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Something Ventured

Encourage SBICs and you encourage small-business growth.

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This story appears in the July 2000 issue of Entrepreneur. Subscribe »

In an effort to keep Small Business Investment Companies (SBICs) focused on small dotcoms and other fledgling businesses in the United States, Congress is making some changes to SBIC ground rules. It hopes to keep commercial banks, which own 104 of the 367 SBICs, in the program. Larger banks have been tempted to drop their SBICs, because the Gramm-Leach-Bliley bank-modernization bill (passed by Congress in 1999) lets banks start venture capital subsidiaries without obtaining SBIC licenses.

Lee Mercer, president of the National Association of SBICs (NASBIC), believes some larger banks will do exactly that: drop their SBICs when they become parts of large financial-services holding companies. Smaller community banks, which probably won't become part of some conglomerate, are therefore more likely to hang on to their SBIC licenses. NASBIC is pushing legislative changes to keep it that way; the SBA supports them.

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