Interagency

Borrowers and lenders of loans backed by the U.S. Small Business Administration will have greater access to capital and less paperwork as a result of a proposed regulation aimed at streamlining the SBA application process, while also strengthening oversight and the integrity of the agency’s loan programs.

 “Streamlining and simplifying has been a key focus of our agency over the last few years. The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small business owners the financial resources to grow and create jobs,” said SBA Administrator Karen Mills. “Specifically, these proposed regulations will provide greater access to capital through our two largest loan programs, while also reducing risk to taxpayer dollars.”

The SBA proposes the new measures after extensive consultations with lenders and borrowers to identify the greatest challenges they face and find ways to reduce barriers to making and accessing loans, while still maintaining strict oversight.

The U.S. Small Business Administration is seeking comment on three proposed rules published today in The Federal Register that would revise the size definitions for small businesses in the Utilities; Construction; and Arts, Entertainment and Recreation sectors. The proposed revisions reflect changes in marketplace conditions.

The proposed rule for the Utilities sector will revise the size standard for nine industries. The rule proposes changing six of the industries dealing with electric power generation, distribution and transmission from revenue-based size standards to an employee based size standard of 500 employees.

It would also increase the size standards for the remaining three industries in the Utilities sector from $7 million to $25.5 million for water supply and irrigation systems, $7 million to $19 million for sewage treatment facilities, and $12.5 million to $14 million for steam and air conditioning supply. SBA estimates as many as 400 additional firms in this sector would become eligible for SBA programs as a result of these revisions.

The U.S. Small Business Administration is inviting experienced early stage investment fund managers to apply for licensing as Early Stage Innovation Funds as part of SBA’s Small Business Investment Company capital investment program. 

Licensed Early Stage Innovation Funds can receive SBA-guaranteed funding to match their privately raised capital up to a maximum of $50 million.  Early Stage Innovation Funds must invest at least 50 percent of their investment dollars in early stage small businesses.

“This intiative is intended to promote American innovation and job creation by encouraging private sector investment in early stage small businesses,” said SBA Administrator Karen Mills. “Early stage small businesses face difficult challenges accessing capital. At the same time, in this financial climate, venture capital funds are finding it difficult to raise money from institutional investors. By licensing and providing SBA financial backing to Early Stage Innovation Funds, we hope to expand entrepreneurs’ access to capital and encourage innovation as part of President Obama’s Start-Up America Initiative launched last year.”

As part of the Start-Up America Initiative, SBA intends to commit up to $1 billion in SBA guaranteed leverage over a five-year period to selected Early Stage Innovation Funds using its current program authorization.

The Securities and Exchange Commission announced it will begin accepting comments from the public as the agency sets out to make rules required under the recently-signed Jumpstart Our Business Startups (JOBS) Act.

Under a process first utilized with the Dodd Frank Wall Street Reform and Consumer Protection Act, the public will be able to comment before the agency even proposes its regulatory reform rules and amendments.