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March 29, 2012 /PRNewswire/ -- Saratoga Investment Corp. (NYSE: SAR), a business development company, today announced that its wholly-owned subsidiary has received a Small Business Investment Company (SBIC) license from the U.S. Small Business Administration (SBA).
An SBIC license allows Saratoga Investment Corp. to drawdown borrowings of up to
$150 million over a five-year period that have a term of 10 years at SBA fixed rates, currently below 4% per annum. Saratoga Investment Corp. will invest this money in middle-market businesses that comply with SBIC regulations.
"SBIC financing provides attractive funding costs and structure with a 10-year term and fixed rates that are generally lower than rates on comparable bank and other debt," said
Christian L. Oberbeck, Chief Executive Officer and President of Saratoga Investment Corp. and managing member of Saratoga Investment Advisors, LLC, the external investment adviser to Saratoga Investment Corp. "It is especially advantageous for Saratoga Investment Corp. because the large size of the SBIC financing relative to our capital base allows for substantial asset growth."
Saratoga Investment Corp. has invested
$25 million into the SBIC subsidiary. This will be fully invested before taking down up to
$50 million of available SBIC funds. In subsequent fundings, Saratoga Investment Corp. plans to invest up to an additional
$50 million into the SBIC subsidiary and gain access to the additional
$100 million of SBIC leverage. Assuming full investment, this would result in a
$225 million SBIC fund.
"Saratoga Investment Corp. views the SBIC license as a substantial benefit to the company. SBIC financing, combined with its existing revolving credit facility, provides the capital to allow Saratoga Investment Corp. to more than double assets under management," said
Michael J. Grisius, Chief Investment Officer. Saratoga Investment Corp. recently received from Madison Capital Funding LLC a
$45 million, eight-year, senior secured revolving credit facility.
With the SBIC license, Saratoga Investment Corp. has furthered its objective to better serve the U.S. middle market through increased scale and capital availability.