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EXHIBIT IV (b)
SBIC examinations and investigations conducted, by fiscal year

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Disbursements for:
6-month periods ended :

Sept. 30, 1963_
Mar. 31, 1964-
Sept. 30, 1964.
Mar. 31, 1965.
Sept. 30, 1965_--

104, 398, 883
115, 570, 530
96, 006, 590
90, 802, 985
109, 237, 028

30-month total..

516, 016, 016

Accumulated disbursements since start of the program. 902, 953, 482 1 Complete disbursement information is not available prior to Mar. 31, 1963. Outstanding balances as of Mar. 31, 1963, are treated as equal to the sum of the accumulated disbursments to that date.

Comparison of number of licenses in force and number of reporting companies

Licenses in

force

Reporting
companies

Mar. 31, 1960.
Sept. 30, 1960
Mar. 31, 1961.
Sept. 30, 1961
Mar. 31, 1962
Sept. 30, 1962
Mar. 31, 1963
Sept. 30, 1963
Mar. 31, 1964.
Sept. 30, 1964
Mar. 31, 1965
Sept. 30, 1965.

86
136
206
377
531
623
657
678
710
719
713
708

80 130 204 364 516 565 615 631 649 664 645 637

Selected financial data from companies reporting as of Mar. 31, 1960, Mar. 31, 1961, Mar. 31, 1962, Mar. 31, 1963, Mar. 31, 1964, Mar. 31,

1965, and Sept. 30, 1965, and for the SBIC fiscal years ended on these dates

1

2

3

4

5

6

7

194, 678, 087 40, 147, 642

223, 041, 006

58, 394, 841 281, 435, 847

41, 043, 368

7, 801, 935 48, 845, 303

(314, 730) 176, 235

193, 134, 941

86, 498, 323 279, 633, 264

13 149, 814, 526

203, 113, 404

75, 044, 631 278, 158, 035 (16, 337, 932)

376, 305

234, 825, 729

80 reporting 204 reporting 516 reporting 615 reporting 649 reporting 645 reporting 637 reporting companies, companies, companies, companies, companies, companies, companies, Mar. 31, 1960 Mer. 31, 1961 Mar. 31, 1962 Mar. 31, 1963 Mar. 31, 1964 Mar. 31, 1965 Sept. 30, 1965

Private investment (capital stock and paid-in surplus)

$39, 718, 268

$174, 625, 333

$436, 273,983

$434, 634, 711

Total assets
Allowances for losses.

43, 337, 593

67, 078

195, 484, 525

1, 360, 661

$460, 058, 266 599, 246, 142 20, 612, 122

506, 953, 948

6,780, 841

3 og

$463, 700, 046 $459, 884, 668
657, 174, 303 699, 730, 967

39, 386, 869 53, 992, 896
696, 561, 172 753, 723, 863
209, 097, 118 258, 403, 561

701, 710, 887
52, 678, 634

Adjusted total assets.

196, 845, 186

513, 734, 789

619, 858, 264

43, 404, 671
5, 584, 787

754, 389, 521
278, 056, 573

Outstanding balances: Sec. 305 loans.

30, 591, 830

83, 919, 120

152, 111, 737

Outstanding balances:

Sec. 304 debt securities.
Sec. 304 stock and warrants..

4, 236, 177

87, 740

122, 487, 636 27, 326, 890

Total, sec. 304 investments..

4,323, 917

44, 137
(29, 154)

Net income (loss) from operations.
Net realized gain (loss)..

Combined net income (loss) from operations and realized gain (loss)

(2, 998, 875)
1, 087, 012

(7, 121, 766)
(1, 211, 474)

(10, 816, 133)
(7, 590, 677)

' 1,794, 863
1 2,889, 268

14,983

(138, 495)

(1, 911, 863)

(8, 333, 240)

(18, 406, 810)

(15,961, 627)

14, 684, 131

i Data for 6 months only.

$5,000 and under.
$5,001 to $10,000.
$10,001 to $25,000
$25,001 to $50,000.
$50,001 to $100,000.-
$100,001 to $150,000..
$150,001 to $250,000..
$250,001 to $350,000..
$350,001 to $500,000.-
$500,001 and over.

Total all sizes.
Arithmetic average size.

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$1,686, 756

3, 168, 784
13, 110, 011
21, 220, 719
30, 200, 998

8, 439, 029
11, 004, 662

8, 918, 875 11, 068, 583 6,574, 464

$3, 710, 090
6, 351, 384
22, 891, 370
39, 964, 240
56, 636, 603
20, 715, 210
23, 194, 469
11, 837, 936
18, 928, 074
15, 740, 037
219, 969, 413

39, 016

$3, 024, 957

5, 894, 405
21, 739, 122
34, 449, 663
44, 638, 768
17, 555, 887
21, 184, 159

7, 247, 259
11, 665, 794
19, 409, 561
186, 809, 575

39, 221

$1, 646, 670

3, 099, 283
11, 401, 956
16, 577, 327
25, 717, 936
11, 421, 187
14, 501, 888
3, 148, 792
5, 932, 583
15, 789, 406
109, 237, 028

42, 225

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115, 392, 881

38, 958

Selected financial data from companies reporting for the SBIC fiscal years ended on Mar. 31, 1960, Mar. 31, 1961, Mar. 31, 1962, Mar. 31, 1963,

Mar. 31, 1964, Mar. 31, 1965, and Sept. 30, 1965 1

Disbursement transactions during the period, by size of individual disbursement

Size of individual disbursements:

Year ended
Mar. 31, 1960

Year ended
Mar. 31, 1961

Year ended
Mar. 31, 1962

6 months ended
Mar. 31, 1963 1

Year ended
Mar. 31, 1964

Year ended
Mar. 31, 1965

6 months ended
Sept. 30, 1965 1

1 Data for 6 months only.

2 Disbursement data by size of disbursement not available.

EXHIBIT IV (d)

SBIC debentures and loans disbursed, cumulative through June 30, 1966 (pre

liminary) (cents omitted, therefore details may not add to totals)

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Senator HARRIS. I have some questions, but I may not ask all of the questions that occur to me now because I think at the end of these hearings we may want to call you back or others from SBA for additional questions relating to the problems that have come out in the hearings. But I will ask some at this time.

I wanted to ask you, first, about the crash program you referred to for examination of all SBÍC's within 120 days. I wondered if you could comment further on that, as to how many men will be required, where they are coming from, whether the examination has begun, how it is going, how long you think it will last, what sort of priority list you will follow as to companies to be investigated or examined first, and so forth?

Mr. BoUTIN. Thank you very much, Mr. Chairman.

The reason for this crash program is this: When I was appointed Administrator, one of the first things was confronted with was the obvious problems of the SBIC industry and the program in SBA. I was constantly amazed by the lack of accurate and firm information.

No matter how many sources I inquired from, I seemed to get different answers or the figures never seemed to quite add up, or they never were current within a reasonable period of time.

In the past, unfortunately, as I stated in the statement, Mr. Chairman, the examinations were sporadic, at best. Some companies were not examined for several years. I guess in some instances it went as high as 4 years.

I don't know how anyone could base a judgment and testify before the Congress, or run the program or answer to the general public on the condition of the industry with that kind of antiquated, obsolete information.

Two, the format used for examination was not at all satisfactory. It did not get the information that we wanted sufficiently in depth so that it was truly meaningful to us. We have 23 people, Mr. Chairman, in our Examination Division. We are doing some reassigning of other people who have the capability to do this kind of work.

Senator HARRIS. Within the SBA, you mean? Mr. BOUTIN. Yes. In addition, 'I am contacting other agencies. such as Chairman Cohen of SEC and Sheldon Cohen, Commissioner of IRS, and perhaps I will have to go to other agencies, as well, to borrow people on a reimbursable basis to get this job done.

This actually was undertaken the 15th of July. We will meet, Mr. Chairman, to the best that I can tell you, the 120-day time period that I have told you about here. I have made it crystal clear to all of our people that this job is going to be done, so it is going to mean overtime and they are going to be working weekends, but I think the change may do some of them some good.

We are going to get this job finished so that we can tell you, and tell anyone else who asks us, what is going on in the SBI industry.

Now, the top priority is going to be the problem companies. The term “problem” is a very difficult one, because it can mean different things to different people. To some it can mean impaired companies. Then comes a question of extent of impairment. The staff of this committee, in discussing with us the problem companies, say that our list of 237 as of the 30th of June is not the figure that tells the whole story. I agree to that.

It is a question of extent here. As a matter of fact, Mr. Chairman, I can tell you and this committee that we recognize there are, in fact, over 300 companies who had losses, that have suffered losses, so that their private investment is no longer fully intact.

On the other side of that coin, of course, we have to ask the question:“Why do we have an SBIC industry?"

We have this industry, it seems to me from the mandate of the Congress, to make high-risk loans. So if they never lost any money, they couldn't be making any loans, and we wouldn't need the program. We have a real paradox here that is very difficult to analyze and to rationalize. I realize that is a very long answer to your question.

Senator HARRIS. Of course, while agreeing in general with your last statement, we would have to say, however, that out of 637 companies reporting, 300 or so, or 237, are in trouble, and that is going à little beyond what we would consider as normal risk in the small business field. Wouldn't you agree?

Mr. BOUTIN. Very definitely, Mr. Chairman, I would agree. I was only dealing with the part of it that has to do with impairment. Of course, there are other problems that this committee is well aware of.

Senator Harris. First let me ask you, How many investigators or examiners did you have in SBA or in the SBIC program of SBA when you came in?

Mr. BOUTIN. There were 23 examiners, Mr. Chairman.
Senator HARRIS. That is in the SBIC program itself?
Mr. BOUTIN. That is in the SBIC program itself.

Senator HARRIS. What about investigators as distinguished from examiners, or do you make that distinction?

Mr. BOUTIN. Yes, we do. Mr. Greenberg, would you provide me that figure, please?

Mr. HOWARD GREENBERG. There were six investigators at the time Mr. Boutin came aboard.

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