SBICs Provide Financial Support and Stability
In 2001, we became a Business Development Company (BDC) and in 2002, we applied for, and received, a Small Business Investment Company (SBIC) license through the U.S. Small Business Administration (SBA). Under this program, Rand Capital SBIC, Inc. was formed as a subsidiary of Rand Capital Corporation. In 2016 we requested approval from the SBA to form a second SBIC fund and in early 2017 we received a “Green Light” letter authorizing us to proceed with the application process.
How do SBICs Work?
The Small Business Administration (SBA) licenses Small Business Investment Companies (SBICs) as part of a program designed to stimulate the flow of private debt and/or equity capital to small businesses. SBICs use funds borrowed from the SBA, together with their own capital, to provide loans to, and make equity investments in, concerns that have a net worth of less than $18 million and average net income of less than $6 million. The SBIC structure provides access to long-term, low-interest, fixed rate loans from the SBA that are not callable and are pre-payable without penalty. The structure also facilitates partnering with other investment firms, which increases deal sourcing avenues and adds stability.