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14 Bus. Law. 582 (1958-1959)
Small Business Administration Actitives under the Small Business Investment Act

handle is hein.journals/busl14 and id is 584 raw text is: The Business Lawyer

The activities of the Investment Division of the Small Business
Administration, created by the Small Business Investment Act last
summer, are twofold:
1. To make loans to State and local development companies, and
2. To license, regulate and give financial assistance to privately
organized, privately financed companies, called small business
investment companies.
Under Section 501 of Title V of the Investment Act, the Small
Business Administration is authorized to make loans to a State devel-
opment company, up to the total amount of its outstanding borrowings
from all other sources. These loans must be used by the development
company to stimulate and supplement the flow of private equity
capital and long-term loan funds to small business concerns.
Although officials of our Agency have conferred on several occa-
sions with representatives of State development companies, to explore
the possibility of loans to them, we have not as yet received any loan
applications from the State companies.
Under Section 502 of Title V, we may make loans of up to $250,000
to local development companies-and to the State companies as well-
to help them assist specific small business concerns. Local development
companies are showing considerable interest in the opportunities pre-
sented by this new avenue of financing.
A Small Business Administration loan may be obtained by a local
development company to help a small business purchase needed
equipment, build additional facilities, and even to acquire property
deemed necessary to carry out the purposes of small business
While the law limits to $250,000 the amount we may lend a develop-
ment company to assist a specific small business, it should be remem-
bered that the number of loans to a development company is not
necessarily limited. Thus, for example, four loans for as many small
businesses may be negotiated if helping the small firms get established
in the community will carry out the aims and purposes of the Act.
*Deputy Administrator of the Small Business Administration, Investment
Division. A speech, delivered by John Floyd, before the Section of Corporation,
Banking and Business Law, Upper Ohio Valley Regional Meeting, American
Bar Association, March 13, 1959, Pittsburgh.

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