SBA Expands SBIC Program to attract VC Funds

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management

1 year ago

Any thoughts and opinions about these latest updates from SBA?

https://www.axios.com/2023/08/17/exclusive-sba-expands-sbic-program-to-attract-more-vc-funds

Does it mean we could have more VCs money available to acquire small businesses or will there be more competition from VCs?

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searcher from The University of Texas at Austin - Red McCombs School of Business

So SBIC funds have to pay cash interest on the money they borrow that they then lend out. According to this article, with the rule change, they may no longer have to pay cash interest semi-annually - instead it will accrue. The implication is that for borrowers, cash debt service goes down. With improve credit metrics, growth oriented or capital intensive businesses can now receive capital.

This is a double edged sword. If you're an operator, your cash cost of capital just went down. At the same time, improved liquidity means valuations will increase.

1 year ago | like reply | 1 like

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