Small Business Investment Company [SBIC] Law and Legal Definition

Small Business Investment Company [SBIC] is a SBA-licensed, private company providing equity capital and long-term loans to small businesses. SBIC lends money to, or buy stock or convertible debentures in, firms with less than $5 million in assets, net worth of not more than $2 1/2 million, and after-tax net income not exceeding $250,000. Prime advantage with SBIC is that, it has special IRS tax treatment, allowing stockholders to write off credit losses against ordinary income. Additionally, a loss on the sale of small business investment company stock is treated as an ordinary trade or business loss.