Letter to the Editor

Your recent article in PE Week (8/1/05 issue) entitled “SBIC Venture Program Proposed” contained some statements that were inaccurate.

The SBIC program includes two types of licenses – a Debenture License and a Participating Securities License. The SBA is continuing to accept and process license applications for debenture applicants. The suspension of consideration of new licenses and the proposed new legislation only applies to the participating securities segment of the SBIC program.

As the trade association for the SBIC industry, we are concerned that by failing to differentiate the two segments of the program and to indicate that the SBA has “stopped licensing new SBICs” and has suspended the program will discourage continued and future interest in the SBIC program by qualified potential applicants. While we are hopeful and optimistic that we will be able to foster the adoption of proposed legislation that will lead to a new and improved equity license counterpart to the debenture license to replace the participating securities license, we want to emphasize that NASBIC is working with the SBA to try to assure that the debenture program is actively and strongly supported both in the public and private markets.

We encourage you to please contact the SBA to get accurate statistics and its position relative to the Debenture License segment of the program.
James R. Herndon
Chairman – Board of Governors
National Association of Small Business Investment Companies