FEDERAL AGENCY:

SMALL BUSINESS ADMINISTRATION

AUTHORIZATION:

Small Business Investment Act of 1958, as amended, Title III, Part B, Sections 351-368; 15 U.S.C. 689 - 689q.

To promote economic development and the creation of wealth and job opportunities in low-income geographic areas and among individuals living in such areas, through developmental venture capital investments in smaller enterprises located in such areas.

USES AND USE RESTRICTIONS:

Recipients use funds from debentures guaranteed by SBA to make equity capital investments in smaller enterprises located in low-income geographic areas. Recipients use grant funds to provide management and technical assistance to smaller enterprises in connection with such investments. Recipients must not use grant funds for their own general and administrative expenses. Term of guaranteed debenture is up to 10 years, with no payments required in years 1 to 5, interest only payments due semi- annually in years 6 to 10, and a balloon repayment of principal due at maturity. Cost is approximately 100 basis points over comparable U.S. Treasury Securities. Prepayment is allowed without penalty after year 1.

ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:   Applicants for designation as New Markets Venture Capital (NMVC) companies (to receive both guaranteed debentures and project grants) must be newly formed for-profit companies. Existing Specialized Small Business Investment Companies (SSBICs) also are eligible to apply for project grants.

Beneficiary Eligibility:   Smaller enterprises located in low- income geographic areas and small businesses.

Credentials/Documentation:   None.

Pre-application Coordination:   None. This program is excluded from coverage under E.O. 12372.

Application Procedure:   Applicants may submit applications only after SBA publishes a Notice of Funds Availability ("NOFA") in the Federal Register and invites applications. Applicants must submit applications by the deadline specified in the NOFA. Applicants for NMVC company designation must submit SBA Form 2184 (New Markets Venture Capital Application), SBA Form 2185 (Exhibits to New Markets Venture Capital Application), and SF 424 (Application for Federal Assistance). SSBIC applicants must submit a SF 424 and technical proposal as described in instructions available upon request from SBA. Applications are submitted to SBA's Office of New Markets Venture Capital.

Award Procedure:   Applicants for NMVC company designation will be selected for conditional approval as an NMVC company. Conditionally approved NMVC companies then will have a certain period of time, specified by SBA but no more than 2 years, to raise its private capital and grant matching resources. Those conditionally approved NMVC companies that raise such resources by the applicable deadline and that meet other conditions established by SBA, will become finally approved NMVC companies entitled to a project grant and entitled to apply for a guaranteed debenture. SSBIC applicants will receive notice of conditional selection for a project grant. Such SSBICs then will have a certain period of time, specified by SBA but no more than 2 years, to raise its private capital and grant matching resources. Those SSBICs that raise such resources by the applicable deadline will receive a project grant.

Deadlines:   Application deadlines will be set forth in a NOFA published in the Federal Register.

Range of Approval/Disapproval Time:   SBA may take between 60 to 90 days to consider and approve/disapprove applications.

Appeals:   None.

Renewals:   Not applicable.

ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:   Applicants for NMVC company designation must raise at least $5 million in capital and at least $1.5 million (or 30% of capital raised, whichever is more) in grant matching resources. SSBIC applicants must raise grant-matching resources in the amount of 30% of the new capital they raise to make investments in smaller enterprises located in low-income geographic areas. SBA will award project grants to NMVC companies and SSBICs on a dollar for dollar basis with grant matching resources raised by NMVC companies and SSBICs. 13 CFR 108.2030.

Length and Time Phasing of Assistance:   Project grant funds will be available for a time period not to exceed 5 years after award. Debenture funds will be available until expended.

POST ASSISTANCE REQUIREMENTS:

Reports:   SBA will request financial information including, but not limited to, financial statements, economic impact and community development information, and portfolio financing reports and valuations.

Audits:   SBA will require an annual financial report performed by an independent public accountant and an annual examination performed by SBA's internal examiners.

Records:   Appropriate records as needed for requirements of 111 and 112.

FINANCIAL INFORMATION:

Account Identification:   (Loans) 73-1154-0-1-376; (Grants) 73-0100- 0-1-376.

Obligations:   (Grants) $150,000,000 in debenture guarantee authority, and $50,000,000 for grant award. Both appropriations are available until expended.

Range and Average of Financial Assistance:   Minimum amount of grant award will be $1,500,000. Range in amount of grant award will depend in large measure on the amount of grant that applicants request.

Not applicable.

REGULATIONS, GUIDELINES, AND LITERATURE:

13 CFR part 108.

INFORMATION CONTACTS:

Regional or Local Office:   None.

Headquarters Office:   Director, New Markets Venture Capital Program, 409 3rd Street, NW., Suite 6300, Washington, DC 20416. Telephone: (202) 205-6510.

Web Site Address:   http://www.sba.gov/inv.

EXAMPLES OF FUNDED PROJECTS:

Not applicable.

CRITERIA FOR SELECTING PROPOSALS:

Equity venture capital finance experience, community development finance experience, and ability to raise equity capital and matching grant funding.