The uptick in small business administration (SBA) licenses
signals that banks are increasingly taking advantage of the
exception to the Volcker rule’s ban on proprietary
trading, which allows them to make investments through
Small Business Investment Companies (SBIC).
The exemption allows banks to have SBIC subsidiaries through
which they can hold more than five percent of a non-bank
company. SBICs can also grant loans and debt securities to
Banks will be able to partner with their own SBICs to
grant more leveraged loans, while avoiding limits on
leverage ratios. While it is
unclear how regulators will react to this change, the
limitations on SBIC loans will likely keep a check on the
market, and their growth could boost the small and mid-size
companies in the US.
"There is a possibility that banks could make loans...