Small Business Investment Company (SBIC)

An SBIC is a private lending organization certified by the SBA to provide loans to small businesses. These entities can borrow from the federal government at set interest rates to re-lend to small businesses. To qualify, they must meet SBA requirements. The SBA acts as a guarantor for loans, reducing risk and allowing SBICs to offer lower interest rates. SBICs typically lend between $100,000 and $250,000, adjusting for inflation and business needs.

Explain how SBICs can profit from the loans they provide.

What is the typical loan amount that SBICs lend, and how does this change over time?