WASHINGTON – The president of a Chandler investment company praised a government program that helps secure funds for small businesses, but told a House subcommittee Thursday that there is still room to improve the program.
It could start with something as simple as letting potential investors file documents electronically instead of requiring hard copies for the Small Business Administration’s Small Business Investment Company program, said Steven Brown, president of Trinity Capital Investment.
“One of the major problems for SBIC funds is the inability of the SBA to accept documents electronically,” Brown said, in testimony to the House Small Business Committee’s Subcommittee on Investigations, Oversight and Regulations.
The oversight hearing was called to look at the 55-year-old SBIC program and make sure that it is fulfilling its mandate.
“Since the SBIC program exists to ensure that small businesses don’t falter for lack of opportunity, we must be certain that the application process hasn’t become too burdensome and complicated for compliance,” said Rep. David Schweikert, R-Fountain Hills, in an opening statement. Schweikert is chairman of the subcommittee.
Brown testified that the program “provides the competitive source of capital for growing small businesses,” which helps create jobs. But he also said that the process of applying to qualify his company to invest in the program “took longer than we expected.”
The Small Business Investment Company program is a public-private partnership created by Congress in 1958 to boost the availability of private equity capital available to small businesses, according to documents from the subcommittee.
The program has invested more than $60 billion in over 109,000 domestic small businesses since it started. It uses funds from private firms, like Brown’s, that are licensed by SBA to invest capital backed by a federal guarantee.
But as it has grown in size, participating funds such as Brown’s have seen problems during the application process.
Brown, testifying on behalf of the Small Business Investor Alliance, called for “a meaningful review and improvement in both the technological tools and the policies” affecting the program, including greater use of digital tools. That could speed the process and head off delays or loss of paper copies of critical documents, he said.
SBA Acting Associate Administrator Pravina Raghavan said progress has been made, but that tight budgets have made the task harder.
“We have been under sequestration and also continuing (budget) resolution, which has made it a bit difficult to invest in technology,” Raghavan said.
She said SBA is adopting a new system that will let annual financial reports be filed online.
Brown applauded those efforts, but also called for more transparency and efficiency in the licensing process. He said it currently takes too long, for example, from the time a company like his files a management assessment questionnaire to the time it is licensed by SBA.
The problems, however, did not affect Brown’s support of the program.
“I believe it is a very well-run program and we are proud to be a part of it,” he said during a break in the hearing.
“It ultimately results in economic growth. It results in jobs being created,” Brown said. “It truly provides the competitive source of capital that would not otherwise be there if the program wasn’t in place.”
He said he hopes his company, and the program, can help bring more capital to small businesses in Arizona.
“We hope we can help Arizona grow its economy as a result of being there and being licensed,” Brown said.