Bills
| 3.23.22

Should Small Business Investment Companies Focus on Underserved Areas? (H.R. 4111)

Do you support or oppose this bill?

What is H.R. 4111?

(Updated December 11, 2018)

This bill — the Spurring Business in Communities Act of 2017 — would require the Small Business Administration (SBA) to focus on underserved areas as the Small Business Investment Company (SBIC) applications are reviewed and processed. SBIC applicants from under-licensed states and under-financed states would be exempt from full capital requirements. The SBA would be required to report annually on its progress toward increasing the geographic dispersion of SBICs.

The SBIC program was founded in 1958 as one of the many financial assistance programs available through the SBA. The SBA doesn’t directly invest into small businesses, but provides loan guarantees to qualified investment management firms with expertise in certain sectors or industries.

Argument in favor

The Small Business Administration’s SBIC program helps speed the development of small businesses across the country, and it’d be wise to focus such efforts on underserved areas.

Argument opposed

The Small Business Administration shouldn’t place an emphasis on SBIC applications from underserved areas to spur the growth of small businesses in that area.

Impact

Small businesses and investment management firms in underserved areas; and the SBA.

Cost of H.R. 4111

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Cathy McMorris-Rodgers (R-WA) introduced this bill to encourage investment in small businesses in underserved parts of the country:

“Small businesses are the backbone of our economy. They provide 55 percent of jobs in America, and account for 1.3 million employees in Washington state alone. SBICs serve an important function in providing capital and support to these small businesses, but there are currently none here in Washington state. Instead, SBICs are primarily located in large urban and finance centers of the U.S., which only further concentrates lending and investment activity. This legislation will change that by easing the process for SBICs to form in our state, invest in people in our community, grow our local economy, and create jobs.”

Companion legislation has been introduced in the Senate by Sen. Marco Rubio (R-FL) who added:

“I want Florida’s entrepreneurs and investors to be able to stay and invest here in Florida’s economy, instead of feeling like they are being shoe-horned into Wall Street and Silicon Valley jobs away from home. Our bill will help reduce America’s investor gap by removing regionally biased obstacles investors face when applying to become a licensed Small Business Investment Company.”


Media:

Summary by Eric Revell

(Photo Credit: fotostorm / iStock)