yield myself the balance of my time.

Since its creation in 1958, the SBIC program has injected billions of dollars into promising startups and small businesses.

With the help of the SBIC, some of these small businesses grow into Fortune 500 companies. Apple, Inc., was once an SBIC client. Today it is one of the largest companies in the world by market capitalization.

By providing businesses with capital to grow, the SBIC program has also been a driver of job creation. In 2014 alone, the program helped create or retain 113,000 jobs.

I look forward to working with the chairman and our colleagues in the Senate on this legislation. I urge a ``yes'' vote.

I yield back the balance of my time.

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