Capital Southwest Announces Receipt of Second SBIC License
Capital Southwest (Nasdaq: CSWC) announced that its subsidiary, Capital Southwest SBIC II, LP, has received a Small Business Investment Company (SBIC) license from the U.S. Small Business Administration.
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Rhea-AI Summary
Capital Southwest (Nasdaq: CSWC) announced that its subsidiary, Capital Southwest SBIC II, LP, has received a Small Business Investment Company (SBIC) license from the U.S. Small Business Administration. This marks the company's second SBIC license, following its first in April 2021.
The new license enables SBIC II to issue SBA-guaranteed debentures up to $175 million, bringing Capital Southwest's total SBIC program borrowing capacity to $350 million. These debentures feature semi-annual interest payments and ten-year maturity, with interest rates fixed at a spread over ten-year U.S. Treasury Notes.
The company received exemptive relief from the SEC, allowing the exclusion of SBA-guaranteed debentures from senior securities in asset coverage requirements.
Positive
- Secured second SBIC license, doubling potential borrowing capacity
- Additional $175 million in potential SBA-guaranteed debentures
- SEC exemptive relief obtained for favorable asset coverage treatment
- Access to favorable government-backed financing terms
Negative
- Subject to SBA regulations and oversight limiting investment flexibility
- Investment restrictions on size and nature of portfolio companies
Details
News Market Reaction – CSWC
The recorded move for CSWC in the trading session of this news was +0.62%.
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DALLAS, April 21, 2025 (GLOBE NEWSWIRE) -- Capital Southwest Corporation (“Capital Southwest”) (Nasdaq: CSWC), an internally managed business development company focused on providing flexible financing solutions to support the acquisition and growth of middle market businesses, today announced its wholly owned subsidiary, Capital Southwest SBIC II, LP (“SBIC II”), has received a license from the U.S. Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”).
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
The SBA program has played a pivotal role within Capital Southwest’s lower middle market investment strategy since receiving its first SBIC license in April 2021. Capital Southwest received exemptive relief from the Securities and Exchange Commission that allows for the exclusion of SBA-guaranteed debentures from the definition of senior securities in the asset coverage requirement applicable to the Company.
About Capital Southwest
Capital Southwest Corporation (Nasdaq: CSWC) is a Dallas, Texas-based, internally managed business development company with approximately
Investor Relations Contact:
Michael S. Sarner, President and Chief Executive Officer
214-884-3829
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