MicroCap Small Business Investing Act of 2023

MicroCap Small Business Investing Act of 2023

This bill authorizes the Small Business Administration (SBA) to issue up to ten Small Business Investment Company (SBIC) licenses each year to certain applicants. An SBIC is a privately owned company, licensed and regulated by the SBA, which invests in small businesses through debt and equity.

A license issued under the bill must be awarded to an applicant

• that would otherwise be issued a license except that the management of the applicant does not satisfy certain qualification requirements such as investment experience;
• where the fund managers have a documented record of successful business experience, a record of business management success, or knowledge in the particular industry or business in which the investment strategy is being pursued; and
• that will make at least 25% of its investments in specified areas and businesses (e.g., low-income communities, businesses owned or controlled by individuals in underserved communities, and rural areas).

The SBA must prioritize applicants that are located in states with fewer licenses and establish a streamlined application process for those licenses.

Bill 118 HR 3717, also known as the MicroCap Small Business Investing Act of 2023, aims to support small businesses by making it easier for them to access capital through the public markets. The bill specifically focuses on microcap companies, which are small companies with market capitalizations of less than $300 million.

One key provision of the bill is the creation of a new regulatory framework for microcap companies, which would streamline the process for these companies to go public and raise capital through initial public offerings (IPOs). This framework would include simplified disclosure requirements and reduced regulatory burdens, making it easier and less costly for microcap companies to access public markets.

Additionally, the bill includes provisions to encourage more institutional investment in microcap companies, such as by providing tax incentives for investors who hold shares in these companies for a certain period of time. This is intended to attract more long-term investors to the microcap market, which can help stabilize and grow these small businesses. Overall, the MicroCap Small Business Investing Act of 2023 is aimed at promoting economic growth and job creation by supporting small businesses and encouraging investment in the microcap market. The bill has bipartisan support and is currently being considered by Congress for passage into law.