The record
On 21 August 1958 the president signed the Small Business Investment Act, Public Law 85-699. The enacted text created the Small Business Investment Company license: a privately organized company that met a paid-in capital and surplus minimum of 300,000 dollars could apply to the Small Business Administration for a license to operate under the Act. To help new companies reach that threshold, the Administration was authorized to purchase up to 150,000 dollars of a company's own subordinated debentures, counted as part of its capital and surplus. Once licensed, a company could borrow further from the Administration through purchased obligations, with the amount outstanding to any one company capped at 50 percent of that company's paid-in capital and surplus, and a single-enterprise investment limited to 20 percent of a company's combined capital and surplus. National banks and other member banks were made eligible to buy shares in these companies, up to 1 percent of a bank's own capital and surplus.
What the documents establish
The 1958 text itself, not a later summary of the program, is the source for these original mechanics: a capital minimum, a debenture-purchase incentive to reach it, and specific leverage and concentration ceilings expressed as percentages of an individual company's own capital base. The Small Business Administration's current program page, as retrieved on 16 September 2026, describes today's licensing process, a pre-screening form, a management assessment questionnaire, then a final license application, and today's leverage instruments, standard and accrual debentures issued at up to roughly twice a company's private capital, with government guarantees. Those are the agency's own current terms; the page does not restate the 1958 dollar figures, and this entry does not treat the modern debenture multiple as the number the 1958 Act itself set.
The operating read
This is an editorial reading beyond the statute. A founder approached by a licensed fund of this kind is dealing with a fund that combines its own private capital with government-guaranteed borrowing under SBA oversight, a structure meant from 1958 onward to extend the reach of private capital into small businesses rather than to substitute for it. The specific leverage ratio and capital minimums such a fund operates under today are set by current SBA rule, not by the 1958 figures above; a diligence question about how much of a fund's capital is government-guaranteed leverage, and what conditions attach to it, is a question about the current rule, which this entry does not attempt to state in full.
What to check before you decide
Before treating this kind of program label as a description of a fund's economics, check the specifics rather than the label.
- Is the fund currently licensed under the program, and under which debenture structure, standard or accrual?
- What share of the fund's investable capital is private versus government-guaranteed leverage, and does that change its return expectations or reporting obligations?
- Does the fund's investment in your company trigger any size-standard or use-of-proceeds condition specific to the program?
This is an editorial checklist; a fund's own license documents and its counsel are the source for its current, not 1958, operating terms.
Sources & their limits
These are the existing record’s sources and retrieval dates, preserved from the archive. Source statements, historical events and editorial interpretation are distinct.
- Public Law 85-699, Small Business Investment Act of 1958
Enacted text setting the original 300,000 dollar minimum paid-in capital, SBA debenture purchase up to 150,000 dollars, and the 50 percent lending limit per company, approved 21 August 1958.
- Small Business Investment Companies (U.S. Small Business Administration)
SBA's current description of licensing stages and the modern debenture leverage structure, as retrieved 16 September 2026, for comparison with the 1958 original.