SBIC Hits Record Lending

November 1, 2011

The U.S. Small Business Administration recently announced record small-business financing through the Small Business Investment Company (SBIC) program. In FY 2011, SBIC provided $2.59 billion to small businesses, a 63 percent increase over FY 2010.

SBICs are privately-owned and managed investment firms that are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are nearly 300 SBICs with more than $17 billion in capital under management.

Since 1958, the SBIC program has provided funding to high-growth firms who face challenges in accessing long-term debt and private-equity capital. The FY 2011 volume is the highest single-year volume in the 50-plus year history of SBA’s SBIC debenture program, due to tweaks to the program that have led to an increased  number of new SBIC licenses.

In addition to record funds provided to small businesses in FY 2011, the SBIC program also hit a record high in SBA capital commitments to the program to the tune of $1.8 billion, and a record high in private capital of $840 million—up from $654 million in FY 2010.There were 22 new debenture SBICs and unleveraged licenses issued in FY 2011, more than double the five-year average of 10.6 per year. Additionally, SBIC license processing time improved to just 5.5 months in FY 2011, down from 14.6 months in 2009.