NVCA Applauds SBA’s Efforts to Reduce Barriers for Innovative Small Businesses and Calls for Further Expansion

WASHINGTON, DC – The National Venture Capital Association (NVCA) praises the Small Business Administration’s (SBA) move to update affiliation rules for the 7(a) loan program to better define small business in the American economy.

“We applaud SBA Administrator Isabella Guzman for modernizing the definition of small business in the SBA’s 7(a) loan program, which for too long created barriers for innovative small businesses that have been financed with equity capital,” said NVCA President and CEO Bobby Franklin. “This rulemaking will increase participation and access to technology-related economic activity in communities across the country.”

While commending Administrator Guzman’s bold leadership, NVCA also urged the SBA to expand the new affiliation rule changes to other SBA programs, including small business procurement and the Small Business Innovation Research (SBIR) program.

“Broadening the affiliation rule modernization further will enhance the positive impact of major technology programs across government agencies and accelerate the goals of major technology packages,” Franklin added.

This is particularly important for the critical technology areas outlined by the Department of Defense’s Office of Strategic Capital and the key technology focus areas as designated by the CHIPS and Science and the Inflation Reduction Act.

“We call on the SBA to act boldly and swiftly to ensure that all innovative small businesses have access to the resources and support they need to drive economic growth and job creation for the benefit of all Americans.”

Background:

• Small businesses financed by equity investment have been at the forefront of innovation in frontier technologies, leading the way in creating new industries and transforming the modern economy. Examples include semiconductors, biotechnology, personal computing, the internet, and mRNA.
• However, existing Small Business Administration (SBA) affiliation rules can act as a barrier for these small businesses by triggering even minority investments and prohibiting eligibility from certain federal programs.
• These affiliation rules can drive an unintentional wedge between some of America’s most innovative small businesses and various government agencies that need their products and services to accomplish their goal.
• Despite their potential to contribute to economic growth and job creation, many innovative small businesses are excluded from federal programs due to these affiliation rules, limiting their ability to access vital resources and support.
• In recognition of these challenges, the SBA modernized affiliation rules for the 7(a) loan program to more accurately define small businesses in the American economy.
• While this is a step in the right direction, there is still more work to be done to ensure that innovative small businesses are not excluded from federal programs due to outdated affiliation rules.
• By reducing barriers for these small businesses and expanding opportunities for equity investment, the SBA is helping to drive innovation, create jobs, and foster a more inclusive and dynamic economy.

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The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the U.S. venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about NVCA, please visit www.nvca.org.