Letter to Congress: Proposed Stimulus Measures for Small Businesses Through BDC Investment

1155 F. Street, NW, Suite 1200

Washington D.C. 20004

March 19, 2020

 

Honorable Nancy Pelosi Speaker

U.S. House of Representatives 1236 Longworth H.O.B. Washington, DC 20515

 

Honorable Mitch McConnell Majority Leader

United States Senate

317 Russell Senate Office Building Washington, DC 20510

Subject: Proposed Stimulus Measures for Small Businesses Through Business Development Company Investment

Dear Speaker Pelosi and Majority Leader McConnell:

The Coalition for Business Development (CBD), on behalf of our business development company members, urges Congress to adopt additional statutory and administrative relief to ensure that small business and their employees who are affected by the coronavirus pandemic receive the assistance they need to weather this unprecedented health and economic crisis.

Created by Congress in 1980, BDCs have a specific statutory mandate: to make capital available to small, developing and financially troubled companies that do not have ready access to the public capital markets or other forms of conventional financing. Specifically, BDCs must invest 70% of their assets in privately-owned U.S. operating companies or public U.S. companies with a market capitalization of less than $250 million. Further, BDCs are statutorily required to make available managerial assistance to a large number of the companies in which they invest.

Accordingly, public BDCs provide an estimated $25 billion in capital each year to small businesses

As our nation continues to suffer from the coronavirus pandemic, it is vital that BDCs are able to continue to invest in and promote small businesses.  To that end, we urge Congress to support the following proposals enumerated below in their order of importance:

  • Expanding the Small Business Administration’s funding levels for Small Business Investment Companies (SBICs) for licenses by BDCs from $350 million to $1 billion and streamlining the licensing process, making it immediately available to all public BDCs provided they follow the rules in place and submit an application within 3 months;

  • Applying the SBA valuation methodology for SBICs to BDCs, thereby alleviating liquidity concerns stemming from the pandemic faced by BDCs managing the current Investment Company Act of 1940 asset coverage test requirements; and,

  • Creating an exchange stabilization fund for distressed industries, as recommended by the Department of Treasury, that allows BDC participation alongside other financial institutions.

The CBD appreciates your leadership during this unprecedented crisis and looks forward to working with you to help American small businesses. If you have any additional questions, please contact me at dcohen@bhfs.com or 202-872-5286.

Sincerely,

Dave Signature.png

David Cohen Executive Director

CC:  Chairwoman Maxine Waters, US House Committee on Financial Services Ranking Member Patrick McHenry, US House Committee on Financial Services

Chairman Mike Crapo, US Senate Banking, Housing and Urban Affairs Committee Ranking Member Sherrod Brown, US Senate Banking, Housing and Urban Affairs Committee

Chairman Richard Neal, House Ways and Means Committee Ranking Member Kevin Brady, House Ways and Means Committee Chairman Chuck Grassley, US Senate Committee on Finance Ranking Member Ron Wyden, US Senate Committee on Finance Chair, Nydia Velazquez, House Small Business Committee Ranking Member Steve Chabot, House Small Business Committee

Chairman Marco Rubio, Committee on Small Business and Entrepreneurship Ranking Member Ben Cardin, Committee on Small Business and Entrepreneurship

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