How to Get an SBIC Loan
What it is
| At a Glance | |
|---|---|
| Loan Type: | Business |
| Lender: | Government |
| Secured: | No |
An SBIC loan is a loan financed through a member of the 1958 Small Business Investment Company program. The program was created to help entrepreneurs find capital in order to launch small businesses when sources of funding seem scarce. SBICs are privately owned and managed investment firms that participate in a vital partnership between government and the private sector economy. SBICs borrow capital and other funding from the government at favorable rates and in turn provide venture capital funding to small independent businesses.
SBICs are profit-motivated and they invest in small businesses in order to share the success as it grows and prospers. Small businesses that qualify for the SBIC program are able to receive many types of funding, including equity capital, long-term loans, and expert management assistance. United States taxpayers also benefit as a result of the SBIC program. Tax revenue generated each year from successful SBIC investments cover the cost of the program.
Who it's for
Many small businesses find themselves in need of a business loan at one time or another for a variety of reasons, and an SBIC loan could be the answer to financial problems for new and established businesses. This program can be especially helpful to small business owners who are not eligible for financing through regular commercial lending channels.
What you need to do to apply
Applying for an SBIC loan can be quite complex. First a borrower must commit the necessary capital, including $5 million in private capitalization. Also, the borrower must provide a well-structured business plan, have qualified management on staff, and request a management assessment questionnaire from the SBIC Program Development Office. Two copies of the documentation need to be sent to the Office of Program Development, Investment Division, and the Small Business Administration in Washington, DC. Those interested in an SBIC loan should obtain a lawyer to assist in the application of the loan.
Apply for an SBIC Loan
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