No CRS summary available for this bill.
This section revises the definition of private capital for small business investment companies (SBICs) by (1) eliminating the requirement that certain employee welfare benefit plans be established prior to October 1, 1987; (2) expanding qualifying investors to include foundations, endowments, or trusts of colleges or universities; and (3) excluding funds obtained directly or indirectly from federal, state, or local governments except for specified types used in leverage requests approved by the SBA Administrator. (As background, SBICs are SBA-licensed funds that use private capital leveraged by SBA-guaranteed debentures to make equity investments and long-term loans in small businesses.) This section further modifies SBIC maximum leverage limits by (1) decreasing the leverage ceiling to 200% of private capital (from 300%); (2) capping leverage for a single SBIC at $250 million if it makes quarterly or semiannual interest payments or $175 million otherwise; and (3) limiting aggregate leverage for commonly controlled SBICs to $475 million if they make quarterly or semiannual interest payments or $350 million otherwise (previously $350 million flat). This section expands the exclusion from outstanding leverage calculations for SBIC investments in small businesses located in low-income or rural geographic areas, operating primarily in covered technology categories (as defined in 10 U.S.C. 149(f)), or qualifying as small manufacturers—up to the lesser of 50% of private capital or $125 million—and limits eligibility to investments made after enactment. (Thus, SBICs may take on additional leverage for such targeted investments.)