WASHINGTON – Senator John Kerry (D-Mass.), top Democrat on the Committee on Small Business and Entrepreneurship, is promoting greater investments in low-income communities. Today Kerry introduced legislation to resuscitate the New Markets Venture Capital (NMVC) program that he created in 2000. The bill brings in necessary capital for businesses, including small manufacturers and firms owned by minorities and women, that may otherwise struggle to find investors based on the location’s demographics.
“When companies invest in low-income and rural areas, they’re sending a message that these communities can grow and thrive. Making these investments can jump-start job creation, foster entrepreneurship, and revitalize our communities that need it most,” said Kerry. “Unfortunately, the Bush Administration has starved this program for nearly six years, leaving these communities behind instead of working to lift people out of poverty.”
The Securing Equity for the Economic Development of Low-Income Areas (SEED) Act will reauthorize the program for three years, since it is set to expire this year and improve it by creating an Office of New Markets Venture Capital. This program is particularly critical to helping minority and women entrepreneurs gain access to venture capital to grow their businesses.
In 2004, community development financial institutions invested $3.5 billion to create more than 28,300 jobs and help more than 6,800 businesses in low-income communities, according to the Community Development Venture Capital Alliance. Their clients were 53 percent women, 58 percent minorities, and 70 percent low-income.
Kerry’s legislation specifically:
- Establishes the Office of New Markets Venture Capital to be headed by a director appointed by the SBA Administrator;
- Incorporates small manufacturers into the mission of the NMVC program;
- Encourages the SBA to establish at least one company that is located in each of the SBA’s 10 geographic regions;
- Provides clarification for NMVC companies to have two full years to raise private matching funds;
- Drops the matching requirement for operational assistance grants, adopting the grant structure provided in the Rural Business Investment Program;
- Requires the SBA to develop a streamlined process for companies to be approved in the program; and
- Calls for the SBA to assess the overall program’s success within one year and study the availability of equity capital in low-income urban and rural areas.
To read Kerry's full statement, click here.