Administrator of the U.S. Small Business Administration (SBA), Maria Contreras-Sweet, recently announced it has expanded the Impact Investment Fund, a feature of the Small Business Investment Company (SBIC) Program. The SBA is implementing a series of policy changes that promise to broaden access to the fund and strengthen the impact of SBIC’s.
“As head of the SBA, my main goal is to increase access to capital for our nation’s entrepreneurs, especially to our underserved communities. This expansion of the Impact Investment Fund today puts more capital into the hands of entrepreneurs, while offering impact investors a tremendous platform to reach small business owners with innovative ideas,” said Administrator Contreras-Sweet.
The SBA launched the Impact Fund in 2011 as a five-year, $1 billion pilot initiative to capitalize investment funds that seek both financial and social return. This announcement reaffirms SBA’s commitment to impact investing beyond 2016. The agency will continue to allocate roughly $200 million of its $4 billion annual investment authority to Impact SBIC’s investing in underserved areas and sectors of national priority. The detailed policy memo that outlines this new commitment can be found at: www.sba.gov/inv/impact.
In addition to extending the Impact Investment Fund, SBA has introduced policy changes based on extensive consultation with SBIC Program stakeholders and experts in the impact investment industry. The major changes include:
“We applaud the US Small Business Administration’s relentless work with the private sector to enhance investment opportunities and coming up with this policy refresh” said Jonathan Greenblatt, Special Assistant to the President and Director of the Office of Social Innovation and Civic Participation in the Domestic Policy Council.
SBA anticipates licensing a few new Impact SBICs by the end of the year. These funds will join the two existing Impact SBICs, Michigan Growth Capital Partners and SJF Ventures III. Together they manage over $182 million in assets and have invested in seventeen (17) companies that collectively employ about 1,500 people. Fiber By-Products, a portfolio company of Michigan Growth Capital Partners located in rural White Pigeon, Mich., collects wood waste otherwise destined for the landfill and uses it to produce animal bedding, wood mulch and premium pellet fuel. Think Through Learning, an impact investment of SJF Ventures III, is an education technology company that provides online instructional systems for schools and students nationwide. Its flagship product, Think Through Math, helps students master key mathematical concepts and is designed to aid the transition many schools are making to the Common Core Curriculum.
The 290 funds in the SBIC Program portfolio, which collectively manage $21.5 billion in assets, are already focused on increasing investment flows to sectors and regions where capital formation gaps are widest. Last year, about one-quarter of the American small businesses SBICs financed were owned by minorities, women, and veterans – or conducted business in HUBZones, rural or distressed urban areas and other Competitive Opportunity Gaps.Related Articles: