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B-197439 1 (1980-07-29)

handle is hein.gao/gaobadilk0001 and id is 1 raw text is: THE CONPTROLLER GENERAL DECISI ON OF THE UNITED STATES WASHINGTON. D.C. 20548 FILE: B MATTER DIGEST: -197439D E: July 29, 1980 OF. Authority of SBA to leverage against Minority Business Resource Center investments in mi- norit enterprise small business companies The mall Business Administration (SBA) does oni y a--~ge against (partially match) funds invested by the Federal Railroad Administration in minority enterprise small business investment companies (MESBICs) because, generally,SBA may only leverage against investments made by private sources in MESBICs. During a review of a Federal Railroad Administration program by the General Acc unting Office (see GAO Report CED-80-55, Feb. 1, 1980), question arose concerning the Small Business Administration's (SBA's) practice of partially matching investments of other Federal agencies in minority enterprise small business investment companies (MESBICs). SBA's matching is accomplished through a pro- cess known as leveraging. Leveraging means investing in MESBICs (or other small business investment companies) through the purchase or guarantee of debentures, or through the purchase of preferred securities.q 13 C.F.R. §107.3. SBA sometimes bases its investments in MESBICs on the amount of Federal funds invested by other agencies-- i.e., it leverages against (partially matches) investments made by other Federal agencies. One of the agencies that invests Federal funds in MESBICs is the Minority Business Resource Center, established within the Federal Railroad Administration pursuant to 49 U.S.C. S1657a. The Minority Business Resource Center is authorized to invest money (called venture capital) to enable minority businessmen to take advantage of business opportunities related to maintenance and improvement of railroads. 49 U.S.C. §1657a(c)(6). The Center has been investing in MESBICs based on this authority, and SBA has agreed to leverage against (partially match) these investments. FeD -4L 6&eJCe 6A) erUA i /1~) -7e~ .L llesrmle jrs

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