News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
September 20, 2007  

CONTACT: Kate Gilman/ Erin Donar,  (202) 225-4038

Committee Approves Bill to Improve Investment Opportunities for Small Firms
Legislation Will Expand Access to Venture Capital and Angel Investors

WASHINGTON –Access to capital is a common and growing concern for many aspiring businesses owners, a problem that has only been exacerbated by the recent credit crunch. Many small firms are being confronted with limited financing options, and may not be aware of other opportunities that are available to them. Today the House Small Business Committee voted unanimously to adopt H.R. The Small Business Investment Improvements Act of 2007, introduced by Congressman Jason Altmire (D-PA), Chairman of the Subcommittee on Investigation and Oversight, to help ensure that entrepreneurs are able to secure the funding they require.

“Small businesses rely on access to affordable capital to develop their ventures and create jobs,” said Chairwoman Nydia M. Velázquez. “Angel investment and venture capital are two mechanisms that can help spur growth among small enterprises, but changes are necessary to ensure these programs are able to serve as viable resources for this nation’s entrepreneurs.”

As they currently stand, the SBA’s investment programs are ineffective, contributing to the more than $60 billion in unmet capital needs for small businesses. Venture capital and angel investment have the potential to address this problem, with angel investors alone accounting for the creation of more than 51,000 new businesses a year. These opportunities coupled with an SBA that is better able to provide capital to small businesses, will improve the ability of entrepreneurs to secure adequate financing.  

“Thousands of small businesses are started each year based on an innovative idea or product.  But in order to take that next step, entrepreneurs often require an infusion of private investment.  Unfortunately, this assistance can be difficult for small business owners to come by,” said Chairman Altmire. “My bill provides assistance to these early-stage companies by making the SBA an efficient partner in their business development by improving access to venture capital and angel investments.” 

The Small Business Investment Improvements Act of 2007 addresses current shortfalls, by overhauling the SBA’s Small Business Investment Company (SBIC) and the New Markets Venture Capital (NMVC) programs which are designed to aid small enterprises, particularly those owned by women, minorities, and resident of low income areas. The bill creates a new Angel Investment Program to fill the gap in seed capital that was impacted with the elimination of the participating securities program, one of SBA’s venture capital initiatives, and to help infuse entrepreneurs with this crucial source of financing. It also creates a renewed focus on investment in low income areas and to minority owned businesses – two sectors that have historically faced barriers in accessing equity investment.  Additionally, the Small Business Act will be amended to ensure firms that received venture capital are able to maintain their small business classification, removing current disincentives to seeking this kind of financing. Finally, improvements will be made to the surety bond program by raising the maximum allowable bond amount and decreasing fees for borrowers and surety companies, making the initiative more accessible.

“This bill improves the climate for investment in small firms, benefiting the nation’s current and future entrepreneurs as well as the neighborhoods that depend on the services they provide,” said Chairwoman Velázquez. “As the incubators of new ideas, small businesses serve as the job creators and drivers of our economy - this measure will ensure that have the equity they need to prosper.”

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