The specialized small business investment companies are established to provide financial assistance to the small businesses that are run by economically or socially backward individuals. These organizations provide a wide range of loan products to these businesses and also stimulate their growth.
The small businesses in the United States of America used to receive investments from individual sources till 1958. There was no organization to provide financial assistance to the small business sector.
In 1958, the Small Business Investment Act was passed. This act provided the base to establish SBICs and SSBISs.
The SSBICs or specialized small business investment companies were created with the sole purpose of providing financial services to all those businesses that were owned by socially backward people or all those who were not in the best economical conditions. These companies are held by private owners and are supported by the federal government. The US Small Business Administration provides the necessary license to the SSBICs to provide financial services.
At the same time, the business policies and investment decisions of their clients are taken by the SSBIC owners.
On the other hand these organizations are eligible to apply for long term loans from the federal government. The SSBICs design their loan products according to the size and necessity of the particular small business client they are catering to. These organizations may offer equity financing or provide financial loans to the small businesses. The business owners should always look for the SSBIC that provides assistance according to their customized needs. The SSBIC loans are available to almost every type of small industry but every SSBIC does not provide all these assistances. Basically the organizations finance those businesses in which they also have some kind of expertise.
The small businesses that receive SSBIC financial assistance are also considered for loan products from other banks. Apart from this, the SSBIC management as well as the directors are well known in the industry and they provide full support to the small businesses. The SSBICs also provide training to the small business employees to develop their skills and this helps in the growth of these businesses too.