The Small Business Administration (SBA) announced last week that it had conditionally approved seven venture capital firms to participate in the New Markets Venture Capital Program, to invest capital in economically distressed areas in 15 states.
Each of these newly formed venture capital companies will be required to raise between $5 million and $12.5 million in private capital and $1.5 million to $3.75 million in matching resources.
Those Venture Capital Companies receiving preliminary approval include:
- Southwest Development Fund, LLC (Arizona)
- Murex Investments, I, L.P. (New Jersey,
Pennsylvania & Delaware)
- Pennsylvania Rural Opportunities Fund (Pennsylvania)
- CEI Community Ventures Fun, LLC (Main, New Hampshire
- Adena Ventures, L.P. (Ohio, West Virginia, Maryland
- Dingman Center for Entrepreneurship (Maryland &
- The Southern Appalachian Fund, L.P. (Tennessee,
Kentucky, Alabama & Georgia)
"Small Enterprises" which are small businesses with net annual after-tax profits not exceeding $2million for the previous two years and a net worth not exceeding $6 million are eligible to receive funding from this program.
Before you start celebrating, "Small Enterprises" must also be located in a Low-Income Geographic area. To qualify as such an area, it must be located:
* In a census tract or county division where the poverty rate is 20 percent or more, or in metropolitan areas, where half of the households have an income below 60 percent of the area median gross income; or
* In a census tract or county division outside a metropolitan area in which the median household income does not exceed 80 percent of the state wide median household income; or
* IN a HUBZone, an Urban Empowerment Zone, and Urban Enterprise Community, a Rural Empowerment Zone, or a Rural Enterprise Community.
The program has Congresses "ok" for six years, until and including 2006. However, funding has only been made for the first year. Additionally, this program is one of the SBA programs President Bush would like to cut because he says it is too similar (and thus redundant) to the Small business Investment Capital program.
Small business groups and small business congressional committees are opposed to the cancellation of the program, asking that the President give the program a chance to yield results. Only time and the political climate will tell whether or not the program is viable and remains open.