SBA Announces New Initiative with GIIRS Rating System for Private Funds and Companies

From the U.S. Small Business Administration

SBA Administrator Maria Contreras-Sweet today announced a new initiative with Global Impact Investing Rating System (GIIRS), an innovative rating system that evaluates the operational and business model impact of private funds and companies. Under the terms of the understanding, OII will use GIIRS ratings as one factor to rate and authenticate the influx of Impact Small Business Investment Companies it will review and license in fiscal year 2017.  Additionally, GIIRS will begin to offer geographic mapping for further evaluation of impact in low-to-moderate income (LMI) investment, which is a critical metric to ensure that the regions and cities of America who need investment the most are being served.

In making the announcement, SBA Administrator and a member of President Obama’s cabinet, Maria Contreras-Sweet said: “SBICs are among SBA’s most important programs to increase investments in the most promising and socially impactful small businesses.  I am pleased that GIIRS is following SBA’s lead in including LMI communities when evaluating impact investments.  Tracking how these investment dollars are distributed in LMI areas will bring important attention to those American cities, towns and rural areas suffering the most economically. This new initiative with GIIRs will deepen our coordination and provide a valuable new tool for private investors to evaluate and validate where their investment dollars are directed."

Andrew Kassoy, Co-Founder of B Lab, the non-profit developer of GIIRS, added: “The SBA’s Office of Investment and Innovation is one of the most important players in the impact investing arena. This partnership and their utilization of GIIRS to measure and understand the impact across the SBIC program supports the growth of the impact investing sector in many ways.” 

GIIRS will be customized for all SBIC funds to make it efficient to produce SBA-required data. Under the agreement, GIIRS will offer geographic mapping to SBICs of low-to-moderate income (LMI) investment, as well as a profile of the companies where SBIC has made an investment. LMI is an accepted government and social impact yardstick to measure the focus of invested funds on areas in American cities and regions that have citizen-income levels below average.  This mapping will add another level of analysis and assessment of the SBIC’s impact and social value.

SBA’s Small Business Investment Companies (SBIC) program licenses professionally managed private equity, venture capital and business development funds to receive debt-leverage to invest in American small businesses. The SBIC program has 315 active licensees.  With partner funds, SBA oversees a “fund of funds” with almost $24 billion in assets under management. Several of these licensees include investment strategies aimed at sustainability, low and moderate income community investing, and demographic diversity investing, among others.