Entrepreneurs in the clean tech and renewable energy sectors may want to look to the U.S. Small Business Administration for help financing their operations. The agency announced this week it has launched a nationwide effort to commit $1 billion in loan guarantees to clean energy startups.
The arrangement calls upon SBA to partner with venture investors, particularly those with stakes in small businesses that are either located in economically disadvantaged areas or operate in the clean energy or education markets. Administration officials will collaborate with private institutions to identify potential investments and help expedite the licensing process for fund managers qualified to organize as a Small Business Investment Company (SBIC).
The SBIC label implies a degree of stability that helps attract banks to certain funds. This is crucial in light of greater caution among lenders in recent years.
SJF Ventures, a North Carolina-based venture capital firm, will manage the first SBIC selected by the SBA, which will commit up to $75 million of investment capital over the next five years.
“We are specifically interested in funds that are focused on investing not only in financial return but also in social return,” Sean Greene, the SBA’s associate administrator for investment, told the Washington Post.
Greene acknowledged that the scourge of global economic uncertainty has made some lenders averse to risk.
“My crystal ball isn’t perfect as far as who’s going to hit next and when,” Greene told the source. “The bigger question is the private capital fundraising.”
Thomson Reuters and PayNet recently reported an uptick in total small business lending in January, marking the 18th consecutive month of double-digit growth.