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Hercules approved for second small business license

Hercules Technology Growth Capital, a finance company providing venture debt and equity to venture capital and private equity-backed technology and life science companies, has received final agency committee approval by the US Small Business Administration for a second Small Business Investment Company license.

Hercules expects that the SBIC license will be issued following final action by the SBA administrator.

This additional license has a ten-year term and will provide up to USD75m of fixed-rate capital for investment.

The SBIC programme represents a partnership between the SBA, Hercules, and the private sector economy.

The new access to capital will fund needed liquidity to technology, life sciences, and lower middle market growth companies that qualify under the SBIC programme.

Hercules will gain access to USD75m of capital through the SBA debenture programme, in addition to its regulatory capital contribution of USD37.5m to the SBIC subsidiary which will be used for investment purposes as well, subject to the issuance of a capital commitment by the SBA and customary procedures.

Similar to its first SBIC license, Hercules’ borrowings under its second SBIC license will be exempt from its 200 per cent asset coverage requirement as required by US Securities and Exchange Commission because of its existing exemptive order granted by the SEC.

“This new source of capital further strengthens our liquidity position, which now will include two SBIC licenses representing a ten-year fixed cost of capital, and our lines of credit with Wells Fargo and Union Bank,” says Manuel A. Henriquez, co-founder, chairman and chief executive officer of Hercules.

“Our current backlog of signed term sheets is currently over USD240m in-house today, and the pipeline of potential new investment opportunities is the strongest we have seen since 2007. We anticipate we will be investing this additional capital in the second half of 2010 as we continue to build out our investment portfolio. As I’ve stated before, it is important to note that commitments generally do not become outstanding loans in the quarter in which they are originated and generally have been funded at an approximate 75 per cent level over a period of three to six months after the transaction has closed.”

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