lewisma9 at pilot.msu.edu
01-15-1999, 04:56 PM
Friday January 15, 1:55 pm Eastern Time
Company Press Release
SOURCE: U.S. Small Business Administration
President Clinton, SBA Offer New
Markets Investment Initiatives to
Fuel Business and Job Creation in
Rural, Inner City Areas
NEW YORK, Jan. 15 /PRNewswire/ -- President Clinton and U.S. Small Business
Administration (SBA) Administrator Aida Alvarez today announced a sweeping
new public/private partnership to provide tax credits, investment capital
and credit, and technical assistance to stimulate business formation and
job creation in economically distressed rural and inner city areas.
The New Markets Initiative could lead to investment of as much as $15
billion in the nation's most economically distressed rural areas and inner
cities.
``We have to do more to invest in our own people to give them the tools
they need to succeed and to widen the circle of opportunity,'' the
President said.
``Concentrations of poverty and joblessness continue to have a devastating
effect on the social and economic fabric of communities across the country,
and it is holding America back,'' the President said. ``This lack of
opportunity is at the heart of our deepest social divisions. The New
Markets Initiative will direct billions of dollars of private and public
investment capital and credit into these communities, and go a long way
toward opening the doors of opportunity to all Americans.''
SBA Administrator Alvarez noted: ``It couldn't be more fitting that we are
meeting on Martin Luther King's birthday -- at the center of economic power
in this country -- to talk about opening the doors of economic opportunity,
to tap into New Markets. Dr. King's words and actions remind us that when
we limit economic opportunities for some Americans, we limit the
possibilities for all Americans.''
The comprehensive program announced today by the President includes
participation by the SBA and the Departments of Treasury and Housing and
Urban Development, as well as numerous private sector investment and
banking professionals and private sector corporate sponsors.
The President and Administrator Alvarez announced the programs today at the
Wall Street Project Conference sponsored by the Rev. Jesse Jackson.
The New Markets Initiative is designed to take advantage of attractive
business opportunities in underserved rural and inner city communities that
are not currently being met. The key elements include: tax credits and loan
guarantee incentives, a network of private investment institutions to
funnel credit, equity and technical assistance into businesses in America's
New Markets, and technical assistance and mentoring programs to help
targeted small businesses use new investments to finance growth.
The New Markets Initiative includes:
* New Markets Tax Credits -- To help spur $6 billion in new equity capital
for investment in America's New Markets, President Clinton has proposed a
tax credit worth up to 25 percent for investments in a wide range of
vehicles serving these communities, including community development banks,
venture funds and corporations, the new investment company programs listed
below, and other targeted investment funds.
* New Markets Venture Capital Companies (NMVCs) -- NMVCs will be venture
capital companies that provide a combination of equity venture capital
financing and technical assistance to smaller businesses located in low-
and moderate-income (LMI) areas. SBA is proposing a pilot program to create
between 10 and 20 NMVCs.
LMI areas are census tracts where at least 20 percent of the
population is beneath the poverty level, or where median family income is
less than 80 percent of median family income for the surrounding area. SBA
also intends to include other areas in which economic development is
lagging, including HUBZones, Enterprise Communities, Empowerment Zones and
counties with persistent poverty.
NMVCs will provide government-guaranteed long-term funding,
combined,with technical assistance grants, to private for-profit
community-based venture capital companies that will target their efforts in
these rural and inner city areas. NMVCs must raise at least $5 million in
investment capital, which SBA will match up to $10 million for any single
NMVC. The interest on the government funding will be deferred for the first
five years. NMVCs must also obtain commitments to provide at least $1. 5
million in technical assistance funding over five years. SBA will provide
technical assistance grants amounting to 30 percent of the private capital
amount.
SBA anticipates that the program will involve $100 million in
SBA-backed funding and $30 million in technical assistance grants.
Establishing the program will require enabling legislation.
* LMI Investments and Outreach Workshops -- SBA has organized a series of
six workshops designed to recruit potential SBIC investors and management
teams with experience in investing in small businesses in LMI areas.
Beginning in late March, workshops are scheduled for Chicago, Kansas City,
New York, Atlanta, Dallas and San Francisco.
These workshops will result in the creation of new SBIC licensees,
new interest in rural and inner city investing, and a database of
investment and community development professionals that will be available
to work with SBA on this effort.
SBA also will create a new funding mechanism to provide financial
incentives to encourage SBICs and Specialized SBICs to invest in LMI areas.
The funding will be provided to licensees in amounts that match the level
of their investments in small businesses that: 1) are located in LMI areas,
or 2) hire at least 35 percent of their workforce from among residents of
LMI areas.
* America's Private Investment Companies (APICs) -- APICs, modeled on
the Overseas Private Investment Corporation, will provide equity capital
for the creation or relocation of large-scale businesses in inner cities
and rural areas. It will fund large, investment partnerships formed by
private investors for this purpose. It will be a Department of Housing and
Urban Development (HUD) program administered jointly by HUD and SBA to
combine SBA's venture investment expertise with HUD's expertise in large
scale urban revitalization.
APICs will be organized as conventional, for-profit private venture
capital funds with a minimum private capitalization of $100 million. APICs
will be eligible for twice that amount in government guaranties. APIC
investments will be required to be in low- and moderate-income areas and
require prior government approval for each investment transaction.
HUD and SBA anticipate that the program will involve $1 billion of
government-backed funding. Establishing the program will require enabling
legislation.
* BusinessLINC Initiative -- The BusinessLINC Initiative is a new
partnership between the federal government and America's business community
to encourage large businesses to work with small business owners and
entrepreneurs, especially in America's rural areas and inner cities.
BusinessLINC, which stands for Learning, Information, Networking,
and Collaboration, is designed to stimulate business-to-business
relationships that will produce one-on-one technical advice and consulting,
classroom and group training, peer group consulting, strategic alliances,
and supplier and marketing development for small businesses.
* New Markets Lending Companies (NMLCs) -- Under this pilot, SBA will
select approximately 10 non-depository lending institutions to make
SBA-guaranteed loans targeted to New Market small businesses. The proposed
NMLC program is a limited term, limited participation pilot that will last
between five and 10 years.
NMLCs will make SBA-guaranteed loans under the 7(a) General Business
Loan Guaranty program, the agency's largest financial assistance program.
Under the 7(a) program, SBA guarantees up to 80 percent of a loan that is
made by a commercial lender to a creditworthy small business that cannot
otherwise secure financing on reasonable terms.
Funding for loan guaranties made under the NMLC initiative will come
from the SBA's appropriation for 7(a) program loans, which is funded at a
level of $10 billion for the current fiscal year.
SOURCE: U.S. Small Business Administration
This post transferred from the cdb-l mailing list
Company Press Release
SOURCE: U.S. Small Business Administration
President Clinton, SBA Offer New
Markets Investment Initiatives to
Fuel Business and Job Creation in
Rural, Inner City Areas
NEW YORK, Jan. 15 /PRNewswire/ -- President Clinton and U.S. Small Business
Administration (SBA) Administrator Aida Alvarez today announced a sweeping
new public/private partnership to provide tax credits, investment capital
and credit, and technical assistance to stimulate business formation and
job creation in economically distressed rural and inner city areas.
The New Markets Initiative could lead to investment of as much as $15
billion in the nation's most economically distressed rural areas and inner
cities.
``We have to do more to invest in our own people to give them the tools
they need to succeed and to widen the circle of opportunity,'' the
President said.
``Concentrations of poverty and joblessness continue to have a devastating
effect on the social and economic fabric of communities across the country,
and it is holding America back,'' the President said. ``This lack of
opportunity is at the heart of our deepest social divisions. The New
Markets Initiative will direct billions of dollars of private and public
investment capital and credit into these communities, and go a long way
toward opening the doors of opportunity to all Americans.''
SBA Administrator Alvarez noted: ``It couldn't be more fitting that we are
meeting on Martin Luther King's birthday -- at the center of economic power
in this country -- to talk about opening the doors of economic opportunity,
to tap into New Markets. Dr. King's words and actions remind us that when
we limit economic opportunities for some Americans, we limit the
possibilities for all Americans.''
The comprehensive program announced today by the President includes
participation by the SBA and the Departments of Treasury and Housing and
Urban Development, as well as numerous private sector investment and
banking professionals and private sector corporate sponsors.
The President and Administrator Alvarez announced the programs today at the
Wall Street Project Conference sponsored by the Rev. Jesse Jackson.
The New Markets Initiative is designed to take advantage of attractive
business opportunities in underserved rural and inner city communities that
are not currently being met. The key elements include: tax credits and loan
guarantee incentives, a network of private investment institutions to
funnel credit, equity and technical assistance into businesses in America's
New Markets, and technical assistance and mentoring programs to help
targeted small businesses use new investments to finance growth.
The New Markets Initiative includes:
* New Markets Tax Credits -- To help spur $6 billion in new equity capital
for investment in America's New Markets, President Clinton has proposed a
tax credit worth up to 25 percent for investments in a wide range of
vehicles serving these communities, including community development banks,
venture funds and corporations, the new investment company programs listed
below, and other targeted investment funds.
* New Markets Venture Capital Companies (NMVCs) -- NMVCs will be venture
capital companies that provide a combination of equity venture capital
financing and technical assistance to smaller businesses located in low-
and moderate-income (LMI) areas. SBA is proposing a pilot program to create
between 10 and 20 NMVCs.
LMI areas are census tracts where at least 20 percent of the
population is beneath the poverty level, or where median family income is
less than 80 percent of median family income for the surrounding area. SBA
also intends to include other areas in which economic development is
lagging, including HUBZones, Enterprise Communities, Empowerment Zones and
counties with persistent poverty.
NMVCs will provide government-guaranteed long-term funding,
combined,with technical assistance grants, to private for-profit
community-based venture capital companies that will target their efforts in
these rural and inner city areas. NMVCs must raise at least $5 million in
investment capital, which SBA will match up to $10 million for any single
NMVC. The interest on the government funding will be deferred for the first
five years. NMVCs must also obtain commitments to provide at least $1. 5
million in technical assistance funding over five years. SBA will provide
technical assistance grants amounting to 30 percent of the private capital
amount.
SBA anticipates that the program will involve $100 million in
SBA-backed funding and $30 million in technical assistance grants.
Establishing the program will require enabling legislation.
* LMI Investments and Outreach Workshops -- SBA has organized a series of
six workshops designed to recruit potential SBIC investors and management
teams with experience in investing in small businesses in LMI areas.
Beginning in late March, workshops are scheduled for Chicago, Kansas City,
New York, Atlanta, Dallas and San Francisco.
These workshops will result in the creation of new SBIC licensees,
new interest in rural and inner city investing, and a database of
investment and community development professionals that will be available
to work with SBA on this effort.
SBA also will create a new funding mechanism to provide financial
incentives to encourage SBICs and Specialized SBICs to invest in LMI areas.
The funding will be provided to licensees in amounts that match the level
of their investments in small businesses that: 1) are located in LMI areas,
or 2) hire at least 35 percent of their workforce from among residents of
LMI areas.
* America's Private Investment Companies (APICs) -- APICs, modeled on
the Overseas Private Investment Corporation, will provide equity capital
for the creation or relocation of large-scale businesses in inner cities
and rural areas. It will fund large, investment partnerships formed by
private investors for this purpose. It will be a Department of Housing and
Urban Development (HUD) program administered jointly by HUD and SBA to
combine SBA's venture investment expertise with HUD's expertise in large
scale urban revitalization.
APICs will be organized as conventional, for-profit private venture
capital funds with a minimum private capitalization of $100 million. APICs
will be eligible for twice that amount in government guaranties. APIC
investments will be required to be in low- and moderate-income areas and
require prior government approval for each investment transaction.
HUD and SBA anticipate that the program will involve $1 billion of
government-backed funding. Establishing the program will require enabling
legislation.
* BusinessLINC Initiative -- The BusinessLINC Initiative is a new
partnership between the federal government and America's business community
to encourage large businesses to work with small business owners and
entrepreneurs, especially in America's rural areas and inner cities.
BusinessLINC, which stands for Learning, Information, Networking,
and Collaboration, is designed to stimulate business-to-business
relationships that will produce one-on-one technical advice and consulting,
classroom and group training, peer group consulting, strategic alliances,
and supplier and marketing development for small businesses.
* New Markets Lending Companies (NMLCs) -- Under this pilot, SBA will
select approximately 10 non-depository lending institutions to make
SBA-guaranteed loans targeted to New Market small businesses. The proposed
NMLC program is a limited term, limited participation pilot that will last
between five and 10 years.
NMLCs will make SBA-guaranteed loans under the 7(a) General Business
Loan Guaranty program, the agency's largest financial assistance program.
Under the 7(a) program, SBA guarantees up to 80 percent of a loan that is
made by a commercial lender to a creditworthy small business that cannot
otherwise secure financing on reasonable terms.
Funding for loan guaranties made under the NMLC initiative will come
from the SBA's appropriation for 7(a) program loans, which is funded at a
level of $10 billion for the current fiscal year.
SOURCE: U.S. Small Business Administration
This post transferred from the cdb-l mailing list