59–010 

Calendar No. 104 

114TH CONGRESS REPORT " ! SENATE 2d Session 114–265 

THE SMALL BUSINESS INVESTMENT CAPITAL COMPANY 

ACT OF 2015 

MAY 26, 2016.—Ordered to be printed 

Mr. VITTER, from the Committee on Small Business and 

Entrepreneurship, submitted the following 

R E P O R T 

[To accompany S. 552] 

The Committee on Small Business and Entrepreneurship, to 

which was referred the bill (S. 552) to amend the Small Business 

Investment Act of 1958 to provide for increased limitations on leverage for multiple licenses under common control, having considered the same, reports favorably thereon with an amendment and 

recommends that the bill, as amended, do pass. 

I. INTRODUCTION 

The Small Business Investment Capital Company Act of 2015 (S. 

552) was introduced by Senators James Risch and Benjamin L. 

Cardin, on February 24, 2015. The bill’s co-sponsors include Committee members Senator Kelly Ayotte, Jeanne Shaheen, the Committee’s Ranking Member, and David Vitter, the Committee’s 

Chair. 

The Small Business Investment Capital Company Act of 2015 

amends the Small Business Investment Act of 1958 to increase 

from $225 million to $350 million the maximum amount of outstanding leverage to be made available by the Small Business Administration (SBA) to two or more commonly-controlled small business investment companies not under capital impairment (referred 

to as the ‘‘family of funds’’ limit). 

During the markup of the bill, the bill was approved unanimously by voice vote. Identical legislative language was signed into 

law as a provision of H.R. 2029, the Consolidated Appropriations 

Act of 2016 (P.L. 114–113). 


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II. HISTORY (PURPOSE & NEED FOR LEGISLATION) 

Small business investment companies (SBIC) are for-profit venture capital firms, privately-owned and managed but licensed and 

regulated by the SBA. 

The Small Business Investment Company (SBIC) program was 

established pursuant to the Small Business Act of 1958, in order 

to help stimulate capital investments in U.S.-based small businesses. Companies with tangible net worth of $19.5 million or less 

and average net incomes of less than $6.5 million over the previous 

two years are eligible for SBIC investment. 

Since the 2008–2009 SBICs have boomed with total loan volumes 

increasing to $3.5 billion in 2013. The increase stemmed partly 

from changes to the program made by the American Recovery & 

Reinvestment Act of 2009. The law encouraged formation of new 

funds and shortened processing times for new licenses. That same 

year (Fiscal Year 2010), SBICs attracted record funding from both 

the SBA and private capital sources. 

SBICs are considered precursors to today’s private venture capital industry. They were established to encourage investment in innovative small businesses at the start of the space-race era. SBICs 

generally invest between $250,000 and $5 million, according to the 

Small Business Investor Alliance. The SBIC Program ensures that 

SBICs invest in businesses, primarily based in the U.S., that are 

engaged in productive enterprises—not vehicles for financial or real 

estate investment, for example. 

Although they often do not possess the high profiles of wellknown venture capital firms, there are more than 300 SBICs in the 

U.S., with more than $16 billion in capital under management, according to the SBA. This online tally of licensees lists contact information, investment criteria, and the type of funding each SBIC 

provides—they make both loans and equity investments. 

Outstanding leverage to be made available by the SBA to two or 

more commonly controlled small business investment companies 

not under capital impairment is referred to as the ‘‘family of funds’’ 

limit. A family of funds refers to multiple licensed funds operated 

by the same team of SBIC fund managers. These funds under common control are currently limited to $225 million of SBA-guaranteed debt, and several teams of fund managers have already 

bumped against this cap. 

During the 112th Congress, then-Small Business Committee 

Chair Landrieu and then-Ranking Member Olympia Snowe filed S. 

3253, the EXCEL Act of 2012, on May 24, 2012. The bill included 

the program authorization level increase and the increase in the 

family of funds leverage limit to $350 million, as well as a number 

of other program enhancements. While the stand-alone bill was not 

acted upon further by the Committee, the increase was included in 

several other pieces of legislation during the 112th Congress. 

Senate Amendment 1833 (S. Amdt. 1833), an amendment in the 

nature of a substitute to the Jumpstart Our Business Startups 

(JOBS) Act of 2012 (H.R. 3606), contained language to raise the 

family of funds limit to $350 million from $225 million and to increase the SBIC program’s the family of funds limit to $350 million 

from $225 million and to increase the SBIC program’s authorization level to $4 billion. S. Amdt. 1833, the Invigorate New Ventures 


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and Entrepreneurs to Succeed Today (INVEST) in America Act of 

2012, was introduced on March 15, 2012 by Senator Jack Reed 

along with Chair Landrieu and Senators Carl Levin, Sherrod 

Brown, Jeff Merkley, Daniel Akaka, Sheldon Whitehouse, Al 

Franken, Tom Harkin, Richard Durbin, Jeanne Shaheen, and Robert Menendez. S. Amdt. 1833 was ultimately not included in the 

final version of H.R. 3606. 

Additionally, Chair Landrieu included SBIC program enhancements in Senate Amendment 2521 (S. Amdt. 2521), which she filed 

to S. 2237, the Small Business Jobs and Tax Relief Act of 2012, on 

July 11, 2012. Division B of S. Amdt. 2521, entitled the Success Ultimately Comes from Capital, Contracting, Education, Strategic 

Partnerships, and Smart Regulations (SUCCESS) Act, included the 

EXCEL Act of 2012 as a portion of Title II. Although it came up 

short of the 60 votes needed to end debate, the amendment received a strong 57 bipartisan votes when it received a vote on the 

Senate floor on July 12, 2012. 

Shortly thereafter, Chair Landrieu filed the SUCCESS Act as a 

standalone bill. On July 25, 2012, Chair Landrieu introduced S. 

3442, the SUCCESS Act of 2012, with eight co-sponsors including 

Committee members Senators Cardin and Shaheen, as well as Senators Blumenthal, Boxer, Gillibrand, Lieberman, Merkley, and 

Whitehouse. 

Ultimately, however, none of the bills or amendments were 

signed into law during the 112th Congress. 

During the 113th Congress, on March 11, 2013, then-Chair Landrieu reintroduced S. 511, the EXECL Act, which included the 

same increase from $225 million to $350 million as the maximum 

amount of outstanding leverage for two or more commonly-controlled SBICs. 

On March 13, 2013, the Committee’s then-ranking member, Senator Risch, introduced S. 550, the Small Business Investment Company Modernization Act of 2013. This bill would have increased the 

family of funds limit (multiple licensees under common control) 

from $225 million to $350 million. 

III. HEARINGS & ROUNDTABLES 

In the 111th Congress: 

On October 1, 2009, the Committee held a roundtable discussion 

titled, ‘‘Reauthorization of SBA Finance Programs and the Impact 

of the Small Business Provisions in the Recovery Act,’’ at which it 

was pointed out that the family of funds limit should be increased 

because several funds were approaching the current limit. 

In the 112th Congress: 

On March 22, 2012, the Committee held a roundtable discussion 

titled, ‘‘A Spotlight on Small Business Investment Companies and 

their Role in the Entrepreneurial Ecosystem,’’ which featured various stakeholders in the SBIC community, to highlight the success 

of the SBIC program, and to examine opportunities for improvement. The 14 roundtable participants included representatives 

from the SBA, SBICs, SBIC investors, and small businesses. The 

discussion centered on the success of the SBA programs. Several 

business owners shared their stories about how SBA programs assisted with their companies’ growth. Additionally, SBA’s Deputy 

Associate Administrator for Investment, Mr. Harry Haskins, speVerDate Sep 11 2014 00:56 Jun 01, 2016 Jkt 059010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR265.XXX SR265

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cifically discussed the positive impacts associated with increasing 

the family of funds limit. He highlighted that the capital can be 

managed at minimal risk and no cost to the taxpayer because the 

fees associated with the program cover the costs. 

On November 29, 2012, the Committee held a hearing entitled, 

‘‘Creating Jobs and Growing the Economy: Legislative Proposals to 

Strengthen the Entrepreneurial Ecosystem.’’ The purpose of the 

hearing was to discuss the legislative proposals included in the 

SUCCESS Act of 2012 (S. 3442), which was the result of recommendations gathered during a series of three Committee 

roundtables examining the entrepreneurial ecosystem during the 

112th Congress. Among the provisions that the Committee examined during the hearing were those included in the version of the 

EXCEL Act that Chair Landrieu and former Ranking Member 

Snowe introduced during the 112th Congress. Witnesses testified 

that funding levels at the time were close to hitting the cap limit 

and that increasing the limit would allow the program to continue 

its growth and success. 

In the 113th Congress: 

On March 14, 2013, the Committee held a roundtable entitled 

‘‘Helping Small Businesses Weather Economic Challenges & Natural Disasters: Review of Legislative Proposals on Access to Capital 

and Disaster Recovery.’’ The purpose of the roundtable was to discuss four legislative proposals on small business access to capital 

and disaster recovery on which the Committee would focus during 

the 113th Congress, including the EXCEL Act and the Small Business Investment Company Modernization Act of 2013. Both included an increase of the family of funds limit to $350 million. 

Again, the discussion highlighted the importance of increasing the 

limit, especially since the program had proven to be cost effective. 

The EXCEL Act was considered during a markup on June 13, 

2013 and was reported favorably with amendments on June 17, 

2013. 

IV. DESCRIPTION OF BILL 

The bill amends the Small Business Investment Act of 1958 to 

increase from $225 million to $350 million the maximum amount 

of outstanding leverage to be made available by the Small Business 

Administration (SBA) to two or more commonly controlled small 

business investment companies not under capital impairment (referred to as the ‘‘family of funds’’ limit). 

V. COMMITTEE VOTE 

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

Senate, the following vote was recorded on April 23, 2015. 

A motion to adopt the Small Business Investment Capital Company Act of 2015, a bill to amend the Small Business Investment 

Act of 1958 to provide for increased limitations on leverage for multiple licenses under common control, was approved unanimously by 

voice vote with the following Senators present: Senators Vitter, 

Risch, Fischer, Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, 

Cardin, Heitkamp, Booker, Coons, Hirono, and Peters. 


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VI. 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: 

MAY 28, 2015. 

Hon. DAVID VITTER, 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. 552, the Small Business Investment Capital Company Act of 2015. 

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

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 552—Small Business Investment Capital Company Act of 2015 

S. 552 would raise the maximum amount of debt that the Small 

Business Administration (SBA) can guarantee for a group of companies participating in the Small Business Investment Company 

(SBIC) program that are operated together (defined as ‘‘a family of 

funds’’) from $225 million to $350 million. 

Under current law, businesses participating in the SBIC program 

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-presentvalue basis. Based on information from the SBA, CBO expects that 

increasing the maximum loan guarantee level for a family of funds 

would not affect the estimated net subsidy cost, nor would the 

changes increase the SBA’s cost to administer the program, which 

is recorded in the budget on a cash basis. Therefore, CBO estimates that implementing S. 552 would not affect discretionary 

spending. Enacting S. 552 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply. 

S. 552 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would not 

affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Susan Willie. The estimate was approved by Theresa Gullo, Assistant Director for Budget 

Analysis. 

VII. EVALUATION OF REGULATOY 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. There will be no additional impact on the 

personal privacy of companies or individuals who utilize the services provided. 


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VIII. SECTION-BY-SECTION ANALYSIS 

Section 1. Title 

This section provides the short title, ‘‘Small Business Investment 

Capital Company Act of 2015’’. 

Section 2. Increased limitations on leverage for multiple licenses 

under common control 

This section increases from $225 million to $350 million the maximum amount of outstanding leverage to be made available by the 

SBA to two or more commonly controlled small business investment companies not under capital impairment (referred to as the 

‘‘family of funds’’ limit). 

Æ 


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