Thursday, October 22, 2009

Anyone opposed to increased access to capital?

Landrieu to Introduce Bill Increasing Loan Limits for Small Businesses.
(Thanks to Fred Patterson, the SBIR Coach, for spotting this):

Included in the bill is language to remove the "Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) contracting exemption that was included in the Recovery Act." If you haven't been following along, someone (mysteriously, multiple hearings have been unable to unmask the culprit, as noone is taking credit) inserted language into H.R. 1, the American Recovery and Reinvestment Act, that effectively exempted $229 million of stimulus funds from being spent on small high-tech businesses for R&D under the SBIR/STTR funding mechansims (known as R41/R42 and R43/R44).

This action was arguably illegal, certainly unethical, as the language was inserted while the bill was under the authority of a conference committee, after having been passed by both Houses of Congress without it. As per the rules of Congress, the purview of a conference committee is to reconcile differences between House & Senate versions of a bill, not to introduce any substantive changes that were not a part of either bill.

If Landrieu's new bill passes, those $229 million* will be restored as per statutory requirements under the Small Business Act and numerous SBIR/STTR reauthorizations to set aside a small percentage (currently 2.8% total for both programs) of certain federal agencies' extramural R&D budget to provide seed (Phase I) and transition-to-commercialization (Phase II) funding for small business-led efforts. American recovery & reinvestment: it's even in the title of the act.

Access to capital means much more than providing loans to small businesses. And it means more than letting Venture Capital interest and investment serve as a proxy for a business' worth. There is a reason that SBIR/STTR have been so successful in stimulating the creation of new technologies, and getting those technologies to the end users where they will have the greatest effect, more effective than Venture Capital.

I've said it before, but it warrants repeating: it's all about seed funding, and continued support to get those sprouts to market!

* UPDATE * Actually the language of Landrieu's bill, S. 1832, would only restore $150m of the stimulus funds to SBIR/STTR. Apparently, according to Fred Patterson, this may have been a compromise NIH was willing to agree to. Considering Jo Anne Goodnight's current detail, away from her desk as NIH Coordinator for SBIR/STTR, to the Senate's Committee on Small Business & Entrepreneurship, it's not too far fetched that there is close (albeit tight-lipped) coordination between the activities of the SBE and NIH administrative personnel.

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