Title 15, Commerce and TradeRelease 119-110

§689c Selection of New Markets Venture Capital Companies

Title 15 › CHAPTER 14B — SMALL BUSINESS INVESTMENT PROGRAM › SUBCHAPTER III — INVESTMENT DIVISION PROGRAMS › Part B — New Markets Venture Capital Program › § 689c

Last updated Sep 23, 2026|Official source

Summary

Sets rules for which companies can apply to be New Markets Venture Capital companies, what must be in their applications, how the Administrator picks them, and what they must do to get final approval. To apply, a company must be newly formed and for-profit (either on its own or as a new for-profit subsidiary), have managers with community development or venture capital experience, and aim mainly to boost the economy of low-income areas. Applications must include a business plan for investments, information on management’s qualifications and reputation, a plan to work with community groups and meet local capital needs, a proposal on using grant money for operational help (including use of licensed professionals when needed), an estimate of cash versus in-kind contributions, criteria for measuring success, details about any parent or partner firms, and any other information the Administrator asks for. The Administrator will give conditional approval to selected applicants based on the strength of the plan and team, the need and focus in the target areas, likely impact, ability to meet final conditions, and other factors, while encouraging national coverage. Conditionally approved companies get up to 2 years to raise at least $5,000,000 in private capital (no federal agencies), and to secure non-Administrator resources for operational assistance equal to at least 30% of that capital through multi-year commitments, an annuity, or a mix (payments spread over up to 10 years). In special cases the Administrator may accept a credible plan with at least 20% firm commitments. No more than 50% of required contributions may be in-kind. Final approval and official designation come only if the company meets these requirements and signs a participation agreement; otherwise the conditional approval is revoked.

Full Legal Text

Title 15, §689c

Commerce and Trade, Source: USLM XML via OLRC

(a)Eligibility

A company shall be eligible to apply to participate, as a New Markets Venture Capital company, in the program established under this part if—

(1)the company is a newly formed for-profit entity or a newly formed for-profit subsidiary of an existing entity;

(2)the company has a management team with experience in community development financing or relevant venture capital financing; and

(3)the company has a primary objective of economic development of low-income geographic areas.

(b)Application

To participate, as a New Markets Venture Capital company, in the program established under this part a company meeting the eligibility requirements set forth in subsection (a) shall submit an application to the Administrator that includes—

(1)a business plan describing how the company intends to make successful developmental venture capital investments in identified low-income geographic areas;

(2)information regarding the community development finance or relevant venture capital qualifications and general reputation of the company’s management;

(3)a description of how the company intends to work with community organizations and to seek to address the unmet capital needs of the communities served;

(4)a proposal describing how the company intends to use the grant funds provided under this part to provide operational assistance to smaller enterprises financed by the company, including information regarding whether the company intends to use licensed professionals, when necessary, on the company’s staff or from an outside entity;

(5)with respect to binding commitments to be made to the company under this part, an estimate of the ratio of cash to in-kind contributions;

(6)a description of the criteria to be used to evaluate whether and to what extent the company meets the objectives of the program established under this part;

(7)information regarding the management and financial strength of any parent firm, affiliated firm, or any other firm essential to the success of the company’s business plan; and

(8)such other information as the Administrator may require.

(c)Conditional approval

(1)In general

From among companies submitting applications under subsection (b), the Administrator shall, in accordance with this subsection, conditionally approval companies to participate in the New Markets Venture Capital Program.

(2)Selection criteria

In selecting companies under paragraph (1), the Administrator shall consider the following:

(A)The likelihood that the company will meet the goal of its business plan.

(B)The experience and background of the company’s management team.

(C)The need for developmental venture capital investments in the geographic areas in which the company intends to invest.

(D)The extent to which the company will concentrate its activities on serving the geographic areas in which it intends to invest.

(E)The likelihood that the company will be able to satisfy the conditions under subsection (d).

(F)The extent to which the activities proposed by the company will expand economic opportunities in the geographic areas in which the company intends to invest.

(G)The strength of the company’s proposal to provide operational assistance under this part as the proposal relates to the ability of the applicant to meet applicable cash requirements and properly utilize in-kind contributions, including the use of resources for the services of licensed professionals, when necessary, whether provided by persons on the company’s staff or by persons outside of the company.

(H)Any other factors deemed appropriate by the Administrator.

(3)Nationwide distribution

The Administrator shall select companies under paragraph (1) in such a way that promotes investment nationwide.

(d)Requirements to be met for final approval

The Administrator shall grant each conditionally approved company a period of time, not to exceed 2 years, to satisfy the following requirements:

(1)Capital requirement

Each conditionally approved company shall raise not less than $5,000,000 of private capital or binding capital commitments from one or more investors (other than agencies or departments of the Federal Government) who met criteria established by the Administrator.

(2)Nonadministration resources for operational assistance

(A)In general

In order to provide operational assistance to smaller enterprises expected to be financed by the company, each conditionally approved company—

(i)shall have binding commitments (for contribution in cash or in kind)—

(I)from any sources other than the Small Business Administration that meet criteria established by the Administrator;

(II)payable or available over a multiyear period acceptable to the Administrator (not to exceed 10 years); and

(III)in an amount not less than 30 percent of the total amount of capital and commitments raised under paragraph (1);

(ii)shall have purchased an annuity—

(I)from an insurance company acceptable to the Administrator;

(II)using funds (other than the funds raised under paragraph (1)), from any source other than the Administrator; and

(III)that yields cash payments over a multiyear period acceptable to the Administrator (not to exceed 10 years) in an amount not less than 30 percent of the total amount of capital and commitments raised under paragraph (1); or

(iii)shall have binding commitments (for contributions in cash or in kind) of the type described in clause (i) and shall have purchased an annuity of the type described in clause (ii), which in the aggregate make available, over a multiyear period acceptable to the Administrator (not to exceed 10 years), an amount not less than 30 percent of the total amount of capital and commitments raised under paragraph (1).

(B)Exception

The Administrator may, in the discretion of the Administrator and based upon a showing of special circumstances and good cause, consider an applicant to have satisfied the requirements of subparagraph (A) if the applicant has—

(i)a viable plan that reasonably projects the capacity of the applicant to raise the amount (in cash or in-kind) required under subparagraph (A); and

(ii)binding commitments in an amount equal to not less than 20 percent of the total amount required under paragraph (A).

(C)Limitation

In order to comply with the requirements of subparagraphs (A) and (B), the total amount of a company’s in-kind contributions may not exceed 50 percent of the company’s total contributions.

(e)Final approval; designation

The Administrator shall, with respect to each applicant conditionally approved to operate as a New Markets Venture Capital company under subsection (c), either—

(1)grant final approval to the applicant to operate as a New Markets Venture Capital company under this part and designate the applicant as such a company, if the applicant—

(A)satisfies the requirements of subsection (d) on or before the expiration of the time period described in that subsection; and

(B)enters into a participation agreement with the Administrator; or

(2)if the applicant fails to satisfy the requirements of subsection (d) on or before the expiration of the time period described in that subsection, revoke the conditional approval granted under that subsection.

Reference

Citations & Metadata

Citation

15 U.S.C. § 689c

Title 15, Commerce and Trade

Last Updated

Sep 23, 2026

Release point: 119-110