SBIA President Brett Palmer testifies before House Small Business Subcommittee
Hearing looks at the SBIC program’s impact on small businesses
WASHINGTON, DC (April 17, 2024) – Brett Palmer, President of the Small Business Investor Alliance (SBIA), the association for private equity funds investing in American small businesses, was invited to testify before a House Small Business Subcommittee on Economic Growth, Tax, and Capital Access hearing on the impact of the Small Business Investment Company (SBIC) program on U.S. small businesses. Below are key excerpts from the hearing:
Watch SBIA President Brett Palmer’s opening statement >
Responding to Subcommittee Chair Dan Meuser (R-PA) about real world examples of how SBIC leverage impacts small businesses:
Mr. Palmer: “SBIC capital … is the first institutional capital to go into most of these businesses. A lot of this effort includes professionalizing the business and helping them scale up, so the number of employees increases significantly in most cases. The bonus leverage is designed specifically to make it so there's an incentive, not a mandate, but an incentive to look off the beaten track to parts of the country that haven't received adequate investment...”
Responding to House Small Business Committee Chair Roger Williams (R-TX) about the program’s cost to taxpayers:
Mr. Palmer: “It’s a zero-subsidy program … the private capital has to be lost first before the taxpayer is exposed…”
Responding to Rep. Judy Chu (D-CA) on how the “Investing in Main Street Act” would impact the small business investing ecosystem:
Mr. Palmer: “…Demand for this capital is off the charts, these funds have to raise … and there are a lot of banks that would like to invest more but they’re just not allowed to, not because the banking law says they can’t but because the SBICs can’t accept it. So it would be very helpful in getting more private capital that would then be amplified through the small business ecosystem.”
Responding to Rep. Chu about access to capital for disadvantaged small businesses, recent changes to the program, and the new investment models created by SBA:
Mr. Palmer: “The SBA changed their regulations last fall and created a couple of new models .. that will allow for more equity investing because SBICs do invest at a higher rate in women and minorities in equity and venture than does the broader venture market…”
Responding to Rep. Greg Landsman (D-OH) on three policy changes that would have the greatest impact on small businesses:
Mr. Palmer: “…the passage of the Investing in All of America Act … expediting the [SBIC] licensing process for repeat funds … [and] keeping the [SBIC] fees that we’re paying inside the program …”
# # #
The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for over 60 years. For more information, visit www.SBIA.org or call (202) 628-5055.
