Washington, D.C.- Today, Congressman Brian Higgins (NY-27) joined a bipartisan majority of the House of Representatives to pass H.R. 3567, The Small Business Investment Expansion Act of 2007. The bill reforms Small Business Administration (SBA) programs to assist small business owners, including veterans and women, with obtaining the investment capital necessary to start or grow their operations and improves access to venture capital and angel investments for these entrepreneurs.
“Our nation’s entrepreneurs drive our economy, transforming new and innovative ideas into jobs,” said Congressman Higgins, who was recently selected to serve on the House Small Business Committee. “This legislation will ensure that small businesses have the access to affordable capital necessary to continue to spur economic growth.”
The bill includes the following provisions to address the financing needs of small businesses:
Overhauls the SBA’s Small Business Investment Company (SBIC) and New Markets Venture Capital (NMVC) Programs. The SBA’s Small Business Investment Company (SBIC) and the New Markets Venture Capital (NMVC) programs are public-private partnerships designed to aid small firms – in particular those owned by veterans and women and in low-income areas– in acquiring venture capital. The Small Business Investment Expansion Act creates a renewed focus on investment in low-income areas and to veterans and minority owned businesses –three sectors that have historically faced barriers in accessing equity investment.
Creates Angel Investment Program. Angel investors -- individuals who invest in start-up companies -- are estimated to account for more than 51,000 entrepreneurial ventures a year and are rapidly becoming a common way for startups to obtain capital. This bill builds the first-ever nationwide network of angel groups and partners SBA with these licensed investor groups that invest in start-up small businesses, providing them with matching financing leverage. This new program provides greater taxpayer protection than the Administration’s current investment programs. These programs would work to fill the gaps left by Bush Administration reductions in the SBA’s venture capital initiatives.
Increase Small Business Participation. The bill ensures that small businesses that receive venture capital are not treated any differently than those entrepreneurs receiving traditional financing. The bill includes safeguards that prevent any individual or entity from gaining an unfair advantage, ensures that the investors themselves are small, and prohibits any large companies from being involved. Finally, the bill improves the surety bond program needed for small businesses to do construction -- raising the maximum allowable bond amount and decreasing fees for borrowers and surety companies.