79–010 

Calendar No. 353 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–272 

SMALL BUSINESS INVESTMENT OPPORTUNITY ACT OF 

2018 

JUNE 7, 2018.—Ordered to be printed 

Mr. RISCH, from the Committee on Small Business and 

Entrepreneurship, submitted the following 

R E P O R T 

[To accompany S. 2527] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Small Business and Entrepreneurship, having 

considered the bill (S. 2527) to amend the Small Business Investment Act of 1958 to increase the amount of leverage made available to small business investment companies, having considered 

the same, reports favorably thereon without amendment, and recommends that the bill do pass. 

I. INTRODUCTION

The Small Business Investment Opportunity Act of 2018 (S. 

2527) was introduced by Senator Benjamin L. Cardin, the Committee’s Ranking Member, for himself, Senator James E. Risch, the 

Committee’s Chairman, and Senator John Kennedy on March 8, 

2018. 

This bill amends the Small Business Investment Act of 1958 to 

increase the Individual Leverage Limit for individual funds participating in the Small Business Investment Company (SBIC) program 

from $150,000,000 to $175,000,000. 

The bill was approved unanimously by a roll call vote as part of 

a manager’s package. 

II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

The SBIC program was authorized in the 85th Congress by the 

Small Business Investment Act of 1958 and is an integral part of 

the Small Business Administration’s (SBA’s) programs that provide 


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1 P.L. 111–15. 2 P.L. 114–113. 

a broad spectrum of access to capital for small businesses across 

the United States. SBICs are privately owned and managed investment funds, licensed and regulated by SBA, that use their own capital plus funds borrowed with an SBA guarantee to make equity 

and debt investments in qualifying small businesses. The program 

operates at no expense to taxpayers. Instead, the cost of the program is covered by fees paid by SBICs and their portfolio companies. 

Since the program started in 1958, the SBIC program has deployed more than $67 billion of capital, made more than 166,000 

investments in American small businesses, and licensed more than 

2,100 investment funds. 

In the 111th Congress, the American Recovery and Reinvestment 

Act of 20091 simplified and raised the maximum amount of leverage for an individual SBIC to 300 percent of its private capital, or 

$150,000,000, whichever is less. The maximum amount of leverage 

for licensees with two or more licenses was raised to $225,000,000. 

In the 114th Congress, Senator Risch and Ranking Member 

Cardin introduced a bill (S. 552), with Chairman David Vitter and 

Senators Jeanne Shaheen and Kelly Ayotte as cosponsors, to increase the maximum amount of leverage for SBICs with more than 

one fund from $225,000,000 to $350,000,000. The bill was enacted 

as part of the Consolidated Appropriations Act of 2016.2

However, the leverage limit for SBICs having just one fund was 

not increased. Consequently, the amount for an individual fund has 

been fixed at $150,000,000 since 2009. In the interim, inflation has 

diminished the value of the $150,000,000 maximum. Today, adjusted for inflation, the current cap for a single SBIC of $150 million should be nearly $170 million. The Committee strongly recommends the individual fund limit increase apply to any existing 

qualified fund that has commenced its investment period two years 

prior to the date the bill becomes law. 

In the 115th Congress, a companion bill, the Small Business Investment Opportunity Act of 2017 (H.R. 2333), was marked up and 

passed by the House Small Business Committee on July 12, 2017 

and passed by the full House on July 24, 2017. 

Like the House bill, the Cardin-Risch Small Business Investment 

Opportunity Act of 2018 ensures the SBIC program is able to continue to deploy needed capital through the availability of venture 

and private equity capital in a manner that allows the Individual 

Leverage Limit to keep pace with inflation and aligns it more closely with the 2015 increase in the multiple licensee limit. 

III. DESCRIPTION OF BILL

This bill will expand the ability of SBA and its private-sector 

partners to deploy more capital to innovative, fast-growing small 

businesses through the SBIC program. The bill increases the Individual Leverage Limit for an individual SBIC from $150,000,000 to 

$175,000,000. 


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IV. COMMITTEE VOTE

In compliance with rule XXVI (7)(b) of the Standing Rules of the 

Senate, the following vote was recorded on March 14, 2018. 

A motion to adopt the Small Business Investment Opportunity 

Act of 2018, a bill to amend the Small Business Investment Act of 

1958 to increase the amount of leverage made available to small 

business investment companies, was approved unanimously by a 

roll call vote as part of a manager’s package. Senators Risch, 

Rubio, Paul, Scott, Ernst, Inhofe, Young, Enzi, Rounds, Kennedy, 

Cardin, Cantwell, Shaheen, Heitkamp, Markey, Booker, Coons, 

Hirono, and Duckworth voted for the bill. 

V. COST ESTIMATE

In compliance with rule XXVI(11)(a)(1) of the Standing Rules of 

the Senate, the Committee estimates the cost of the legislation will 

be equal to the amounts discussed in the following letter from the 

Congressional Budget Office: 

APRIL 19, 2018. 

Hon. JAMES E. RISCH, 

Chairman, Committee on Small Business and Entrepreneurship, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2527, the Small Business 

Investment Opportunity Act of 2018. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

KEITH HALL, 

Director. 

Enclosure. 

Small Business Investment Opportunity Act of 2018 

Under current law, the Small Business Administration (SBA) operates a program that provides loan guarantees to Small Business 

Investment Companies (SBICs) that make investments in qualifying small businesses. The amount of debt the SBA is authorized 

to guarantee for any SBIC is capped at $150 million. SBICs are required to pay various fees that are sufficient to offset the program’s 

estimated subsidy cost, that is, the estimated long-term cost to the 

government of a loan guarantee, calculated on a net-present-value 

basis. S. 2527 would raise the amount of debt that the SBA can 

guarantee for a SBIC to $175 million. 

Using information from the SBA, CBO estimates that implementing the bill would cost $3 million over the 2019–2023 period 

for the agency to update the program’s regulations and subsidy-cost 

model in 2019 and for additional analysis and oversight of SBIC 

portfolios over that period. Most of those costs would result from 

administrative activities and any spending would be subject to the 

availability of appropriated funds. Using information from the 

SBA, CBO estimates that increasing the cap on the amount of debt 

that the SBA can guarantee for SBICs would increase the volume 

and gross cost of loan guarantees that the SBA could make; however, CBO estimates that the estimated net subsidy cost to the govVerDate Sep 11 2014 02:28 Jun 10, 2018 Jkt 079010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR272.XXX SR272

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ernment would not be affected because the SBA would raise fees 

to cover any such costs. 

Enacting S. 2527 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting S. 2527 would not increase net direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2029. 

S. 2527 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. 

On July 21, 2017, CBO transmitted a cost estimate for H.R. 

2333, the Small Business Investment Opportunity Act of 2017, as 

reported by the House Committee on Small Business on July 12, 

2017. The two pieces of legislation are similar and CBO’s estimates 

of their budgetary effects are the same. 

The CBO staff contact for this estimate is Stephen Rabent. The 

estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

VI. EVALUATION OF REGULATORY IMPACT

In compliance with rule XXVI(11)(b) of the Standing Rules of the 

Senate, it is the opinion of the Committee that no significant additional regulatory impact will be incurred in carrying out the provisions of this legislation. 

VII. SECTION-BY-SECTION ANALYSIS

Section 1: Short title 

This section provides the short title for the Act, the ‘‘Small Business Investment Opportunity Act of 2018’’. 

Section 2: Individual SBIC Leverage Limit increase 

This section amends Section 303(b)(2)(A)(iii) of the Small Business Investment Act of 1958, 15 U.S.C. 682(b)(2)(A)(ii), by increasing the Individual Leverage Limit from $150,000,000 to 

$175,000,000. The Committee strongly recommends the individual 

fund limit increase apply to any existing qualified fund that has 

commenced its investment period two years prior to the date the 

bill becomes law. 

Æ 


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