Program Description:
What Is a Small Business Investment Company?

Individual investors have provided venture capital for new and small businesses in the United States for many years. No institutional source of such financing existed until 1958, when Congress passed the Small Business Investment Act.

Small Business Investment Companies (SBICs) and Specialized Small Business Investment Companies (SSBICs) are financial institutions created to make equity capital and long-term credit (maturity of at least five years) available to small, independent businesses.

SBICs are licensed by the U.S. Small Business Administration, but they are privately organized and privately managed firms which set their own policies and make their own investment decisions. In return for pledging to finance only small businesses, SBICs may qualify for government-backed long-term loans. Although all SBICs will consider applications for funds from socially and economically disadvantaged entrepreneurs, SSBICs normally make all their investments in this area.