Updated 2 days ago
Last progress May 22, 2025 (8 months ago)
2 meetings related to this legislation
Changes how Small Business Investment Companies (SBICs) count certain investments when calculating their maximum leverage. It lets SBICs exclude specified qualifying investments from the leverage calculation up to set dollar caps (only for investments made after this law takes effect) and narrows the definition of “private capital” so that most government-provided funds cannot be treated as private capital when the Administrator reviews leverage requests. The effect is to potentially increase SBICs’ usable leverage capacity for new investments in targeted small businesses, while preventing government-provided funding from being counted as private capital in leverage approvals. The change applies only to investments made after the law’s enactment and includes dollar limits and other eligibility rules for excluded investments.
Amends the definition in Section 103(9) so that 'private capital' does not include funds obtained directly or indirectly from any Federal, State, or local government or any government agency or instrumentality, except for funds described in subclauses (I) through (III) of subparagraph (B)(iii), for the purpose of approval by the Administrator of any request for leverage.
Amends Section 303(b)(2) subparagraph (A)(ii)(I) to set the maximum amount that may be excluded from the calculation of outstanding leverage for a company that makes quarterly or semiannual interest payments at $250,000,000.
Amends Section 303(b)(2) subparagraph (A)(ii)(II) to set the maximum amount that may be excluded from the calculation of outstanding leverage for any other company licensed under section 301(c) at $175,000,000.
Amends Section 303(b)(2) subparagraph (B)(i) to set the aggregate exclusion limit for commonly controlled companies that make quarterly or semiannual interest payments at $475,000,000.
Amends Section 303(b)(2) subparagraph (B)(ii) to set the aggregate exclusion limit for other commonly controlled companies licensed under section 301(c) at $350,000,000.
Primary effects:
SBICs: This change can increase an SBIC’s effective borrowing/leverage capacity for future investments in qualifying small businesses because specified post-enactment investments can be excluded from the maximum-leverage calculation (subject to caps). That may enable SBICs to fund more deals or larger rounds in the targeted categories.
Targeted small businesses / startups: Small businesses that meet the statute’s qualifying criteria should be more attractive to SBIC capital, potentially improving access to growth capital for early-stage or specified-category small firms.
SBA and Administrator: Administrators and reviewers must implement the narrower private-capital definition in leverage approvals and verify that exclusion claims meet the post-enactment and dollar-cap rules, increasing administrative oversight and compliance checks.
Investors and capital sources: By excluding most government-provided funds from the private-capital definition, the law prevents sponsors from counting public grants/loans as private capital for leverage approval. That reduces the risk that leverage will be extended based on what had been effectively public funding rather than private commitments.
Risks and considerations:
Financial risk management: Allowing exclusions increases leverage headroom for SBICs; regulators must ensure leverage remains at prudent levels so systemic risk or sponsor overleverage does not increase.
Market effects: The carve-out may concentrate SBIC activity into the qualifying small-business categories, which could be beneficial for those sectors but may shift investment away from others.
Timing and scope: Because exclusions apply only to post-enactment investments and are dollar-limited, near-term impacts will depend on how quickly SBICs deploy capital into qualifying companies and on the size of statutory caps.
Overall, the bill is a narrowly focused technical change to SBIC leverage accounting intended to encourage new private investment in specific small-business types while preventing government funding from inflating private-capital calculations.
Updated 6 days ago
Last progress December 3, 2025 (2 months ago)
Last progress December 2, 2025 (2 months ago)
Introduced on March 11, 2025 by Dan Meuser
On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H4918)
Received in the Senate and Read twice and referred to the Committee on Small Business and Entrepreneurship.