Sponsors (2)
The bill increases private capital flow to disadvantaged small businesses and potential local job growth by easing SBIC leverage limits, while raising taxpayer exposure and potential systemic financial risk from greater and more concentrated leverage.
Small disadvantaged and underserved businesses (including rural firms) will gain increased access to private equity as SBICs can deploy more capital toward qualifying investments, which can support job creation and local economic growth.
SBICs that target disadvantaged firms can exclude certain qualifying investments from leverage calculations, enabling those funds to make more and larger investments without breaching leverage limits.
Taxpayers may face greater risk of loss if higher leverage leads SBICs to fund riskier investments in smaller disadvantaged firms, potentially increasing government exposure or costs if investments fail.
Allowing larger combined leverage for SBICs or affiliated groups (up to $250 million combined) could concentrate risk and raise systemic vulnerability for financial institutions and taxpayers if those concentrated investments perform poorly.
Based on analysis of 2 sections of legislative text.
Permits SBA to exclude certain equity investments in disadvantaged small businesses from SBIC leverage calculations up to 50% of private capital and adds per-fund and combined leverage caps.
Introduced September 23, 2025 by Marilyn Strickland · Last progress September 23, 2025
Allows the SBA to ignore (exclude) part of an SBIC’s equity investments in qualifying socially and economically disadvantaged small business concerns when calculating the SBIC’s outstanding leverage, up to 50% of the SBIC’s private capital, and sets new caps on maximum leverage for individual SBICs and for groups of SBICs under common control. To qualify for this treatment, an SBIC must certify that at least 50% of its dollar investments will go to socially and economically disadvantaged small business concerns in its first fiscal year after enactment or any fiscal year thereafter. The change increases the amount of leverage some SBICs can carry (subject to the caps) and aims to encourage more private investment into disadvantaged small businesses without immediately changing funding levels or creating new agencies or deadlines.