House approves bill that seeks to bolster investment in small businesses

The U.S. House of Representatives unanimously approved this week a bipartisan bill sponsored by U.S. Reps. Dan Meuser (R-PA) and Hillary Scholten (D-MI) that seeks to incentivize greater private capital investments in small businesses.

The Investing in All of America Act of 2023 (H.R. 5333) deals with the Small Business Investment Companies (SBICs) program. SBICs are privately owned firms regulated by the Small Business Administration (SBA) that raise private capital, which is matched with leverage by the SBA. This combined capital is then invested directly into small businesses. The SBIC program, it should be noted, operates without taxpayer subsidy.

Since 2000, SBIC-backed businesses have generated 5 million new jobs and supported an additional 10.5 million jobs. Last year alone, SBICs injected more than $8 billion into small businesses nationwide. However, despite these successes, recent studies indicate that only 20 percent of SBIC investment reaches low to middle-income communities.

This new legislation aims to significantly increase that number. Specifically, the Investing in All of America Act would incentivize the deployment of additional capital to small businesses in underserved communities. Further, dollars invested in these areas will not count against individual SBIC’s $175 million dollar leverage cap.

Through this incentive, the Investing in All of America Act will increase investment in rural and underserved communities by as much as $125 million per SBIC license.

“By passing my Investing in All of America Act, Congress chooses to incentivize investment and support economic growth in often-underserved communities. My bill is not just about supporting small businesses; it’s about bolstering economic growth and revitalization in northeastern and central Pennsylvania, as all as similar regions nationwide,” Meuser said.

Also, the bonus leverage in this legislation does not alter the cost or risks of the SBIC program. Additionally, the legislation adjusts SBIC leverage caps to keep pace with inflation. Leverage that is matched by the SBA, is currently capped at $175 million dollars for individual licensees. By reinstating the inflation adjuster, the bill ensures that SBICs’ investment power stays aligned with market trends.

“This is smart policy that will help small businesses access the capital they need to grow, particularly in underserved parts of the country, without new federal spending, regulations, or mandates,” Small Business Investor Alliance President Brett Palmer said.

The Investing in All of America Act of 2023 was approved 23-0 by the Small Business Committee and then passed unanimously in the full House of Representatives. The legislation now heads to the United States Senate for a vote.

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