A bipartisan bill introduced by U.S. Rep. Cathy McMorris Rodgers (R-WA) to encourage the formation of more Small Business Investment Companies (SBICs) on May 8 received unanimous approval from the U.S. House of Representatives and advanced to the U.S. Senate for consideration.
SBICs, said McMorris Rodgers, are pivotal in providing capital to small businesses and startup companies. “The only problem? There are currently none here in Washington state,” she said. “My bill will help change that by making it easier for them to form here in our state, invest in people in our community, grow our local economy, and create jobs.”
Many SBIC-backed companies, she said from the House floor prior to the chamber’s vote on the bill, are “primarily located in larger, urban and financial centers, which only further concentrates lending and financing activity.” Overall, 72 percent of SBICs are located in 10 states, the congresswoman said.
The Spurring Business in Communities Act of 2017, H.R. 4111, which Rep. McMorris Rodgers introduced on Oct. 24, 2017 with original cosponsor U.S. Rep. Stephanie Murphy (D-FL), would amend the Small Business Investment Act of 1958 to require the Small Business Administration (SBA), in reviewing and processing a licensing application for an SBIC, to prioritize an SBIC applicant located in an under-licensed state having below median financing; and to exempt applicants in under-licensed states from certain SBA capital requirements, according to a congressional record summary.
“By supporting small businesses, we can help ensure that there are more jobs and opportunities here in eastern Washington for people to live their American dream,” McMorris Rodgers said.
The Small Business Investor Alliance (SBIA) also voiced support for H.R. 4111, which SBIA President Brett Palmer said would expand economic opportunity to more communities across the country.
“H.R. 4111 is designed to increase access to SBIC capital for growing small businesses in states with too few SBICs,” Palmer wrote in a May 8 letter to the bill’s sponsors. “This is a noble goal because SBIC investments have empowered hundreds of thousands of small businesses to grow and create jobs that are the economic lifeblood of communities.”
Palmer added that SBIA knows of “no other government program that so effectively enhances private sector job creation at such a low cost to the taxpayer” as the SBIC program. H.R. 4111 encourages the SBA to correct the SBIC licensing shortage across the United States, he wrote, and in turn, increase capital access options for small businesses.
Rep. Murphy, a former businesswoman, said such growth capital is important both “to establishing a thriving small business” and increasing the number of private-sector jobs across the nation.
In fact, according to a 2017 Library of Congress study, SBIC-backed small businesses created 3 million new jobs and supported an additional 6.5 million jobs that year, McMorris Rodgers said from the House floor. At the same time, the SBA’s most-recent report shows that SBICs reported more than $800 million in financing during the fourth quarter of 2017 that contributed to creating in excess of 16,000 jobs, she added.
Small businesses are “the backbone of our community and our economy, providing two out of three new jobs in America,” the congresswoman said, and SBICs are a significant player in this scenario. Easing the application process to allow more SBICs to form in more states bodes well for everyone, McMorris Rodgers said.