SBA Description of Technical Assistance:
SBA Technical Assistance Grants. The SBA will also match the funding that the NMVC company has raised for technical assistance (whether in cash or in-kind) with an equivalent grant payable over 5 to 10 years. The grant funds will be available to the NMVC company for providing marketing, management and technical assistance to the enterprises in which it invests.
| SBA Grant | $1,500,000.00 | |
| NMVC companies must raise matching resources to be used to provide operational assistance to their portfolio companies. NMVC companies must raise these resources to match, on a dollar-for-dollar basis, the grant funds that they will receive from SBA. They can be in the form of cash or binding commitments obtained from any source other than SBA, or as in-kind contributions. They must equal at least 30 percent of the total private investment capital that the NMVC companies raise | CASH: 30% x $10,000,000.00 ÷ 2= | $1,500,000.00 |
| INKIND: 30% x $10,000,000.00 ÷ 2= | $1,500,000.00 | |
| TOTAL | $4,500,000.00 | |
SBA Financial Assistance of $7,500,000 (±)
SBA Description of Financial Assistance:
SBA Financial Assistance. SBA will provide financial assistance by guaranteeing debentures issued by the NMVC company. The cash generated from those debentures will approximately equal the company's own capital. The debentures will have a term of up to 10 years and be issued at a discount to eliminate the requirement for any payments of principal or interest during the initial 5 years. SBA will arrange "just-in-time" funding for the debentures under the procedures utilized in the SBIC program. The debentures are expected to be priced at a current market rate for comparable U.S. Government Treasury securities plus a premium of approximately 100 basis points.
Example: An NMVC company with $10 million of contributed capital would be eligible to issue debentures with a face amount of $15 million. If a 7 percent interest rate prevailed when the debentures were issued, the company would receive net proceeds of $10.63 million for the $15 million of debentures. No payments would be required for the first five years. Commencing with the sixth year, the NMVC company would pay interest on the $15 million at a 7 percent rate semi-annually, and the entire $15 million of principal would be due at maturity
Given our plan to raise $10,000,000 in private equity capital, our proposed seed fund would be eligible for $10 million in contributed capital. We intend to ask the SBA for aprroximately $7,500,000, with the exact amount determined by market rates.
New Markets Tax Credits of 4,000,000 (±)
SBA Description of New Markets Tax Credit:
Investor in a New Markets Venture Capital company may be able to take advantage of a New Markets tax credit if the investment meets all of the requirements of the federal tax code. This would provide a credit against the investor''s federal income taxes equal to five percent of the amount invested on the date of the investment and on the next two anniversary dates, and then six percent on each of the following four anniversary dates. The total potential deduction over the six-year period would thus be 39 percent of the amount invested