The Small Business Investment Company Program Annual Report Shows Record Capital for Small Businesses

As head of The Investment Division of the U.S. Small Business Administration, I am proud to present the results of the Small Business Investment Company Program for Fiscal Year 2012 in our Annual Report . We have achieved record success for a third year in a row, providing the capital small businesses need to fuel their growth and create jobs.  This Annual Report reflects our commitment to the continued growth of the SBIC Program.

With the economy still in recovery, SBA’s mission of supporting small businesses and the Americans they employ has never been more critical. Small businesses are responsible for creating over 60% of the country’s net new private sector jobs each year. Yet despite their importance to the health of the overall economy, many small businesses struggle to access the capital they need to expand operations, build new facilities and hire new staff.

In FY 2012, the SBIC Program channeled more than $3 billion to over 1,000 small businesses. And we estimate these financings created or sustained over 65,000 jobs. We achieved these results at zero cost to the taxpayers, thanks to the public-private partnership at the program’s core.  Even in an era of tightening budgets, SBA is able to efficiently harness the talent of professional investment managers to expand the pool of capital available at the smaller-end of the market.

Critical to the success of the program is attracting private capital to the funds.  The Annual Report analyzes in detail the financial returns to private investors participating in the program and found that these returns compare very favorably to the private equity industry as a whole, and demonstrate that private investors can significantly improve their return by accessing SBA leverage.

As we look to the future, we are investing heavily in improved data management systems, both to enhance our own underwriting processes, but also to provide current and future program participants additional data for more informed investment decisions.

In line with the SBA’s agency-wide commitment to transparency in government, the report was prepared with U.S. taxpayers in mind. We hope all of our stakeholders find this SBIC Program Annual Report useful in evaluating the program’s past, but also in helping to shape its future.

About the Author

Sean Greene is the Associate Administrator for Investment and the Special Advisor for Innovation at the U.S. Small Business Administration.