New Markets Venture Capital (59.051)
Program
59.051 New Markets Venture Capital
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.
Program Number
59.051
Last Known Status
Active
Objectives
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.
Types of Assistance
Project Grants; Guaranteed/Insured Loans.
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.
Application and Award Process
Preapplication 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
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.
Program Accomplishments
Not applicable.
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.
Regulations, Guidelines and Literature
13 CFR part 108.
Related Programs
None.
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
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.
