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SBIC Leverage Pricing at Near Record Low

March 20, 2015, 07:23 AM

The Small Business Investor Alliance (SBIA), the leading association for lower middle market private equity funds and investors, reported the biannual pricing on a record $1.16 billion of Small Business Investment Companies (SBIC) debentures at an interest rate of 2.517 percent, the third lowest in the history of the program. This is the new base rate applied to any SBIC leverage drawn since the last pooling in September when $1.07 billion in SBIC debentures were priced at an interest rate of 3.015 percent.

SBIC debentures are non-amortizing, fixed rate notes. The base rate does not include a number of Small Business Administration (SBA) fees charged to SBICs on top of the base rate. SBICs pay fees to the SBA to keep their leverage at a zero subsidy ensuring there is no cost to the taxpayer.

“The SBIC program provides vital growth capital for small businesses that are the source of job creation and economic growth in small and large communities across America. SBICs fill an important capital access gap because small businesses are severely challenged when trying to secure long-term patient capital. SBICs enable a growth strategy that includes opening and expanding facilities, upgrading equipment, and increasing the workforce,” said Brett Palmer, President of SBIA. ”Thanks to the SBIC program, there are thousands of small businesses thriving and growing.”

In Fiscal Year 2014, SBICs invested more than $5.2 billion of new capital in small businesses and are on pace to exceed that amount in 2015.

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 50 years.

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