DATE: August 2, 2001
SUBJECT: Small Business Administration; New Markets Venture Capital Program
SOURCE: August 1, 2001, Small Business Administration News Release
AGENCIES: Small Business Administration (SBA)
SYNOPSIS: SBA is extending the deadline for the seven venture capital firms that have conditionally approved for the New Market Venture Capital (NMVC) Program to raise the funds necessary for final approval from September 14, 2001, to January 9, 2002.
EDITOR'S NOTE: The regulations for the NMVC program are in Title 13 of the Code of Federal Regulations (CFR), Part 108, New Markets Venture Capital ("NMVC") Program.
For more on the NMVC Program, see the May 23, 2001, FEDERAL CONTRACTS DISPATCH "Small Business Administration; New Markets Venture Capital Program."
DATES: The deadline for the seven venture firms to raise funds is extended to January 9, 2002.
FOR FURTHER INFORMATION CONTACT: SBA's Investment Division, 202-205-6510.
SUPPLEMENTAL INFORMATION: On December 21, 2000, Congress enacted the NMVC program as part of the Consolidated Appropriations Act of 2001 (Public Law 106-554). The NMVC is intended to help create an economic infrastructure in underserved areas by encouraging business growth through program-supported investment. The NMVC program will encourage such growth by supporting new equity capital investments by companies accepted into the NMVC program. The NMVC program is authorized for six years, from Fiscal Year 2001 through Fiscal Year 2006, and provides $150 million in debenture funding and $30 million in technical assistance grant funds.
SBA published an interim final rule implementing the NMVC program on January 22, 2001, with an effective date of February 21, 2001, and comments on the interim final rule were due on March 23, 2001. Also on January 22, 2001, SBA published a notice of funds availability (NOFA) for the NMVC program with an April 19, 2001, deadline for application. SBA expected to designate 15 to 20 NMVC companies and to award up to $30 million in appropriated funds under the NOFA.
However, on January 20, 2000, the day President Bush was inaugurated, the Executive Office of the President issued a memorandum to the heads of all federal agencies directing them to withdraw all rules and regulations that had been sent to the Federal Register but not published, and to postpone for 60 days the effective date of all rules and regulations that have been published in the Federal Register but have not taken effect. Therefore, to comply with President Bush's direction, SBA delayed the effective date of the interim final rule from February 21, 2001, to April 23, 2001, then further delayed the effective date until June 22, 2001. On May 23, 2001, SBA withdrew the interim final rule and replaced it with a substitute 13 CFR Part 108. The new 13 CFR Part 108 was based in large part on the interim final rule version of 13 CFR Part 108 but had many technical and substantive changes. The deadline for application under the NMVC NOFA was subsequently extended to September 14, 2001.
On July 24, 2001, President Bush signed Public Law 107-20 which included language making NMVC funds available until expended. The extension was required because the NMVC program was enacted on December 21, 2000, and the implementing regulations were delayed.
"With the four month extension, the NMVC companies should have ample time to raise the required capital, between $5 million and $12.5 million in private capital and between $1.5 million and $3.75 million in matching resources to be used for operational assistance to the smaller businesses in which they invest," SBA states in its news release announcing the extension.
The criteria for acceptance as a NMVC company require that they be newly-formed for-profit investment funds with private management. At least 80% of the total dollars invested by the NMVC companies must be in small businesses in low-income areas in their targeted states. Also, at least 80% of the businesses in which the NMVC company makes investments must have their principal offices in a low-income area.
In addition, SBA announces the first seven new firms it has selected for the NMVC program and the states they will target for their investments:
In its news release, SBA goes on to state, "The extended availability of funds will also permit a second round of applications from additional individuals and groups interested in joining this unique venture capital initiative. The SBA estimates that a second round would be opened in late Spring, 2002, at the earliest."
FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.
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