News

Washington D.C. — U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, convened a hearing titled, “Reauthorization of the SBA’s Small Business Investment Company Program.”
 
A live-stream of the hearing can be found on the committee’s website here.
 
Chairman Rubio’s opening remarks as prepared can be found below.
 
Chairman Rubio: “I am pleased to hold today’s hearing titled, “Reauthorization of the SBA’s Small Business Investment Program,” to have a robust discussion on one of the most impactful programs at the Small Business Administration.
 
“The SBIC program is one of the earliest SBA programs, created under the Small Business Investment Act of 1958.
 
“The impetus for this program was a Federal Reserve report that showed significant gaps in the business credit and equity markets, with the most prominent gap found in the small business sector.
 
“That report recommended the SBA to create a program to provide equity financing to small businesses. This resulted in the SBIC program that, in turn, popularized the venture capital model of investment in the 1960s and 1970s.
 
“Since then, the SBIC program has continued to provide venture capital financing to fill the gap in investment in small businesses by the private sector. The impact of the program is immense.
 
“In 2017, the Library of Congress prepared a report that measured the role of the SBIC program in small business job creation.
 
“The report only covered the timeframe between October 1995 and December 2014, but found that the program created almost three million jobs during this period, with one new job created for every $14,000 in SBIC investment.
 
“The study also looked at the administrative costs to the government and found that the average administrative cost was approximately $35 per job created.
 
“This program is a clear example of the type of public-private partnership that fills a gap in the private marketplace and creates quantifiable results.
 
“The SBIC program is a proven program that has historically met investment needs not being met by the private sector.
 
“Therefore, it is prudent to reassess the state of investment in the United States, identify gaps in financing, and evaluate the opportunities that exist for the SBIC program to fill those gaps.
 
“For example, there are meaningful market failures in the current configuration of the American innovation and advanced manufacturing ecosystem.
 
“As the United States confronts an ascendant and belligerent China with the clear goal of dominating the consequential industries of the future, it is prudent to consider aligning public policy to address these market failures.
 
“The access-to-capital challenge facing innovative American firms with high-growth-potential is damaging to our country’s competitiveness and this financing gap is not being filled by private investment.
 
“Today, venture capital funding in the United States is highly concentrated by geography – primarily to areas like San Francisco, New York, and Boston – and by industry – largely to information and communication technology companies.
 
“The relatively short window for expected returns, combined with the prioritization of highly scalable, capital-light businesses for investment skews funding towards digital technology and away from capital-intensive manufacturing sectors with longer profit horizons.
 
“Creating an environment in which U.S. firms can compete globally while creating jobs in the United States is in our vital interest.
 
“If policy fails to address it, the United States will continue to lose to other nations, both in the capacity to produce now and the capacity to innovate in the future.
 
“Small advanced manufacturing firms face a debilitating lack of access to critical finance in the United States. Innovative firms engaged in complex, advanced manufacturing production require larger amounts of capital and more time than non-production firms.
 
“While these kinds of firms can often find financing for the earlier stages of their development, they face difficulty accessing financing when they reach the large-scale production and commercialization stage.
 
“Since innovation and production are so closely interwoven in advanced manufacturing, losing the ability to engage in advanced manufacturing production is prohibitive to the ability to innovate and conduct high-level research and development.
 
“The SBIC program is uniquely positioned to play a role in filling this gap in financing and to leverage private domestic investment.
 
“After all, one of its tenets is to support industries that will undergird our national competitiveness.
 
“Our discussion today will explore the role the SBIC program can play in this national discussion, as well as further expand upon its history, stability and success.
 
“The underlying program has remained viable through times of economic prosperity and economic downturns, from administration to administration.  
 
“The program should continue to be robustly supported at SBA, with the necessary number of program staff needed to successfully manage it, and with processes that provide certainty and instill confidence in participants and investors alike.
 
“I look forward to the discussion on this vital program.”