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B-197439 1 (1980-09-18)

handle is hein.gao/gaobabjwa0001 and id is 1 raw text is: SEP 18 198 . The Honorable Charles B. Range1 House of Representatives Dear Mr. Rangel: This is in reply to your. letter of August 21, 198-0, concerning the Small Business Administration's (SBA's) actions in discontinuing itsa practice of leveraging' cer- tain Government investments in minority enterprise small business investment companies (MESBICs). Presumably these actions stem from a recent-Comptoller General decision. On July 29, 1990, we issued our decision B-197439 (copy enclosed), holding that, absent a specific statutory pro- vision to the contrary, SBA lacks authority to leverage against Federal funds invested in MESAICs, since the statute generally applicable to leveraging investments in MESBICs limits the leverage to 'private funds. that is, to invest- ments made by private, non-federal sources. That decision, while binding on-SBA, dealt only with the legal question before us: the basic leveraging authority afforded SBA under. the Small Business Act. we did not address, implementation of our decision because, initially at least, that is a matter for the agency to determine, and because we had no precise information about leveraging commitments to individual XESBICs that would ,permit us to consider, among other matters, how to mitigate possible inequitable consequences. -We are continuing to maintain .informal contact with .SA attorneys who are working with our decision. Based on those • contacts, .we understand that StA is concerned with approxi- mately 14 MESBICs; that Federal investments therein are being categorized, as are any existing SSA leveraging commtments; and that. SBA plans to provide us with. this information and to ask our views on how to treat-existing leveraging commit- ments. We will, of course, be pleased to assist SEA in any .way we can.

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