How to Seek SBIC Financing

Small business investment companies (SBICs) exist to supply equity capital, long-term loans and management assistance to qualifying small businesses.  The privately owned and operated SBICs use their own capital and funds borrowed from the U.S. Small Business Administration (SBA) to provide financing to small businesses in the form of equity securities and long-term loans.  SBICs are profit-seeking organizations that select small businesses to be financed within rules and regulations set by SBA. Specialized SBICs (SSBIC) are a particular type of SBIC that provide assistance solely to small businesses owned by socially or economically disadvantaged persons.  SBICs invest in a broad range of industries. Some SBICs seek out small businesses with new products or services because of the strong growth potential of such firms. Some SBICs specialize in the field in which their management has special competency.  Most SBICs, however, consider a wide variety of investment opportunities.  Only firms defined by SBA as small are eligible for SBIC financing.  The SBA defines a company as small when its net worth is $18.0 million or less, and its average net (after tax) income for the preceding two years does not exceed $6.0 million.  For businesses in industries for which the above standards are too low, alternative size standards are available.  In determining whether a business qualifies, all of the business's parents, subsidiaries and affiliates are considered.

Approaching an SBIC

Research the SBICs
If you own or operate a small business and would like to obtain SBIC financing, you should first identify and investigate existing SBICs that may be interested in financing you company.  Use this directory as a first step in learning as much as possible about SBICs in your state, or in other areas important to your company's needs.  In choosing an SBIC, consider the types of investments it makes, how much money is available for investment and how much might be available in the future.  You should also consider whether the SBIC can offer you management services appropriate to your needs.

Plan in Advance
You should determine your company's needs and research SBICs well in advance-long before you will actually need the money.  Your research will take time, as will the SBIC's research of your business.

Prepare a Prospectus/Business Plan
When you've identified the SBICs you think are best suited to provide financing for your company, you'll need to prepare a presentation.  Our initial presentation will play a major role in your success in obtaining financing.  It is up to you to demonstrate that an investment in your firm is worthwhile.  The best way to show worth is by presenting a detailed and comprehensive business plan or prospectus that includes, at a minimum, the information contained on this page.