- Capital Southwest (CSWC, Financial) secures its second SBIC license, doubling SBA-guaranteed debenture capacity.
- Total SBIC program borrowing capacity increases to $350 million.
- SEC exemptive relief allows favorable asset coverage treatment for SBA-guaranteed debentures.
Capital Southwest Corporation (Nasdaq: CSWC), a Dallas-based internally managed business development company, has announced that its subsidiary, Capital Southwest SBIC II, LP, has received a Small Business Investment Company (SBIC) license from the U.S. Small Business Administration. This marks Capital Southwest's second SBIC license, following their initial one received in April 2021.
The new license empowers SBIC II to issue SBA-guaranteed debentures up to $175 million, effectively doubling the company's total SBIC program borrowing capacity to $350 million. These debentures come with semi-annual interest payments, a ten-year maturity, and interest rates set at a market-driven spread over the ten-year U.S. Treasury Notes.
Additionally, Capital Southwest has obtained exemptive relief from the Securities and Exchange Commission (SEC) to exclude SBA-guaranteed debentures from senior securities in asset coverage requirements. This strategic move enhances the company's capital formation capabilities, while maintaining compliance with regulatory standards.
The expansion in borrowing capacity is significant for Capital Southwest, contributing to approximately 18% of their market capitalization of nearly $963 million. This increase promises to boost the firm’s middle market lending capacity, providing them with more flexibility to support the acquisition and growth of businesses within this sector.
