SBA Offers $187 Million for New Markets VC Programs

Two new programs from the U.S. Small Business Administration are designed to infuse new capital into economically disadvantaged rural and inner city areas and strengthen existing businesses through technical expertise and mentoring.



The New Markets Venture Capital program (NMVC) is anticipated to spur as much as $15 billion in economic development in distressed areas, while BusinessLINC (Learning, Investment, Networking and Collaboration) is designed to assist small firms by providing access to technical assistance, business advice, market knowledge and contracting opportunities that come from relationships with larger companies.



The NMVC program will provide $150 million in government guaranteed funds for investment by 15 to 20 VC companies to be selected competitively by the SBA. The venture capital companies will be community-based for-profit organizations with management that has proven track records of investing capital in small businesses for the purpose of community development. The companies must raise at least $5 million in investment capital which will be supplemented with the issuance of SBA debentures. No interest payments will be required for five years.



Existing community development venture capital companies and groups with equivalent experience may also apply for New Markets Venture Capital Company designation. The application is available on the SBA website at http://www.sba.gov/INV/venture.html

The deadline for applications is April 19, 2001.



An additional $30 million in matching funds for technical assistance grants is also available to NMVCs. The NMVC companies must obtain commitments to provide at least $1.5 million in technical assistance funding that can come from any source other than the SBA. The SBA will require each NMVC company to invest principally in smaller businesses in low income areas.

BusinessLINC is a public-private partnership that encourages large businesses to work with and mentor small business owners and entrepreneurs. Armed with $7 million in SBA funding, BusinessLINC will provide grants and cooperative agreements with new and existing coalitions, such as those run by nonprofit intermediaries and associations.

The grants will be used to plan local programs; to develop systems to match interested and capable small firms in poorer urban and rural communities with large firms; to integrate the expertise of outside business experts who can volunteer to help small firms; and to provide ongoing monitoring. BusinessLINC coalitions are already underway in Boston, Chicago, Dallas, New York City, Washington, D.C., Houston, and the Mississippi Delta.



More information on BusinessLINC can be found on SBA’s website at 

http://businesslinc.sba.gov/

Additional information on community-oriented venture capital can be obtained from the Community Development Venture Capital Alliance at http://www.cdvca.org