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Understanding the Specialized Small Business Investment Company and Its Role in Economic Growth
Definition & Meaning
A specialized small business investment company (SSBIC) is a type of small business investment company that focuses on investing in small businesses that help promote a balanced national economy. These companies specifically aim to support individuals who face social or economic disadvantages in participating in the free enterprise system. To qualify as an SSBIC, the company must be organized under state business or nonprofit corporation laws or formed as a limited partnership. Additionally, it must have been licensed under specific regulations prior to September 30, 1996.
Table of content
Legal Use & context
The term specialized small business investment company is primarily used in the context of federal regulations governing investment in small businesses. SSBICs play a crucial role in the Small Business Investment Program, which aims to foster economic growth and job creation. Legal professionals may encounter this term when dealing with investment, business formation, or economic development cases. Users can utilize templates from US Legal Forms to create necessary documents related to SSBICs or seek professional legal assistance for more complex matters.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A specialized small business investment company invests in a local startup owned by a minority entrepreneur, helping to create jobs in an underserved community.
Example 2: An SSBIC provides funding to a small business that offers services to individuals with disabilities, thus promoting inclusivity and economic participation (hypothetical example).
Relevant laws & statutes
The primary statute governing specialized small business investment companies is found in 15 USCS § 689, which outlines the definition and operational guidelines for SSBICs. This statute is part of the broader Small Business Investment Program.
Comparison with related terms
Term
Definition
Key Differences
Small Business Investment Company (SBIC)
A company that provides financing to small businesses.
SSBICs focus on businesses owned by disadvantaged individuals, while SBICs may not have this specific focus.
Venture Capital Firm
A firm that invests in startups and small businesses with high growth potential.
Venture capital firms typically seek high returns and may invest in a broader range of businesses compared to SSBICs.
Common misunderstandings
What to do if this term applies to you
If you believe that a specialized small business investment company applies to your situation, consider the following steps:
Research SSBICs in your area to find potential funding sources.
Utilize US Legal Forms to access templates for business formation or investment agreements.
If your situation is complex, consult with a legal professional who specializes in small business law.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
Varies by company; may include management fees and performance fees.
Jurisdiction
Federal and state regulations apply.
Possible Penalties
Non-compliance with licensing requirements may lead to loss of license and legal penalties.
Key takeaways
Frequently asked questions
The main purpose of an SSBIC is to invest in small businesses owned by individuals facing social or economic disadvantages, thereby promoting economic balance.
You can search online for SSBICs in your area or consult local business development organizations for recommendations.
Yes, SSBICs must be organized under state laws, focus on disadvantaged businesses, and have been licensed under specific regulations prior to September 30, 1996.