Pursuant to a congressional request, GAO reviewed: (1) the reasons for small business investment companies' (SBIC) liquidations between January 1986 and March 1991; (2) active and liquidated SBIC financial performances; and (3) the statistical correlation of key SBIC characteristics and investments with their liquidations and financial performance.

GAO found that: (1) most SBIC are liquidated for poor financial performance, while other SBIC are liquidated due to regulatory violations and voluntary surrender of licenses to avoid prepayment penalties; (2) high interest costs and liquidity problems have contributed to SBIC liquidations; (3) SBIC are more likely to fail if they are leveraged and equity-oriented; and (4) larger and older SBIC have performed better than smaller and newer SBIC.