The Small Business Administration has just added advanced manufacturing to a national priority list for SBA backed investment. It has also raised a $200 million annual limit on the amount of funding to support investment in these sectors.
The SBA’s Impact Investment Fund  was initially launched in 2011 to support the growth and development of America’s impact investment industry.
In a release announcing the change, SBA Administrator Maria Contreras-Sweet (pictured above) explained:
“As head of the SBA, my main goal is to increase access to capital for our nation’s entrepreneurs, especially to our underserved communities. This expansion of the Impact Investment Fund today puts more capital into the hands of entrepreneurs, while offering impact investors a tremendous platform to reach small business owners with innovative ideas.”
Here’s what you need to know about the program.
What Are Impact Investments?
In case you aren’t familiar with impact investments, here’s a quick definition :
“Impact investments are put into companies, organizations, or funds with the purpose of positively impacting social and environmental goals, as well as creating a financial return.”
The SBA’s goal with its Impact Investment Fund is to help capitalize Impact Small Business Investment Companies (SBICs). These companies invest funds in businesses not only with the goal of maximizing financial returns. They are also generally attempting to generate a measurable social, environmental, or economic impact.
The SBA initially launched the Impact Fund as a five-year, $1 billion pilot effort. With the recent amendments to the program, it’s clear that the SBA plans to carry it beyond 2016. The agency had already committed to providing roughly $200 million of its $4 billion annual budget to the Impact Investment Fund.
What’s New with the Impact Investment Fund
Prior to the announcement, Impact Investment Fund capital had to be aimed at businesses in underserved communities, the education sector or the clean energy sector.
But with the recent addition of advanced manufacturing businesses to the list of eligible impact investments, the SBA is making this sector a priority too. The agency is encouraging fund managers with expertise in the field to consider applying for an Impact SBIC license.
Additionally, the lifting of the $200 million restriction potentially puts Impact SBICs on a par with Standard SBICs for access to funds. Also, existing Standard SBICs may opt-in as Impact SBICs through December 1, 2014.
What This Does
The expansion of the Impact Investment Fund means access to more potential investment for businesses in the advanced manufacturing sector, of course. This could also include companies that have already received Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) grants. But it could also mean fiercer competition for existing SBA funding funneled through the SBICs. Get more information about the Impact Investment Fund here .