Monroe Capital sees growth in small business lending

The Chicago-based financier has been making more investments via its SBIC subsidiary after getting approval for SBA-backed debentures.

Monroe Capital Corporation, the Chicago-based lending firm, has been making more investments via its Small Business Investment Company subsidiary and expects it to be a source of growth going forward. Ted Koenig, Monroe’s chief executive, told analysts on the firm’s earnings call yesterday that the firm was approved to receive Small Business Administration-guaranteed debentures in April, which allows Monroe to access leverage via its SBIC subsidiary.

“We have been approved to receive SBA leverage on a 2 to 1 debt to equity basis, subject to funding the full amount of regulatory capital of $20 million,” he said. “We believe that the SBIC subsidiary license will provide an opportunity to grow the portfolio and generate additional returns for our investors, which should be a huge positive and create real value for shareholders,” he added.

By the end of June, the firm had drawn $8 million in SBIC debentures and Koenig expects the leverage in the subsidiary to have a positive impact on the firm’s net investment income per share.

Discussing the firm’s financial results on Monroe’s earnings call Aug. 11, Koenig said its net investment income for the second quarter was $3.5 million, or $0.37 cents per share, an increase by five cents from the prior quarter. Ever since the Monroe issued its IPO in October, 2012, its investment portfolio has grown to $240 million from $67.6 million