Sponsors (2)
The bill increases private capital flow to disadvantaged small businesses and the jobs/growth that may follow, but does so by raising leverage and concentration that heighten taxpayer and systemic financial risk.
Small disadvantaged business owners (including in rural and underserved communities) will get increased equity capital because SBICs can exclude certain qualifying investments from leverage calculations, enabling funds that target disadvantaged firms to deploy more private capital and potentially create jobs and local growth.
Financial institutions and taxpayers face higher systemic risk because the bill permits larger SBICs or groups under common control to combine leverage (up to $250M), concentrating exposure that could amplify losses across the financial system if investments perform poorly.
Taxpayers could face greater direct losses if increased leverage leads SBICs to make riskier investments in smaller disadvantaged firms, potentially requiring more government backing or increasing fiscal exposure.
Based on analysis of 2 sections of legislative text.
Allows SBICs that direct ≥50% of investments to socially/economically disadvantaged small businesses to exclude up to 50% of that equity from leverage calculations and raises leverage caps with dollar limits.
Official title: To amend the Small Business Investment Act of 1958 to exclude from the leverage limit calculation for small business investment companies certain amounts invested in socially and economically disadvantaged small business concerns, and for other purposes.
Introduced September 23, 2025 by Marilyn Strickland · Last progress September 23, 2025
Allows certain Small Business Investment Companies (SBICs) that commit at least half of their investment dollars to socially and economically disadvantaged small businesses to exclude up to 50% of the cost basis of those equity investments from the SBA’s leverage calculation. It also raises the maximum leverage an eligible single SBIC can carry (the lesser of 300% of private capital or $175 million) and sets a combined cap of $250 million for two or more SBICs under common control.