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B-149685 1 (1977-02-03)

handle is hein.gao/gaobaddwr0001 and id is 1 raw text is: DRC BIC2N FILE: 3-149685 I MATTER OF: Eligibility of SBICa to participate as lenders in guaranteed loan programs of SBA and YaHA. DIGEST: Small business investment companies (SBICs) are not eligible to participate as guaranteed lenders in either Suall Business Administration's (SBA) or Frcmers Home Administration's FrmHA) loan programs. As stated in 49 Comp. Gen..32. legislative history of Small Business Investment Act demonstrates congressional intent that SBICs operate independently of other Government loan programs. Nothing in ?BIC Act or Consolidated Farm and itural De:elopment Act, which established FmHA's authority to guarantee loans, or legislative historj.of either, supports SBA's position that SBIC's 'hould now be permitted to participate as guaranteed lenders in these loan programs. This decisicn to the Administrator of the Small Business Administra- tion (SBA) is in response to his request for our legal opinion as to the eLigibility of small business investment companies (SBICs) to participate as guaranteed lenders in both SSA's section 7(a) Guaranteed Loan program and the Farmers Home Administration (FmHA) Business and Industrial Loan program. Each if these questions will be considered separately. Section 7(a) of the Small Business Act, as amended, 15 U.S.C. 3 636(a)(1970), Vrovides that SBA may make loans to small businens concerns * * * either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis. Basically, the quention before us in whether or notSBICs established under the authority of the Small businest Investment Act of 1958, as amended, 15 U.S.C. 55 661 et seq., can qualify as other lending institutions under section 7(a) of the Small Business Act, su2ra. SBICs were established for the purposes of providing a source of equ-tty capiral to small business concerns, as well as the makiag of C ' to such concerns, in order to'provide them with the ft..a needed for sound financing, growth, modernization, and expausion. See 15 U.S.C. 55 684(a) and 685(a) (1970 and Supp. V, 1975). Also, section 305(b) of the Small Business Investment Act, as amended, 15 U.S.C. 5 685(b)(1970), provides that loans may be made by SBICs directly or in cooperation with other lenders, incorporated or unincorporated, through agree- ments to participate on an immediate or deferred basis. p. V Alan Selkin GUK THE COMPTROLLER GENERAL .F THE UNED 6TArms WAEHINGTON, D.C. 2054G DATE: fNbruary 3, 1977 C) A- A- - I 43$K: 'I

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