Capital is essential to the survival of any firm, but notably small enterprises. Most entrepreneurs cannot start new businesses or grow existing ones without adequate financing, whether through microloans, commercial lending, or investment capital. Because access to capital is so important for small business success, the Committee on Small Business and Entrepreneurship works to ensure that entrepreneurs can obtain the funding they require. Obtaining capital can be especially difficult for start-ups and small businesses, which frequently lack the years in business or established credit history that financial institutions may require before lending. In order to help small firms secure financing, the Committee works closely with the Small Business Administration (SBA) and the lending community to ensure that small businesses can obtain the financing they need.
The Committee is in charge of overseeing the SBA’s loan and investment initiatives. Delivered through private lending institutions with a government-backed guarantee to the lender, the SBA’s 7(a) loan program provides the largest source of long-term working capital to small businesses in this country. The 504 loan program makes long-term loans for fixed assets such as land, buildings, and equipment through non-profit entities known as Certified Development Companies. The microloan program, which helps more women and minorities than other loan programs, provides entrepreneurs with loans of $35,000 or less.
The Committee also oversees the Small Business Investment Company (SBIC) Program, which provides venture capital financing to small businesses. The SBA partners with private investment firms, which the government backs through long-term loans so that they can leverage the money of private investors to provide small businesses with capital to grow their business and create jobs. SBICs differ from traditional venture capital firms in that they make smaller deals, between $250,000 and $5,000,000, and spread their investments more broadly around the country and a larger variety of industries.