December 18, 2014

EXCEL Act Offering Capital to Small Businesses May Not Be Dead Yet

excel act

Remember the EXCEL Act? Not many people do.

The acronym stands for Expanding Access to Capital for Entrepreneurial Leaders. The bill was first introduced in 2012. It was supposed to increase the amount of capital available to small businesses through a program regulated by the Small Business Administration. Most recently re-introduced to the Senate in September 2013, it is still awaiting a debate on the floor and a vote.

Despite support from Democrats and Republican in Washington, it has gone nowhere. Still, some on Capitol Hill say the idea behind the legislation isn’t dead yet.

U.S. Sen. Mary Landrieu (D-La.) touched on the EXCEL Act during the confirmation hearing of Maria Contreras-Sweet as new administrator of the SBA. Landrieu said the bill could have helped up to 40 small businesses and created close to 2,000 jobs immediately if it had passed. Landrieu wanted Contreras-Sweet to affirm her support for the EXCEL Act and other measures that would help small businesses get access to long-term capital.

The legislation was first introduced by Landrieu during National Small Business Week in 2012, and was re-introduced to the Senate in September 2013. The Louisiana Senator said her bill had bi-partisan support but was held up from passing by “a handful” of legislators. Landrieu was, until last week, chair of the Senate Committee on Small Business and Entrepreneurship.

As a refresher, here are some more details on the EXCEL Act:

If passed, the bill would actually amend the Small Business Investment Company (SBIC) program.

First, it sets the maximum amount of debt that the Small Business Administration (SBA) can guarantee under the SBIC program at $4 billion per year. That’s an increase from $3 billion currently. It’s believed the increase in the SBA’s leverage limit would encourage more private investment funds as a result.

Provisions in the legislation would encourage banks to offer more SBA-backed loans. But it would also direct small businesses that are denied loans back to the SBA for more guidance. The bill would encourage banks, individual investors, and local municipalities to invest in SBIC Funds, according to a Small Business Committee report.

SBICs are private investment funds regulated by the SBA that invest in qualified small businesses with private capital and money borrowed through SBA guaranteed securities.

Money Photo via Shutterstock

7 Comments ▼

Joshua Sophy - Staff Writer


Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

7 Reactions

  1. I guess one of the reasons why many don’t know about it is the fact it did not pass yet. After all, how can they even use it if it’s not yet implemented? I guess it is up to the government to let this pass to somehow give small businesses a breather.

  2. The SBIC program has nothing to do with small business and is just another tool of the SBA and banks to perpetuate the false impression that they help small businesses. Nothing could be farther from the truth.

    SBIC loans are only available directly to venture capitalists. If you want SBIC funds, you’ll have to find a vc who is willing to invest in a carpet cleaners or a retail store. 0% of that money goes to true small businesses with 1-19 employees. The vc’s have successfully lobbied the SBA to sequester $2billion – soon to be $4billion in SBA funds that are completely unavailable to small businesses – only to vc’s.

    How did we get here?

    The SBA, vc’s, and the banks have played a very proactive and aggressive role in the decline of small business lending. Terry Sutherland, Director of the SBA Press Office confirmed the following from my research –

    KEY FACT: In the last five years, the SBA has increased the SBA size standards in almost every category of business, including 66,000 larger businesses in the definition of small. They are continuing to review and proactively expand the definition of small today. (Terry Sutherland confirmed).

    RESULTS – confirmed by the Sutherland:

    1) In 2008, the average SBA loan was $182,000 (suitable for most small businesses with 1-19 employees). Today it is $485,000 and climbing. This has allowed banks to do a lot fewer, much bigger loans, to a lot fewer, much larger businesses, and still claim they are helping small businesses.

    2) Nationally, in 2008, loans under $100,000 were 24% of all SBA loans. Today, it is 9% and declining. Small businesses needing small loans are no longer on the SBA’s radar.

    3) In 2013, the SBA backed fewer loans under $100,000 than at any time in their 61 year history.

    The SBA, vc’s, and the banks, are fully focused on larger businesses masquerading as small. SBIC loans are for big businesses. Nothing in this article is for small businesses. It just sounds like it is because it uses the word “small” to describe 500 employee, $30+million corporations.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>



Join us Thursday, Dec. 18, 2014 at 3:00 p.m. EST for the Small Business Outlook 2015, a free webinar!


X