On June 28, 2016, Morrison & Foerster LLP, along with the Milken Institute, the U.S. Small Business Administration (SBA) and the Small Business Investment Alliance (SBIA), will be hosting the 2016 BDCs & Small Business Capital Formation Forum in Washington, DC. The forum will focus on best practices and key issues for business development companies ("BDCs") and small business investment companies ("SBICs") and will include a CEO/investor roundtable discussion, a discussion of the role of BDCs and SBICs, a discussion of BDC regulatory items, and a discussion of small business capital formation.
BDCs were created in 1980 in order to enhance capital formation for small- and medium-sized companies. BDCs also often establish wholly-owned subsidiaries which are licensed by the SBA to operate as SBICs and issue SBA-guaranteed debentures. Since the early 1980s, the number of BDCs has grown significantly. This growth was accelerated following the financial crisis of 2008, when BDCs were able to address the needs of small- and medium-sized businesses that did not have access to capital. Currently, there are over 80 BDCs and BDC loan balances have more than tripled since 2008. As of March 31, 2016, BDC aggregate loan commitments in the United States were over $82 billion and the top sectors included the following: (1) services ($24 billion), (2) manufacturing ($17 billion), (3) finance, insurance and real estate ($13 billion), (4) mining ($6 billion), and (5) transport, communication and electric/gas ($6 billion). (Source: Testimony by Michael J. Arougheti, Co-Chairman of the Board of Directors, Ares Capital Corporation, on behalf of the SBIA, at Hearing on "Improving Communities and Business Access to Capital and Economic Development," Senate Banking Committee, Subcommittee on Securities, Insurance and Investment, May 19, 2016)
The program agenda for the forum is available here.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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