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house Bill H.R. 116

Should Banks and Savings Institutions be Able to Invest More Money in Small Businesses?

Argument in favor

Small Business Investment Companies (SBICs) provide a good return to investors while giving small businesses access to the capital they need to grow. This is a win-win and should be given greater support by allowing banks and savings institutions to invest more of their capital and surplus into these instruments.

Skylor's Opinion
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last Monday
Small business’ drive communities and their tax revenue stays in communities more. I am a small business owner and I consult to help others build their business’. Financing a startup is very difficult. Especially when it comes to securing funds from banking institutions. Please help Americans build their dreams. Small business is the foundation of our country.
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operaman's Opinion
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last Monday
Yes, invest in business since it's the heart of America's employment for local jobs.
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Eurynome's Opinion
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last Tuesday
It's the fabric of America please invest in Small Business!
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Argument opposed

All investments, no matter what they are, carry a degree of risk. Allowing banks and savings institutions to put too much of their capital and surplus into any one type of investment increases risk in the market, and could expose banking consumers to greater risk, as well.

Azrael's Opinion
···
last Monday
Not during this administration Come back in 2020
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SirRobert's Opinion
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last Monday
Sounds like a slippery slope AND somebody is making BIGLY bucks on this deal!
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ConservativeGuy's Opinion
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last Monday
These companies are unable to obtain financing through traditional bank loans. That means they are high risk. Unless the bank is taking an equity stake in the company, their return would not justify the additional risk. “Lower Middle Market” companies are those companies with between $20-50Million. By the time they got to that point, they established a number of patterns and trends. Let those pattern and trends speak for themselves, good or bad. I suspect this will pass, but I would need way more information before signing off.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Small Business and Entrepreneurship
  • The house Passed January 14th, 2019
    Roll Call Vote 403 Yea / 2 Nay
      house Committees
      Committee on Small Business
    IntroducedJanuary 3rd, 2019

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What is House Bill H.R. 116?

This bill would increase the amount that certain banks and savings institutions may invest in Small Business Investment Companies to up to 15 percent of their capital and surplus, subject to the appropriate federal banking agency’s approval. Currently, SBICs can’t take capital investments from banks that have over five percent of their capital and surplus investment in SBICs.

Impact

Small businesses; investors; banks; savings institutions; federal banking agencies; and SBICs.

Cost of House Bill H.R. 116

$0.00
Based on information from the SBA, CBO estimates that implementing the bill would cost nothing, as it’d have no significant effect on the SBIC program’s administrative costs due to the limited number of banks that would probably be affected.

More Information

In-DepthRep. Judy Chu (D-CA) reintroduced this bill to support small businesses by giving them more access to capital:

“Small businesses are the backbone of our economy, accounting for two out of every three new jobs. And so, as part of our commitment to creating opportunities and growing our economy, it’s our responsibility to help more small businesses succeed. But I know, from talking to entrepreneurs in my district and around the country, that one of the greatest challenges to success is access to capital. That is what this bill will address, by letting banks or federal savings associations invest up to 15% of their holdings into SBICs. That will mean more entrepreneurs will be able to access the capital they need to grow their business and hire more workers.”

The Small Business Investor Alliance (SBIA), the leading association of lower middle market private equity funds and investors, supported this bill’s passage in the 115th Congress. SBIA President Brett Palmer said:

“Capital access is a challenge felt by small businesses nationwide. The SBIC program supports small businesses and entrepreneurs so they can do what they do best — create jobs and grow the American economy. Thanks to the bipartisan work of Chairman Hensarling and Ranking Member Waters, the inclusion of the Investing in Main Street Act is a key first step toward increasing the amount of growth capital available for investment in domestic small businesses.”

Palmer argued that SBICs benefit all involved:

“We hear this all the time, one of the greatest challenges to small business is capital access. Creating businesses and jobs is a matter for private capital markets, and the SBIC program is a great catalyst for small business investment. The program facilitates private investment while protecting taxpayers – and it’s why this program enjoys overwhelming support in Congress. This program makes it possible for entrepreneurs from all communities to access capital that otherwise would be inaccessible.”

In the current Congress, this bill has one cosponsor, a Republican. In the 115th Congress, this bill passed the House by voice vote, but wasn’t voted on in the Senate. It had the support of two bipartisan cosponsors, one Democrat and one Republican. It also had the support of the SBIA; Commerce Street Capital, LLC; and the Small Business & Entrepreneur Council (SBE Council).


Of NoteSBICs are highly regulated private investment funds that invest exclusively in domestic small businesses. They play a significant role in providing capital to small businesses — in fiscal year 2013 alone, they invested $3.5 billion in financing dollars to small businesses. From the program’s inception through December 2015, SBICs deployed $80.5 billion into approximately 172,800 financings.


However, they do carry a degree of risk, as they often provide financing that’s more aggressive thank banks could provide.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / Natee Meepian)

AKA

Investing in Main Street Act of 2019

Official Title

To amend the Small Business Investment Act of 1958 to increase the amount that certain banks and savings associations may invest in small business investment companies, subject to the approval of the appropriate Federal banking agency, and for other purposes.

    Small business’ drive communities and their tax revenue stays in communities more. I am a small business owner and I consult to help others build their business’. Financing a startup is very difficult. Especially when it comes to securing funds from banking institutions. Please help Americans build their dreams. Small business is the foundation of our country.
    Like (69)
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    Not during this administration Come back in 2020
    Like (47)
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    Dear Countable users, I am deeply concerned over how this platform is transforming. I wish for liberals and conservatives to think more moderately. What makes Countable so great is the debate between the two sides. I hope that conservatives rise up again, and that everyone thinks before they say. It is because we are skeptical and curious, intellectual human beings that make America so desirable. ~ The Moderate Guy
    Like (52)
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    Yes, invest in business since it's the heart of America's employment for local jobs.
    Like (35)
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    It's the fabric of America please invest in Small Business!
    Like (23)
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    Sounds like a slippery slope AND somebody is making BIGLY bucks on this deal!
    Like (19)
    Follow
    Share
    Small Business Investment Companies (SBICs) provide a good return to investors while giving small businesses access to the capital they need to grow. This is a win-win and should be given greater support by allowing banks and savings institutions to invest more of their capital and surplus into these instruments.
    Like (15)
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    YES.... WE SHOULD SUPPORT SMALL BUSINESS INVESTMENT CO. Small Business Investment Companies (SBICs) provide a good return to investors while giving small businesses access to the capital they need to grow. This is a win-win and should be given greater support by allowing banks and savings institutions to invest more of their capital and surplus into these instruments. SneakyPete.......... 👍🏻👍🏻👍🏻👍🏻👍🏻. 1*14*19..........
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    Absolutely boost the economy!
    Like (13)
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    These companies are unable to obtain financing through traditional bank loans. That means they are high risk. Unless the bank is taking an equity stake in the company, their return would not justify the additional risk. “Lower Middle Market” companies are those companies with between $20-50Million. By the time they got to that point, they established a number of patterns and trends. Let those pattern and trends speak for themselves, good or bad. I suspect this will pass, but I would need way more information before signing off.
    Like (12)
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    This has some ideas similar to h.r.10. Go ahead and pass it.:)
    Like (7)
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    They should be able to invest anything they want. Let the buyer beware. Banks are an investment, so pick one that invests wisely and can return your deposit (i.e. your investment).
    Like (6)
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    Not only should banks be able to loan more to small businesses, they should offer more small loans (micro loans) to help businesses grow.
    Like (6)
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    The idea of more support of small business growth sounds good but we are in the process of deregulation of the banks and mortgage companies. And too little regulation is what caused most of the housing market collapse in 2008. We bailed them out then at a cost to tax payers to avoid a run on the banks/depression. Let’s not go down the same path again. And, for the people responding to this and blaming the collapse/deregulation on democrats- Bush was president when the 2008 collapse happened; Obama increased regulation and the current administration is in the process of deregulation.
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    Vote yes!! Small businesses are the backbone of America. Plus, there is little to no chance they will lay-off their employees and outsource their jobs overseas.
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    All investments are risky. When banks and savings institutions put a lot of their capital and surplus into any one type of investment it makes the risk even worse, and could put banking consumers in a greater risk situation which could lead to another recession or depression. We’re already on the way toward that with the tax cuts for the rich which puts everyone else at risk. .
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    Title Investing in Main Street Act Official Title To amend the Small Business Investment Act of 1958 to increase the amount that certain banks and savings associations may invest in small business investment companies, subject to the approval of the appropriate Federal banking agency, and for other purposes. Vote YEA
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    Some federal contractors were once small businesses.
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    Sometimes it does seem high risk but worth it Small businesses make this Country what it Is I support and Wish well to New Start Ups ! Peace
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    If we want to support small businesses and make them “The Lifeblood” of the U.S. economy, as They are often retired to, then we need to write corporate policy around small business and let the large corporations follow those regulations, or adjust for larger corporations. Since Republicans have created a capitalist environment , in which businesses have to Pay to Play, the only ones who can afford the extortion and the ability to write their own laws, are large, unethical, corrupt corporations. If we want small business to succeed, we need to repeal Citizens United and take away corporate lobbying And all private money out of politics. Set term limits for representatives. Create campaign finance regs that limit campaigns to 5 weeks and allow a maximum of $1 per each constituency within a candidate’s jurisdiction. Ban PACs and other non-profits from political campaigns. That will make negative political advertising worthless and a waste of valuable time and limited funds. All of this would foster a stronger America and a better opportunity for small businesses. It’s hard for a small business to compete with larger corporations when small business does not get the same tax loopholes and breaks that corporations do. We need ethics in capitalism and governance.
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