Fair Share?Venture fund operators cry foul over the SBA's bid to get a greater share of their investment profits.

In an effort to stop losing money in its equity-investmentprogram, theSBAis seeking a larger stake in the profits generatedby the venture funds it licenses. The agency's goal isn'tto make money but to break even. Under existing rules, it providestwo-thirds of the capital for Small Business Investment Companies,or SBICs, but receives a much smaller percentage of their profits.The SBA has asked Congress to increase its share to 33.3 percent,up significantly from its current take of about 10 percent. Thechange would affect funds started after September 30, 2004.

Fund managers argue that such a drastic change in theprogram's economics will dissuade private investors fromputting up capital to start an SBIC. Critics maintain that privateinvestors, who already take a back seat to the SBA in recoveringinvestment losses, are unlikely to accept other unattractive terms,particularly a sizable decrease in their own share of profits."The [SBIC] industry believes that would represent far toorisky an investment for private investors for the potential gainthey would get from investing in those SBICs," says LeeMercer, president of theNational Association of Small Business InvestmentCompanies(NASBIC)。