Wall Street gets the headlines, and AI gets the hype. But one of America’s smartest long-term investments is hiding in plain sight: small businesses. With Kevin Warsh now leading the Federal Reserve, conversations about capital, investment, and long-term economic growth are once again front and center.
The Small Business Investment Company (SBIC) program, created by Congress in 1958 and run by the U.S. Small Business Administration (SBA), has quietly become one of the nation’s most successful public-private investment partnerships. Since its founding, SBIC-backed funds have invested nearly $150 billion in hundreds of thousands of American small businesses, helping to launch companies such as Apple, Intel, FedEx, Tesla, Costco, TOAST, and Amgen. The private market leads. The SBA amplifies.
These are not isolated success stories. They point to a simple truth: today’s small business can be tomorrow’s economic powerhouse, but only if it can access growth capital.
A new SBA report shows SBIC funds now manage a record $53+ billion while supporting the growth of more than 3,500 innovative small businesses. Even more notable, in fiscal 2025 alone, SBIC funds invested $8.2 billion into 1,315 small businesses, with nearly half of that capital flowing to industrial and manufacturing companies. Behind those investment figures are real businesses making real decisions: hiring workers, expanding facilities, purchasing equipment, and entering new markets.
Those decisions strengthen communities and create the jobs that keep local economies growing. As policymakers look for ways to strengthen domestic manufacturing, expand supply chains, and encourage more investment in American production, the SBIC program is already doing exactly that.
These businesses have created millions of private-sector jobs, without taxpayer subsidies, grants, or tax incentives.
Just as important, they deliver strong returns. SBIC funds launched between 2013 and 2022 generated an aggregate 17 percent internal rate of return and a 2.0x total value-to-paid-in capital. Across nearly every vintage year, these funds outperformed comparable private-market benchmarks.
Why do these investments perform so well? Because they target one of the most overlooked opportunities in the American economy. SBIC funds provide the first institutional capital to businesses with strong growth potential that need more capital than a bank will lend, but less than the largest private equity funds are built to deploy. These companies have significant room to grow, improve operations, and enter new markets, while taking on capital at more reasonable valuations than larger businesses. Meanwhile, large funds have moved toward bigger companies and bigger deals, leaving many promising smaller businesses with fewer options when they need capital most.
More than 85 percent of SBIC portfolio companies have less than $10 million in EBITDA when they receive investment. These businesses offer attractive valuations, room for operational improvement, and substantial upside for investors willing to partner with entrepreneurs over the long term.
This is what makes the SBIC model so effective. It aligns the interests of investors, entrepreneurs, and taxpayers by allowing each to do what they do best. Private investors provide market discipline. Professional fund managers identify promising businesses. SBA leverage expands the pool of available capital without the government picking winners. Entrepreneurs build companies that create jobs, innovate, and strengthen local communities. The result is a market-driven partnership that benefits everyone when American small businesses succeed.
The lesson is clear: small businesses are not simply worthy recipients of capital. They are attractive investments capable of delivering competitive returns while creating jobs, strengthening supply chains, and supporting local economies.
America has always prospered by backing builders, inventors, and entrepreneurs. The next transformative company is unlikely to be a household name today. It is far more likely to be a growing manufacturer, a technology company, or a family-owned business creating tremendous value, but needing capital to expand.
Investing in America’s small businesses is more than good public policy. It is a proven strategy that has generated strong financial returns while fueling innovation, job creation, and long-term economic growth.
Wall Street will always dominate the headlines, but the next great success story is far more likely to begin on Main Street. That’s why investing in small businesses is one of the best investments our nation can make.
Brett Palmer is the President of the Small Business Investor Alliance.
