What is the status of the Participating Securities Program?
The Participating Securities program, which was established in 1994 to better match how SBICs were funded with the equity needs of entrepreneurs, ceased issuing new leverage commitments on October 1, 2004. Based on projected losses in excess of $2.7 billion, it was decided that while the Participating Securities program has provided benefits to small businesses in the past, the structure of the current program and related cost to the taxpayers cannot be supported. The Debenture Securities program, which dates back to the inception of the SBIC program in 1958, continues to issue new leverage commitments and is most appropriate for investment management funds focused on providing later stage, expansion capital to cash-flow-positive or nearly cash-flow-positive companies.
