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![handle is hein.gao/gaobadjbt0001 and id is 1 raw text is:
THE COMPTROLLER GENERAL
DECIISION O F THE UNITED STATES
W ASHINGTON, 0..C. 20548
FILE: B-197439 DATE: January 30, 1981
MATTER OF:Authority of SBA to leverage Block Grant funds
invested in minority enterprise small business
investment companies.
DIGEST:
Section 105(a)(15) of the Housing and Community
Development Act of 1974, as amended, 42 U.S.C.
§5305(a)(15), authorizes SBA to leverage
(match) Community Development Discretionary
(Block) Grant funds invested in minority enter-
prise small business investment companies.
Recently, the Small Business Administration (SBA) turned
down an application from.Square Deal Venture Capital Corporation,
a minority enterprise small business investment company (MESBIC)
for leveraging (matchina) funds under the Small Business Invest-
ment Act, citing our decision B-197439, July 29, 1920, as the
reason. SBA explained that the July 29 decision prohibited it
from leveraging Federal funds invested in small business investmen
companies. Since Square Deal's application was based on Federal
investments (from Community Development Discretionary (Block)
Grant funds under Title I of the Housing and Community Development
Act of 1974, as amended), SBA said it. had no alternative but to
return the application. Square Deal has asked us whether our
earlier decision applies to its situation. In addition, we have
had informal discussions with officials of SBA and the Office of
Management and Budget concerning the applicability of our July 29
decision to various MESBICs that have different sources of Federal
funding. Therefore, we are issuing this decision to assist SBA in
interpreting our earlier decision.
Our decision of July 29, 1980, held that SBA did not have
authorit, to leverace funds invested in 2ILSBICs by the Minoritv
Business Resource Center of the Department of Transportation
because section 303(c)(2)(iii) of the Small Business Investment
Act, 15 U.S.C. !i683(c) (2)(iii), authorizes SBA to leverage only
'.private money. Since the Minority Business Resource Center
uses Federal money, we held that its investments in MESBICs
could not be leveraged. We also said, however, that where a
statute such as section 742(a)(1) cf the Coiar.unity Services Act,
42 U.S.C. 5298Sa(a)(l), authorizes it, Federal money may be
leveraaed. We think section 105(a) (15) of the Housing and
Community Development Act of 1974, as amended, 42 U.S.C. §5305
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