and economically disadvantaged harnesses the ture capitalistic spirit that makes this country go. We are proud of the fact that the private and public sectors have gotten together in partnership to assist a segment of our population that has been denied certain economic opportunities." I agree 100% with Mr. Engelson's statement and our Association continues to support wholeheartedly legislation to buttress the MESBIC structure. Incidentally, we should also say that all of the provisions of S.1815 will apply to all SBICS, MESBICs as well as regular licensees, so the enactment of S.1815 is equally important to the Section 301 (d) segment of our industry. CONCLUSION I have devoted the bulk of this statement to an examiniation of the SBIC and venture capital industries in 1977, and to an explanation of the reasons why NASBIC supports the immediate enactment of all of S.1815. I am afraid that this approach is seriously deficient in giving the Committee the real reasons behind our stand. Let me rectify that shortcoming. Without a healthy and vigorous small business community, the American free enterprise system is doomed to failure. Without an environment in which new businesses can be started to replace those which have failed and those which have grown into big businesses, compeititon as a market regulator is dead. Without competition, we shall be forced to require Big Government to regulate the prices and the practices of Big Business, Big Labor, and Big Government. Too many academicians and too many public officials have already deprecated the role of new and small businesses in maintaining the free enterprise system which has been the keystone of our national well-being. They are dead wrong! We are here to testify without qualification that the independent sector of our economy can still perform that essential role if only public policy will not throw up obstacles at every turn in the road. To espouse policies which are "neutral" and treat the Fortune 500 and the local entrepreneur alike reveals mental bankruptcy. To turn over the control of the economy to the professional managers in major corporations and to public regulators in Washington reveals a complete misunderstanding of the lessons of American industry. It is still small business which will provide the jobs for the bulk of U.S. workers; it is still small business which will invent and produce the new products and the new services which will benefit U.S. consumers; it is still small business which will provide the competition which will bring lower prices to the U.S. marketplace. The Small Business Venture Capital Act of 1977 represents the most comprehensive single measure we have ever studied to guarantee the survival and the vitality of independent business. The Senate Small Business Committee has the responsibility for sponsoring and supporting this legislation and making it the capstone of the Nation's Third Century. Do not underestimate the critical significance of your role. REPORT of the SBA TASK FORCE on VENTURE AND EQUITY CAPITAL for SMALL BUSINESS U.S. Small Business Administration January 1977 FOREWORD In July 1976, Mitchell P. Kobelinski, Administrator of the U.S. Small Business Administration (SBA), appointed a Task Force on Venture and Equity Capital for Small Business to assess the financing problems facing the small businessman today and to recommend solutions. The Task Force was made up of 15 people actively involved in managing, financing or advising small businesses. It is grateful for assistance provided by officials from the SBA, the SEC, the Treasury and Labor Departments, and private financial institutions. The Task Force met several times as a full group and more frequently in smaller subcommittees. Early in the discussions it became apparent that the scope of the study had to go beyond just the provision of venture capital to very small businesses, because of the interrelated nature of all forms of capital required by business. The Task Force believes the implementation of the study's recommendations can make a vital contribution to America's free enterprise system. If the recommendations included in the Report are favorably acted upon by the Administration and the Congress, it is the opinion of the Task Force that critically needed new venture and equity capital will flow to the small business sector of our economy, which in turn will produce substantial increases in jobs, tax revenues and productivity. CONTENTS SUMMARY OF SPECIFIC RECOMMENDATIONS INTRODUCTION Impediments to Small Business Growth The Life Cycle of Growing Businesses and Its Financing COMPANIES WITHOUT ACCESS TO PUBLIC SECURITIES MARKETS Tax Revisions to Facilitate Internal Financing and Attract Capital SBA Assistance in Long-Term Borrowing Strengthening the Small Business Investment Company COMPANIES SEEKING PUBLIC CAPITAL Making Institutional Funds More Available to Small Business RECOMMENDATIONS FOR FUTURE ACTION TASK FORCE MEMBERS SBA OFFICIALS |