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Small Business Investment Companies

Launch your next small business venture with safe and reliable SBIC backing

By Michele Vrouvas
Small Business Investment Companies offer private funding to new and existing small to medium businesses. These SBICs acknowledge that supporting the growth of private small businesses is essential to the growth of the United States economy as a whole because small businesses provide so many jobs. SBICs receive backing by the federal government through the United States Small Business Administration, which not only licenses individual small business investment companies but also regulates them.

Once you decide to seek SBIC financing, you must find out if you qualify. Businesses reporting income less than $18 million and less than $6 million in after tax income probably qualify. The next step is to make a conservative assessment of how much SBIC funding you’ll need. This depends in large part on whether you are starting a new business or expanding the one you already have. As you consider SBIC services, make sure you don’t leave one stone unturned in planning your new venture.

1. Research SBIC services to determine whether and how it can help your new or existing business.

2. Determine whether you qualify for SBIC financing by contacting an SBIC representative.

3. Deal with an SBIC that focuses on your particular industry.

 

Get more information on the SBIC program in general

Your business intuition reminds you that financing programs can sound too good to be true. Play it safe by getting accurate information on SBIC law and qualifying criteria from reliable sources before you commit to financing from an SBIC.
Try: The U.S. Small Business Administration has been part of the federal government since 1953. The investment division of the SBA seeks to help create jobs and stimulate the economy by providing private investment to small businesses. Research the concept behind the SBIC program in general. In addition, access the website for the National Association of Small Business Investment Companies for more facts about the concept of the SBIC so you can decide whether SBIC financing is right for you. Check out the Association’s website for success stories from companies that have received SBIC financing.

Contact an SBIC to see if you qualify for funding

Speak directly with an SBIC professional who will explain the company's approval process and individual investment policy.
Try: Alvarez and Marshal, based in New York, has provided financial support to small businesses since 1983. Publicly owned Capital Southwest Corporation and privately owned Petra Capital Partners support small business development throughout the Untied States and have an impressive portfolio of customers representing diverse industries such as electronic manufacturing, construction, architecture, banking, web-based concerns, healthcare and oil.

Find a specialized small business investment company

These SBIC's prefer to focus on certain industries and may even set size requirements for companies they invest in.
Try: Hamilton BioVentures invests in biopharmaceutical and life science technology companies. Argosy Partners concentrates on financing East Coast-based manufacturing firms with a minimum of $10 million in revenue. Advantage Capital Partners focus on the telecommunications industry. It maintains offices in 10 states throughout the country and welcomes you to submit your business plan online.

 

  • It may help to contact a professional finance "coach" who has experience in applying for loans from participating-securities SBIC companies and who can guide you through the approval process.

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