Business Development Companies (BDCs) and Small Business Investment Companies (SBICs) are an increasingly important source of financing for privately held small and middle-market companies. As their importance has increased in recent years, BDCs have encountered regulatory hurdles that have stymied their ability to provide access to capital for businesses excluded from traditional sources of financing. Recently, members of Congress have introduced a pair of bills that would increase the amount of funds available for the BDC and SBIC industries to lend to small and middle-market companies. This Legal Alert examines these bills and their implications for BDCs, SBICs, and BDCs that operate SBIC subsidiaries.
On June 8, 2012, Representatives Michael M. Grimm (R-NY) and Nydia M. Velázquez (D-NY) introduced the Next Steps for Credit Availability Act (H.R. 5929) to reform certain aspects of the regulatory regime that governs BDCs. H.R. 5929 is currently in committee. In addition, on February 28, 2012, Sens. Mary L. Landrieu (D-LA) and Olympia J. Snowe (R-ME) introduced Senate Bill 2136 (S. 2136), which would expand the Small Business Administration’s (the SBA) authorization to guarantee loans to SBICs. S. 2136 is also currently in committee.
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