Bill seeks to diversify access to investment capital from beyond Boston, New York, and Silicon Valley businesses to more rural, underserved businesses
WASHINGTON – Today, U.S. Senators John Hickenlooper, Jim Risch, and Catherine Cortez Masto introduced the MicroCap Small Business Investing Act, legislation which would break down barriers to capital investment for underrepresented small business owners by diversifying the backgrounds of people applying for the SBA’s MicroCap SBIC license. The bill aims to give smaller businesses in underserved markets and industries access to this SBA program.
“The biggest hurdle for many small businesses is access to capital,” said Senator Hickenlooper. “This bill breaks down barriers to SBA loans to give all small business owners – not just those in the big city – a fighting chance.”
“Idaho’s small businesses are key to our economy, but are often left out of investment opportunities, limiting small businesses’ ability to grow,” said Senator Risch. “With the MicroCapSBIC Designation Act, small businesses in Idaho’s rural communities will be granted increased access to capital and the resources needed to keep up their significant contribution to our state.”
“This bipartisan legislation will help entrepreneurs in underserved communities access the capital they need to create and grow their businesses,” said Senator Cortez Masto. “Nevada’s small businesses are the backbone of our economy, and I’ll keep working to help level the playing field for all Nevada business owners.”
Currently, less than 10% of VC capital goes to entrepreneurs living outside major metropolitan areas, with the overwhelming majority of capital being invested in Boston, New York City, and Silicon Valley. The SBA Small Business Investment Company (SBIC) program was established to help close this gap and secure more capital for a diverse array of small businesses from across the country.
The bill would create a new “MicroCapSBIC” license designation within the existing SBIC program. MicroCapSBICs would be required to invest at least half of their capital in “smaller enterprises” and a quarter in rural and underserved communities, and important sectors like manufacturing. Specifically, this new license designation would:
- Allow qualified underrepresented investment managers to obtain SBIC licenses to invest in small businesses.
- Grow the number of smaller funds in underserved markets.
- Create more investment vehicles serving small businesses in rural parts of the country.
Full text of the bill is available HERE.