Heller’s influence in spending bill seen as boost to small companies

Pablo Martinez Monsivais / AP

President Donald Trump reaches to touch a copy of the $1.3 trillion spending bill as he speaks in the Diplomatic Room of the White House in Washington, Friday, March 23, 2018, as Vice President Mike Pence, left, and Commerce Secretary Wilbur Ross watch.

The $1.3 trillion omnibus spending bill signed into law Friday included language inserted on behalf of U.S. Sen. Dean Heller that should provide Nevada businesses easier access to loans.

The bill, which averted a government shutdown, included wording from the Small Business Credit Availability Act, crafted by Heller’s Deputy Legislative Director Scott Riplinger.

Heller had introduced the act, which was co-sponsored by 12 Democrats and five Republicans, in January. But during this week’s negotiations on the omnibus spending bill, Heller was able to insert the language of the act into the final 2,232-page legislative package approved Thursday by Congress and signed Friday by President Donald Trump.

Heller’s action is designed to allow companies that develop small businesses to offer more loans to small- and medium-size businesses.

These business development companies mirror private equity and venture capital funds by giving investors an outlet for putting their money into small businesses and benefiting from the growth or eventual sale of those small companies. BDCs are more accessible to anyone who purchases a share to participate in the open market — unlike private equity and venture capital funds, which are normally reserved for wealthy investors.

“Access to capital can be a problem for some of these small- to mid-size businesses, when you can’t get it from a traditional lender,” Riplinger said. “These companies are a big filler of that gap.”

“This bill will get more of the capital for BDCs to deploy to more businesses,” Riplinger said. “We want to put the gasoline on the fire to get things going.”

The regulations for Business Development Companies hadn’t been updated since 1980, and such companies were limited in borrowing capacity compared with other financial institutions. Heller’s language increased the BDC debt to equity ratio to 2:1, which provides more access to capital for small- and medium-size businesses to grow, his office said. Small business accounts for nearly half of the nation’s jobs, including 428,000 jobs in Nevada.

BDCs have invested more than $456 million in Nevada jobs since 1980, contributing to 6,600 new jobs in the state last month — a 20-month high in Nevada. Among BDC beneficiaries are Caesars Entertainment and Cirque du Soleil.

A representative from Cirque du Soleil declined comment. Representatives from Caesars Entertainment did not immediately respond to request for comment.

Juanita Duggan, president and CEO of the Nashville-based National Federation of Independent Business, said the new regulations would allow BDCs to free up capital, which can be used to service the needs of small businesses.

Allowing BDCs to deploy more capital provides small businesses a funding option that may not otherwise have been available, Duggan said.

“BDCs are key sources of capital for many small businesses, and, in many cases, an alternative to acquiring credit from a large bank,” Duggan said. “Research indicates that small-business owners whose primary financial institution is a large bank have more difficulty acquiring credit than those utilizing smaller banks, and the number of small banks is declining.”