Capital Southwest receives second SBIC license

Capital Southwest (CSWC) announced its wholly owned subsidiary, Capital Southwest SBIC II, has received a license from the U.S. Small Business Administration to operate as a Small Business Investment Company. As an SBIC, SBIC II will be subject to a variety of regulations and oversight by the SBA concerning, among other things, the size and nature of the companies in which it may invest as well as the structure of those investments. The SBIC license will allow SBIC II to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a leverage commitment by the SBA. SBA debentures are loans issued to an SBIC which have interest payable semi-annually and a ten-year maturity. The interest rate is fixed shortly after issuance at a market-driven spread over U.S. Treasury Notes with ten-year maturities. Current SBA regulations permit SBIC II to borrow up to $175M in SBA-guaranteed debentures, bringing Capital Southwest’s aggregate borrowing capacity through the SBIC program to a total of up to $350M of capital.