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Snowe Job
The Senate reconsiders a bid to draw capital to small companies.
Sen. Olympia Snowe is hoping the
second time's the charm. The chairwoman
of the Senate Committee on
Small Business has reintroduced a bill
she believes will increase loans from
small business investment companies
(SBICs) to small companies. SBICs
are SBA-regulated venture capital
groups that invest in original debt or
equities securities. But because those
SBICs that invest in debt (debenture
SBICs) create taxable income, many
potential tax-exempt investors have
stayed away. The bill—called the
Small Business Investment Company
Capital Access Act of 2003—would
change all that, allowing tax-exempt
organizations, pension funds, and
university endowment funds to invest
in SBICs tax-free and without accompanying
accounting headaches.
The National Association of Small
Business Investment Companies
says the bill could attract $200 million
a year in new funds to debenture
SBICs, which would make $250,000
to $1.5 million individual loans to
small companies. This time around,
passage looks promising. Snowe's
co-sponsor on the bill is Sen. Chuck
Grassley, who will try to push the bill
through the Senate Finance
Committee, which he chairs.
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