Small Business Investment Company Modernization Act of 2012

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6504) to amend the Small Business Investment Act of 1958 to provide for increased limitations on leverage for multiple licenses under common control, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on the bill under consideration.

Mr. Speaker, I yield myself such time as I may consume.

I rise today in support of H.R. 6504, the Small Business Investment Company Modernization Act of 2012. This is a bipartisan bill I introduced along with Representative Renee Ellmers and Representative David Cicilline that will increase the leverage limit for a family of SBIC funds from $225 million to $350 million.

I introduced this legislation because the need for increasing small business access to capital is something universally agreed upon, and this legislation does exactly that. Specifically, this bill will increase investments to small businesses by $500 million per year without requiring an appropriation.

In addition to having bipartisan Member support, this bill has the support of the Small Business Investor Alliance, the association that represents SBICs and other small business investors, as well as the support of the U.S. Chamber of Commerce, the world's largest business organization. Additionally, the Obama administration recommended this provision as a part of the President's Startup America initiative.

The Small Business Investment Company program was created in 1958 and provides leverage to highly regulated

private investors. These private investment funds are called small business investment companies, or SBICs for short. SBICs raise private capital from institutions like banks and pension funds, and they also borrow Federal capital to invest in our country's most promising small businesses. As required by law, 100 percent of the money is invested in American companies. Small businesses need capital to grow and create jobs to support our local and regional economies.

SBICs have invested in over 110,000 businesses since the creation of this program. Twenty-three percent of the investments are made in the manufacturing sector of our economy, and 18 percent of the investments are made in the transportation sector.

The manufacturing economy is very important to my State in particular, Ohio, and we need to continue committing to this. In the past 6 years, Ohio's businesses have benefited from an investment of over $307 million from SBICs.

Last year, representatives of one of the SBIC funds in Ohio testified before the House Small Business Committee about the benefits of the SBIC program and in support of the legislation we have in front of us here today. Northcreek Mezzanine, which is located in Cincinnati, Ohio, has successfully invested in five companies since it became an SBIC a little more than 3 years ago. Northcreek understands the importance of supporting successful managers through this program.

It's important for my colleagues to know that this bill does not cost the taxpayers' money, nor does it increase the risk of the program. The SBIC debenture program will remain a zero subsidy program. That means that the SBICs that participate must pay an up-front fee to cover any losses. It's good public policy like this that truly helps business grow and access capital at no cost to taxpayers.

This legislation assists proven fund managers, like Northcreek Mezzanine, as I mentioned before, that have a track record of success by allowing them access to additional funds that they can then use to assist small businesses. We have here a bill that increases the leverage to $350 million for successful investors.

The SBA, the Small Business Administration, will continue to determine whether funds receive additional leverage after meeting certain licensure requirements. Investment decisions will be made by proven private sector fund managers, not the SBA, thus ensuring that the amount of new capital used by this bill will go to qualified small business investors.

H.R. 6045 is the perfect gift this Christmas season as it is the gift that keeps on giving. The increase in the flow of capital to small businesses will have a ripple effect throughout the economy as businesses will expand, create jobs, and invest in research and development. Congress can take an important step in getting the capital to businesses that need it the most.

I would urge my colleagues to vote for H.R. 6504 on the floor today, and I reserve the balance of my time.

Mr. Speaker, I have no additional speakers on our side at this time, and so I continue to reserve the balance of my time.

Mr. Speaker, I would ask the gentlelady if she has any additional speakers.

Mr. Speaker, I would urge my colleagues to support the Small Business Investment Company Modernization Act of 2012, and I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the

point of order that a quorum is not present.

Mr. Speaker, due to a family matter requiring my presence in New Mexico, I was not able to be present for a number of votes on the House floor this week.

Had I been present for rollcall vote No. 627, on motion to suspend the rules and pass H.R. 4606, to authorize the issuance of right-of-way permits for natural gas pipelines in Glacier National Park, and for other purposes, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 628, on motion to suspend the rules and pass S. 3193, the Barona Band of Mission Indians Land Transfer Clarification Act of 2012, I would have voted ``aye.''

Had I been present for rollcall vote No. 629, on motion to suspend the rules and pass H.R. 6504, the Small Business Investment Company Modernization Act of 2012, I would have voted ``aye.''

Had I been present for rollcall vote No. 630, on motion to suspend the rules and agree to the Senate Amendment on H.R. 3783, an act to provide for a comprehensive strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere, and for other purposes, I would have voted ``aye.''

Had I been present for rollcall vote No. 631, on motion to suspend the rules and pass H.R. 6621, to correct and improve certain provisions of the Leahy-Smith America Invents Act and title 35, United States Code, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 632, on motion to suspend the rules and pass S. 3642, the Theft of Trade Secrets Clarification Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 633, on motion to suspend the rules and pass H.R. 6672, to reauthorize certain programs under the Public Health Service Act and the Federal Food, Drug, and Cosmetic Act with respect to public health security and all-hazards preparedness and response and for other purposes, I would have voted ``aye.''

Had I been present for rollcall vote No. 634, on motion to suspend the rules and pass H.R. 1845, the Medicare IVIG Access Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 635, on motion to suspend the rules and agree to H. Res. 668, to refer H.R. 5862, a bill making congressional reference to the United States Court of Federal Claims pursuant to sections 1492 and 2509 of title 28, United States Code, the Indian trust-related claims of the Quapaw Tribe of Oklahoma as well as its individual members, as amended, I would have voted ``aye.''

Had I been present for rollcall vote No. 636, on the motion to suspend the rules and pass H.R. 6655, the Protect Our Kids Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 637, on the motion to suspend the rules and pass S. 3564, the Public Interest Declassification Board Reauthorization Act, I would have voted ``aye.''

Had I been present for rollcall vote No. 638, on the motion to suspend the rules and pass H.R. 6016, the Government Employee Accountability Act, as amended, I would have voted ``aye.''

Mr. Speaker, I thank the gentlelady for the courtesy of this time, and I thank my Republican colleagues, Congressman Chabot and Congresswoman Ellmers, for reaching across the aisle and working with us to introduce H.R. 6504, the Small Business Investment Company Modernization Act.

Small businesses, our Nation's most effective job creators, have faced the brunt of the recession, and Congress needs to work in a bipartisan fashion to ensure our small firms are able to access private capital.

One important tool that we have in our toolbox is the Small Business Investment Company (SBIC) program, and today's bill will help keep the SBIC program a healthy and robust public-private partnership, providing vitally important capital to small businesses in my home State of Rhode Island and across this country.

The SBIC program leverages private investment to provide greater capital to small businesses. Since its creation in 1958, the SBIC program has promoted more than $62.6 billion in financial assistance and made more than 164,000 investments in small businesses.

In the past 2 years, SBICs supported more than 130,000 jobs. In the past 6 years, SBICs have invested more than $68 million in Rhode Island small businesses, including over $40 million in fiscal year 2011 alone.

H.R. 6504 is a commonsense, bipartisan measure that raises the amount of leverage that a group of commonly-held, sound and successful small business investment companies, referred to as a family of funds, can access.

The Small Business Investor Alliance estimates that increasing the leverage limit from $225 million to $350 million, which is achieved through this legislation, would facilitate approximately $500 million a year in new small business investment.

This is legislation that does not require an additional appropriation of funding and was outlined as part of President Obama's Startup America Initiative, and the bill is supported by the Chamber of Commerce.

I'm proud to join with my colleagues across the aisle to support this bill, which will strengthen the SBIC program, enhancing this public- private partnership and the flow of investment to promising small businesses.

Mr. Speaker, I yield myself such time as I may consume.

(Ms. VELAZQUEZ asked and was given permission to revise and extend her remarks.)

I want to take this opportunity to thank the gentleman from Ohio for his work on this issue.

Since 1958, the SBIC program has been an integral part of SBA's mission to provide small businesses with capital and create jobs. To date, the program has invested approximately $63 billion in more than 110,000 U.S. companies. In fact, some of the Nation's most successful corporations, including Apple, FedEx, and Costco, received early-stage financing from SBICs. The key to the program's success is leveraging Federal funds to increase the amount of private capital invested in promising start-up companies.

Access to capital is the lifeblood of every small business. After the 2008 financial crisis froze traditional credit markets, many firms sought out alternative providers of financing, particularly SBICs. Demand quickly outpaced the program's capacity, requiring a significant increase in the leverage caps to keep up. Under the American Recovery and Reinvestment Act, the leverage cap on an SBIC family of funds nearly doubled to $225 million.

As a result, the program experienced unprecedented growth, setting a record in 2012 with over $2.5 billion in equity financings made, an 85 percent increase from 2010. This success has pushed many SBIC licensees against the new leverage caps, reducing the flow of capital to worthy small businesses.

As you know, the goal of the SBIC program is to fill the gap between the availability of venture capital and the needs of small businesses in start-up and growth situations. Although this bill only addresses the needs of some in the SBIC community, it will still get additional equity capital flowing. As the economy continues its recovery, every dollar invested in small businesses will be important.

I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentleman from Rhode Island (Mr. Cicilline).

I don't have any additional speakers, and I yield back the balance of my time, Mr. Speaker.

Mr. Speaker, on rollcall No. 629 I was unavoidably detained. Had I been present, I would have voted ``nay.''