U.S. Rep. Steve Stivers (R-OH) on Tuesday introduced legislation that would boost local job creation and help small and mid-sized U.S. business owners more easily obtain capital needed for growing their firms and employing more workers.
H.R. 4267 would reduce the asset-ratio requirement for Business Development Companies (BDCs) to facilitate investments in small businesses and middle-market companies. It would also update BDC securities offering requirements thereby allowing them to reduce costly, duplicative administrative requirements and focus on moving funds into business investment.
“Unfortunately, in recent years, we have seen banks cut back on lending to small and mid-sized businesses, making BDCs an even more important resource to our job creators,” Stivers said. “We must make it easier for BDCs to provide financing to these businesses so they can continue to create jobs in our communities.”
More than half of BDCs are publicly traded, thereby allowing individuals to invest in smaller companies critical to the nation’s towns and cities but BDC regulatory policies are ripe for change, according to Stivers’ office.
BDCs are required to put at least 70 percent of their assets into private operating companies and publicly traded firms that are valued at less than $250 million – including middle-market businesses. Those middle-market companies provide jobs for some 48 million American workers and produce about one-third of U.S. gross domestic product, Stivers’ office said.
BDCs have been an important business-financing source since Congress created them after banks in the 1970s trimmed small-business lending in the wake of oil and real estate investment losses, according to Stivers’ office.