When it comes to raising capital for your business, it’s easy to focus solely on traditional funding sources like venture capital, private equity, and angel investors. However, there’s a powerful and often underutilized resource available to business owners and investors alike: the Small Business Investment Companies (SBIC) program.
Many entrepreneurs and investors don't realize how pro-business the government really is. One of the best-kept secrets is the SBIC program, which offers a unique opportunity for small businesses to access funding, with the added benefit of government-backed capital.
What is the SBIC Program? The SBIC program is a government initiative that helps private investment firms (known as SBICs) provide funding to small businesses. The Small Business Administration (SBA) partners with these investment firms, offering them government-backed capital, which they then invest in small businesses that meet certain criteria. This partnership makes it easier for businesses to secure the capital they need to grow and scale.
SBICs can provide equity investments, debt financing, or a combination of both, depending on the needs of the business. The government guarantees part of the financing, which reduces the risk for private investors and makes the program a win-win for both sides.
Why Should You Care? If you’re an entrepreneur looking to raise capital or an investor seeking new opportunities, understanding the SBIC program can be a game-changer. Here's why:

1. Access to Capital: The SBIC program opens up a unique channel for securing funding from private investors who have the backing of the government. This makes it easier for businesses to attract the necessary capital to grow without relying solely on traditional venture capitalists.
2. Low-Interest, Flexible Terms: For businesses that qualify, the terms of the financing through SBICs can be more flexible and favorable compared to traditional loans or investments. This flexibility is essential for small businesses looking for customized financing solutions.
3. Reduced Risk for Investors: The government’s involvement in the SBIC program reduces the overall risk for investors, making it a safer investment opportunity for those looking to expand their portfolio while supporting small businesses.
4. A Pro-Business Government Initiative: The government’s dedication to supporting small businesses is evident in the SBIC program. It offers more than just funding — it demonstrates a commitment to fostering entrepreneurship and innovation across the country.

How Can You Get Involved? If you’re currently raising capital, one of the best ways to take advantage of the SBIC program is by exploring the SBIC Directory, which provides a list of all the SBICs operating in the U.S. This directory is a valuable resource for entrepreneurs looking to connect with investment firms that can help fund their businesses.

You can access the SBIC Directory here:
https://www.sba.gov/funding-programs/investment-capital/sbic-directory

The SBIC program is an invaluable resource for entrepreneurs and investors alike. It not only provides access to much-needed capital for small businesses but also offers investors a low-risk opportunity backed by the government.

If you’re raising money or exploring new investment avenues, don’t overlook the potential of the SBIC program. It’s time to leverage these government-backed opportunities and take your business or investment portfolio to the next level.
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Have questions or want to discuss the SBIC program further? Feel free to reach out!

More often than not, our firm receives a fair number of asks in regards to capital raising, as well as capital introductions. Prior to any firm receiving capital, the founder should be aware that if they are seeking capital from venture capital that he or she needs to understand:

​1) Does the venture capitalist even invest in the area that the company is in? I.e. do not go to a venture capital that does deep tech artificial intelligence investing when your firm is a regulatory agency.

2) Understand at which stage the venture capitalist invests? I.e. SEED, Series A? Do not go into a Series A investor asking for Seed.

3) Understand much capital does the venture capitalists fund have? I.e. $100 million? $10 million?

4) Understand from question #3 how much of that capital has already been deployed? I.e. $10 million/$100 million? This shows if this venture capitalist is just kicking the tires, and not serious.

5) From question #4 also ask them how quickly do they deploy capital? I.e. be prepared to offer them something generous in return or look at it from there perspective in what they would actually invest in.

While these questions are not the exhaustive list, it's also important to notate that many venture capitalists lose money 9/10 times, and there are alternative measures of funding. If you'd like to find out more, please schedule a free consultation with us.