Changes in SBA policy regarding applications for leverage, statutory changes in the availability of commitments for SBICs, and the makeup of the industry present the possibility that that provision may, in fact, create conflicts and confusion. H.R.68 will also modify a test for determining the eligibility of small businesses for SBIC financing. These small businesses do not pay taxes at the enterprise level, but instead pass through income and the ensuing tax liabilities to their partners and shareholders. Consequently, many of these small businesses face difficulties when the income test is applied to them, and are often declared ineligible for financing they should receive. Finally, H.R.68 will allow the SBA greater flexibility in issuing trust certificates to finance the SBIC program's investments in small businesses.
Current law allows funding pools to be issued every six months or more frequently.
This inhibits the ability of the SBICs and the SBA to form pools of certificates that are large enough to generate serious investor interest. Allowing more time between fundings will permit SBA and the industry to form larger pools for sale in the market, thereby increasing investor interest and improving the interest rates for the small businesses financed. That, in a nutshell, is the bill and, without further ado, I will turn to my colleague the Ranking Democratic Member, Ms. Velazquez.