Proposed Rule2025-12584
Small Business Investment Company (SBIC) Regulatory Amendments
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 7, 2025
Issuing agencies
Small Business Administration
Abstract
The U.S. Small Business Administration ("SBA" or "Agency") is proposing to modify or remove from the Code of Federal Regulations ("CFR") regulations that are obsolete, inefficient, or otherwise unnecessarily impede the licensing of small business investment companies ("SBICs"). Many of the regulations SBA is proposing to remove apply to the repealed Section 301(d) of the Small Business Investment Act of 1958, as amended, and certain other types of SBICs that SBA no longer licenses, such as Participating Securities SBICs and Early Stage SBICs. The removal of these regulations will assist the public by simplifying SBA's regulations in the CFR. In addition, SBA is proposing to amend its regulations applicable to subsequent fund applicants in order to streamline the licensing process for such applicants. SBA also seeks to remove certain barriers to investments in critical mineral extraction and processing and designated critical technologies. In accordance with 5 U.S.C. 553(b)(4), a summary of this rule may be found https://www.regulations.gov.
Full Text
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[Federal Register Volume 90, Number 127 (Monday, July 7, 2025)]
[Proposed Rules]
[Pages 29794-29802]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-12584]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 90, No. 127 / Monday, July 7, 2025 / Proposed
Rules
[[Page 29794]]
SMALL BUSINESS ADMINISTRATION
13 CFR Part 107
RIN 3245-AI14
Small Business Investment Company (SBIC) Regulatory Amendments
AGENCY: U.S. Small Business Administration.
ACTION: Proposed rule.
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SUMMARY: The U.S. Small Business Administration (``SBA'' or ``Agency'')
is proposing to modify or remove from the Code of Federal Regulations
(``CFR'') regulations that are obsolete, inefficient, or otherwise
unnecessarily impede the licensing of small business investment
companies (``SBICs''). Many of the regulations SBA is proposing to
remove apply to the repealed Section 301(d) of the Small Business
Investment Act of 1958, as amended, and certain other types of SBICs
that SBA no longer licenses, such as Participating Securities SBICs and
Early Stage SBICs. The removal of these regulations will assist the
public by simplifying SBA's regulations in the CFR. In addition, SBA is
proposing to amend its regulations applicable to subsequent fund
applicants in order to streamline the licensing process for such
applicants. SBA also seeks to remove certain barriers to investments in
critical mineral extraction and processing and designated critical
technologies. In accordance with 5 U.S.C. 553(b)(4), a summary of this
rule may be found <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
DATES: Comments must be received on or before September 5, 2025.
ADDRESSES: You may submit comments, identified by RIN: 3245-AI14, by
any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments for Docket Number SBA-
2025-0003.
<bullet> Mail or Hand Delivery/Courier: Frank Salomone, Associate
Administrator for the Office of Investment and Innovation, U.S. Small
Business Administration, 409 Third Street SW, Washington, DC 20416.
SBA will post all comments on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. If you
wish to submit confidential business information (``CBI''), as defined
in the User Notice at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, please submit the
information to Paul vanEyl, Director of Financial Policy, Office of
Investment and Innovation, Small Business Administration, 409 Third
Street SW, Washington, DC 20416, or send an email to <a href="/cdn-cgi/l/email-protection#aac5c3c384dac5c6c3c9d3ead9c8cb84cdc5dc"><span class="__cf_email__" data-cfemail="17787e7e3967787b7e746e5764757639707861">[email protected]</span></a>
with ``RIN 3245-AI14 Proposed Rule'' in the subject heading. Highlight
the information that you consider to be CBI and explain why you believe
SBA should hold this information as confidential. SBA will review the
information and make the final determination on whether it will publish
the information.
FOR FURTHER INFORMATION CONTACT:
Policy: Frank Salomone, Associate Administrator of the Office of
Investment and Innovation, U.S. Small Business Administration,
<a href="/cdn-cgi/l/email-protection#f19e9898df819e9d989288b1829390df969e87"><span class="__cf_email__" data-cfemail="e6898f8fc896898a8f859fa6958487c8818990">[email protected]</span></a>, 771-233-1782. This phone number may also be reached
by individuals who are deaf or hard of hearing, or who have speech
disabilities, through the Federal Communications Commission's TTY-Based
Telecommunications Relay Service teletype service at 711.
Regulatory Comments/Federal Register Docket: Paul vanEyl, Director
of Financial Policy, Office of Investment and Innovation, U.S. Small
Business Administration, <a href="/cdn-cgi/l/email-protection#1b747272356b74777278625b68797a357c746d"><span class="__cf_email__" data-cfemail="e6898f8fc896898a8f859fa6958487c8818990">[email protected]</span></a>, 202-257-5955. This phone
number can also be reached by individuals who are deaf or hard of
hearing, or who have speech disabilities, through the Federal
Communications Commission's TTY-Based Telecommunications Relay Service
teletype service at 711.
SUPPLEMENTARY INFORMATION:
I. Background Information
A. Small Business Investment Company Program
SBA's SBIC program is designed to enhance small business access to
capital by stimulating and supplementing ``the flow of private equity
capital and long-term loan funds which small-business concerns need for
the sound financing of their business operations and for their growth,
expansion, and modernization, and which are not available in adequate
supply.'' Small Business Investment Act of 1958, as amended, 15 U.S.C.
661, et seq. (the ``Act''). The SBIC program's primary objective is to
``improve and stimulate the national economy in general and the small-
business segment thereof in particular.'' Id.
SBICs are privately owned and managed investment funds, licensed
and regulated by SBA, that use capital raised from private investors
(what SBA generally refers to as ``Regulatory Capital'') to make equity
and debt investments in qualifying small businesses. SBICs pursue
investments in a broad range of industries, geographic areas, and
stages of investment. SBA licenses many SBICs to issue SBA-guaranteed
debentures (``Debentures''), typically with a 10-year term, the
repayment of which is guaranteed by SBA using the full faith and credit
of the United States. SBA typically authorizes SBICs to issue
Debentures up to an amount not exceeding $175 million for individual
SBICs and $350 million for SBICs under Common Control (as defined in 13
CFR 107.50).
From the inception of the SBIC program to December 31, 2024, SBICs
have invested approximately $139.2 billion in approximately 198,199
financings to small businesses. In fiscal year 2024, SBICs invested
$7.26 billion in 1,014 small businesses. As of September 30, 2024,
there were a total of 318 licensed and operating SBICs with total
Regulatory Capital of approximately $25.7 billion. In addition, as of
September 30, 2024, SBA had guaranteed outstanding Debentures or had
outstanding commitments to guarantee Debentures to SBICs in the
approximate aggregate amount of $21.1 billion.
B. Part 107, Small Business Investment Companies
SBA is proposing to remove from the CFR seventeen regulations and
two definitions that are no longer necessary, because the rules reflect
statutes that have been repealed, do not have any current or future
applicability, or are otherwise inefficient or unnecessary.
Specifically, SBA is proposing to remove eight regulations relating to
the ``Subsidized Leverage,'' which was formerly issued by Specialized
Small Business Investment Companies (``SSBICs'') (also referred to as
``Section 301(d) Licensees''). Prior to 1996, Section 301(d) of the Act
authorized
[[Page 29795]]
SBA to issue licenses to SSBICs, which were required to invest ``solely
in small business concerns which will contribute to a well-balanced
national economy by facilitating ownership in such concerns by persons
whose participation in the free enterprise system is hampered because
of social or economic disadvantages[.]'' Section 301(d) was repealed by
Section 208(b)(3)(A) of Public Law 104-208, enacted September 30, 1996
(the ``Improvement Act of 1996''). Section 208(b)(3)(B) of the
Improvement Act of 1996 provided, ``[t]he repeal under subparagraph (A)
shall not be construed to require the Administrator to cancel, revoke,
withdraw, or modify any license issued under section 301(d) of the
Small Business Investment Act of 1958 before the date of enactment of
this Act.'' As a result, no new SSBIC licenses have been issued since
October 1, 1996, but existing SSBICs have been allowed to remain in the
program. The Improvement Act of 1996 also repealed the special kinds of
financial assistance (i.e., ``Subsidized Leverage'') that SBA
previously made available to SSBICs under former Section 303(c) of the
Act. Such Subsidized Leverage was previously available to SSBICs in the
form of Debentures with an interest rate subsidy or certain types of
preferred stock known as ``Preferred Securities'' with a specified
dividend. Although Subsidized Leverage can no longer be issued, the
Improvement Act of 1996 did not require SSBICs to prepay or redeem such
Subsidized Leverage prior to its scheduled maturity. Approximately five
SSBICs are currently operating, but no Subsidized Leverage remains
outstanding, so SBA proposes to remove the regulations related to
Subsidized Leverage. The SSBICs remaining in the program will not be
impacted by the changes proposed in this rule and, if eligible, those
SSBICs may continue to apply to issue standard Debentures.
SBA is proposing to remove three regulations and one definition
relating to Participating Securities (as defined in 13 CFR 107.50) and
SBICs that issued Participating Securities (``Participating Securities
SBICs''). The fees payable by Participating Securities SBICs were not
sufficient to cover the projected net losses of the Participating
Securities program and no funds have been appropriated for this program
in over 20 years. As a result, since October 1, 2004, SBA has not
issued new commitments for Participating Securities. There are no
Participating Securities SBICs operating in the program, and
accordingly the changes proposed in this rule will not impact any
Participating Securities SBICs.
SBA is proposing to remove one regulation relating to a category of
SBICs created in 2012 by regulation that required to invest at least
fifty percent of their capital in early-stage small businesses (``Early
Stage SBICs''). The final rule (77 FR 25042, April 27, 2012) defining
this category of Early Stage SBICs stated that SBA's intent was to
license Early Stage SBICs over a 5-year period (fiscal years 2012
through 2016). SBA published a rule on September 19, 2016 (81 FR 64075)
proposing to make the Early Stage SBIC initiative a permanent part of
the SBIC program, but withdrew the proposed rule on June 11, 2018 (83
FR 26875) because, among other things, few qualified funds applied to
the Early Stage SBIC initiative and the comments to the proposed rule
did not demonstrate broad support for a permanent Early Stage SBIC
program. SBA proposes to remove the regulations related to the
licensing of Early Stage SBICs, since SBA is no longer licensing these
funds. The removal of these regulations will not impact Early Stage
SBICs remaining in the program.
SBA is proposing to remove or revise thirty regulations and four
definitions that are duplicative, redundant, or otherwise inefficient
or unnecessary. In connection with this rulemaking, SBA proposes
certain non-substantive amendments to thirteen regulations and two
definitions to remove internal references to the removed regulations,
streamline certain regulations addressing the same concept to improve
efficiencies, or make certain other clarifying changes.
SBA is further proposing to remove three eligibility requirements
for subsequent fund applicants operating an active SBIC license and
further clarify through revision two eligibility requirements
pertaining to SBIC applicants under Common Control with one or more
SBICs that wish to be considered under an ``Expedited Subsequent Fund
Evaluation Process.''
C. Comments Received in Response to Request for Information
On August 15, 2017, SBA published in the Federal Register a request
for information seeking input from the public on identifying which of
the Agency's regulations should be repealed, replaced, or modified
because they are obsolete, unnecessary, ineffective, or burdensome. (82
FR 38617). On October 13, 2017, SBA extended the comment period. (82 FR
47645). SBA has reviewed the comments submitted by the public in
response to that request. Further, in an effort to obtain additional
feedback from SBIC program stakeholders, SBA held a series of
roundtables with SBICs, third-party service providers, and investors on
May 22, 2018, July 17, 2018, and August 7, 2018, respectively.
In this rule, SBA is proposing to remove certain regulations that
commenters suggested removing--e.g., certain Participating Securities
SBIC and Early Stage SBIC regulations--and proposing to remove certain
other regulations that SBA believes will have broad support among
program participants.
On September 30, 2020, SBA issued a proposed rulemaking to remove
from the CFR those regulations which reflect statutory provisions that
have been repealed, do not have any current or future applicability, or
are otherwise inefficient or unnecessary. SBA received no comments from
the public by the due date of November 30, 2020. The proposed
rulemaking complied with Executive Order 13771, Reducing Regulation and
Controlling Regulatory Costs, and Executive Order 13777, Enforcing the
Regulatory Reform Agenda, both of which were revoked on January 20,
2021, through Executive Order 13992, Revocation of Certain Executive
Orders Concerning Federal Regulation. SBA did not issue a final
rulemaking to formally remove the proposed regulations from the CFR.
SBA has identified many of those regulations proposed for elimination
under this rulemaking.
D. Executive Order 14219
On February 19, 2025, President Trump signed Executive Order 14219,
Ensuring Lawful Governance and Implementing the President's
``Department of Government Efficiency'' Deregulatory Initiative, which,
among other objectives, is intended to rescind unlawful regulations,
ensure regulations that impose significant costs upon private parties
are outweighed by public benefits, and eliminate regulations that
impose undue burdens on small business and impede private enterprise
and entrepreneurship. SBA believes the removal of the regulations
identified herein along with clarifying provisions would comply with
Executive Order 14219. Further, such revisions would make part 107 less
confusing and less burdensome for the reader. SBA quantifies the amount
of cost savings that may result from this rulemaking in the Executive
Order 14219 discussion in Section III below.
[[Page 29796]]
E. Executive Order 14241 and Executive Order 14272
President Trump signed Executive Order 14241 and Executive Order
14272 on March 20, 2025, and April 15, 2025, respectively. These
Executive Orders express the vital importance of critical minerals,
rare earth elements, and their derivative products to the U.S. economy
and national security and state that it is imperative ``that the United
States take immediate action to facilitate domestic mineral production
to the maximum possible extent.'' This rulemaking is intended to
facilitate the domestic exploration, extraction, and processing of
critical minerals and rare earth elements by creating an exception to
the project finance restrictions within Part 107 for companies involved
in certain critical mineral projects.
II. Section by Section Analysis
A. Section 107.50--Definition of Terms
SBA is proposing to revise the definition of ``Associate'' in 13
CFR 107.50 to remove paragraph (11) of that definition. This paragraph
states that if any SBIC has an ownership interest in another SBIC, then
those two SBICs will be deemed Associates of each other. SBA notes that
with the exception of a Reinvestor SBIC (as defined in 13 CFR
107.720(a)(2)) investing in a Non-Leveraged SBIC (as defined in 13 CFR
107.50), SBICs are generally prohibited from investing in another SBIC.
Further, SBA notes that an ``Associate'' relationship between a
Reinvestor SBIC and a Non-Leveraged SBIC may be appropriately
determined by paragraphs (1) through (10) of the Associate definition.
Accordingly, SBA proposes to remove paragraph (11) from this
definition.
SBA is proposing to amend 13 CFR 107.50 to include the defined term
``Critical Minerals,'' to include the critical minerals, rare earth
elements, and related substances identified as industrial priorities in
Executive Order 14241 and Executive Order 14272, which are discussed
above.
SBA is proposing to add the definition of ``Critical Technology''
to identify a type of investment that will be permitted under an
additional exception to the project finance restriction if such
investment is made by an SBICCT.
SBA is proposing to revise the definition of ``Debenture Rate'' to
reflect that the interest rate for Debentures issued by SBICs will be
published on the SBIC website (as defined in 13 CFR 107.50). SBA notes
that this change is consistent with SBA's historical practice and will
provide greater transparency to the program.
SBA is proposing to revise the definition of ``Early Stage SBIC''
in 13 CFR 107.50 to remove the reference to 13 CFR 107.310, because SBA
is proposing to remove that regulation. SBA is further proposing to
revise the definition to clarify that an Early Stage SBIC is one that
was licensed in connection with SBA's Early Stage SBIC initiative. In
addition, SBA is proposing to revise the definition to reference
redesignated 13 CFR 107.1810(f)(10) rather than current 13 CFR
107.1810(f)(11) but is not proposing any substantive changes to the
definition.
SBA is proposing to delete the definition of ``Preferred
Securities,'' as ``Preferred Securities'' were issued solely by 301(d)
Licensees issued prior to 1996. The 301(d) program was discontinued by
Public Law 104-208, effective September 30, 1996. Although a small
number of 301(d) licenses remain in effect, there are no outstanding
``Preferred Securities,'' and there is no authorization by statute for
the issuance of additional ``Preferred Securities.''
SBA is proposing to amend 13 CFR 107.50 to include the defined term
``Prior Fund'' applicable to those fund applicants applying for the
``Expedited Subsequent Fund'' evaluation process.
SBA proposes to include the term ``SBICCT'' to identify those SBICs
licensed and designated as Critical Technology Small Business
Investment Companies, pursuant to the March 2, 2023, Memorandum of
Agreement between the Department of Defense Office of Strategic Capital
and SBA's Office of Investment and Innovation or any subsequent or
successor memorandum, agreement, or regulation.
SBA is proposing to amend 13 CFR 107.50 to remove the definition of
``Venture Capital Financing.'' This definition is utilized primarily in
reference to 13 CFR 107.1160. However, SBA is proposing to remove 13
CFR 107.1160 and accompanying references to 13 CFR 107.1160.
Accordingly, this definition is no longer necessary.
B. Section 107.120--Special Rules for a Section 301(d) Licensee Owned
by Another Licensee
This regulation currently addresses the requirements for ownership
of an SSBIC by another SBIC. SBA no longer issues SSBIC licenses, and
no SBIC has utilized the structure authorized under this regulation in
the recent history of the program. Further, because Subsidized Leverage
is no longer available to SSBICs, the structure under this regulation
provides little to no benefit to an SBIC, economic or otherwise. For
that reason, SBA believes that no SBIC will seek to be structured in
the form authorized under this regulation going forward and,
accordingly, proposes to remove this section.
C. Section 107.160--Special Rules for Licensees Formed as Limited
Partnerships
This regulation currently provides for special rules applicable to
SBICs formed as limited partnerships. SBA is proposing to remove
certain requirements applicable to an SBIC's general partner pursuant
to this regulation. Specifically, SBA is proposing to amend paragraph
(b)(2) of 13 CFR 107.160 to remove the reference to 13 CFR 107.585
applying to an entity general partner of an SBIC and amend paragraph
(d) of 13 CFR 107.160 solely to remove references to 13 CFR 107.460 and
107.680. SBA notes that SBA is proposing to remove 13 CFR 107.460 as
part of this rulemaking and 107.680 does not include the term Licensee.
D. Section 107.250--Exclusion of Stock Options Issued by Licensee From
Management Expenses
This regulation currently provides that stock options issued by any
SBIC are not considered compensation and do not count as part of an
SBIC's management expenses. Substantially all SBICs are formed as
limited partnerships that do not issue stock options. Further,
Management Expenses are expressly defined in current 13 CFR 107.520(a),
and that definition does not include stock options. Accordingly, the
few SBICs formed as corporations do not rely on current 13 CFR 107.250.
SBA proposes to remove this section, because it is no longer necessary.
E. Section 107.300--License Application Form and Fee
This regulation currently sets forth the licensing process for an
SBIC including the initial review of a SBIC applicant, final licensing
phase, initial and final licensing fees, resubmission penalty fees and
inflation adjustments. SBA proposes to modify paragraph (a) of 13 CFR
107.300 to clarify applicants meeting criteria described in 13 CFR
107.305(e) are entitled to an ``Expedited Subsequent Fund Evaluation
Process'' and further that SBIC applicants that are currently managing
an active SBIC (``Subsequent Fund applicants'') may be permitted to
file a complete ``Short-Form'' Subsequent Fund MAQ application. While
such Subsequent Fund applicants may be permitted to file a Short-Form
MAQ to streamline
[[Page 29797]]
their licensing application, in order to adequately evaluate a
Subsequent Fund applicant's management team and licensing application
as required by the Act, SBA reserves the right to request that a
Subsequent Fund applicant submit the full, standard MAQ form and/or
provide other information if SBA is unable to adequately evaluate an
SBIC applicant's application in accordance with the provisions of the
Act and its implementing regulations.
F. Section 107.305--Evaluation of License Applicants
This regulation currently sets forth the evaluation factors for
license applicants. SBA proposes to modify paragraph (e) of 13 CFR
107.305 to modify and streamline the criteria for license applicants to
be eligible for an ``Expedited Subsequent Fund Evaluation Process,''
while ensuring that SBA has appropriate benchmarks in place to properly
evaluate such SBIC applicants.
G. Section 107.310--When and How To Apply for Licensing as an Early
Stage SBIC
This regulation currently sets forth the application procedures for
Early Stage SBIC applicants. As described above, SBA no longer licenses
Early Stage SBICs. Therefore, SBA proposes to remove this section.
H. Section 107.460--Restrictions on Common Control or Ownership of Two
(or More) Licensees
This regulation currently provides that certain individuals and
entities may not, without SBA's prior written approval, exercise
control over, or have a greater than ten percent beneficial ownership
interest in, two or more SBICs. This regulation is duplicative of the
requirements in other SBA regulations applicable to SBICs.
Specifically, sections 107.160, 107.400, and 107.410 require SBA prior
approval for any individual or entity to exercise Control (as defined
in 13 CFR 107.50), operate as a principal, officer, director or manager
of, or otherwise have a greater than ten percent beneficial ownership
interest in, any individual SBIC. Accordingly, this section is not
necessary, and SBA proposes to remove it.
I. Section 107.507--Violations Based on False Filings and
Nonperformance of Agreements With SBA
SBA is proposing to amend this regulation to remove the reference
to the term ``Preferred Security'' in 107.507(a). No Section 301(d)
Licensee currently has any form of Subsidized Leverage outstanding,
and, as a result of the Improvement Act of 1996 discussed above, no
Section 301(d) Licensee is authorized to issue or draw Subsidized
Leverage in the future. SBA is not proposing any substantive changes to
13 CFR 107.507.
J. Section 107.720--Small Businesses That May Be Ineligible for
Financing
SBA is proposing to amend paragraph (d) of section 107.720 in order
to clarify that this paragraph does not prohibit investments in small
businesses engaged in long-term projects that either involve the
extraction, conversion, or processing of Critical Minerals identified
as strategically important under Executive Order 14241 (``Immediate
Measures to Increase American Mineral Production,'' March 20, 2025) and
Executive Order 14272 (``Ensuring National Security and Economic
Resilience Through Section 232 Actions on Processed Critical Minerals
and Derivative Products,'' April 15, 2025) or by SBICCTs in defined
Critical Technologies.
K. Sections 107.830--Minimum Duration/Term of Financing, 107.835--
Exceptions to Minimum Duration/Term of Financing, and 107.840--Maximum
Term of Financing
13 CFR 107.830 (Minimum duration/term of financing), 13 CFR 107.835
(Exceptions to minimum duration/term of Financing), and 13 CFR 107.840
(Maximum term of Financing) address the term of financing permissible
in the SBIC program--the minimum term and maximum term, respectively,
and exceptions thereto. SBA believes that having three regulations that
address the same concept is inefficient. Accordingly, SBA is proposing
to streamline these regulations by moving the substance of sections
107.835 and 107.840 into section 107.830 and proposes to remove
sections 107.835 and 107.840. SBA proposes a minor clarification to the
exceptions set forth in 107.835(d) but does not intend any substantive
changes to the minimum or maximum term of financing or exceptions
thereto permitted under the regulations.
L. Section 107.1130--Leverage Fees and Annual Charges
This regulation identifies the fees and other charges associated
with SBA-guaranteed Leverage. Paragraph (d) of 13 CFR 107.1130
identifies the Annual Charge (as defined in 13 CFR 107.50) applicable
to SBICs with outstanding Debentures, and further includes a minimum
Annual Charge, currently set at twenty (20) basis points for fiscal
year 2025 and increasing to a minimum of forty (40) basis points in
fiscal year 2029. SBA is proposing to revise paragraph (d) of 13 CFR
107.1130 to provide SBA with flexibility to make a determination as to
the Annual Charge necessary to reduce to zero the cost to SBA of
purchasing and guaranteeing Debentures pursuant to the Act. SBA does
not expect this change to have any substantive impact on SBICs, as the
average annual charge over the last twenty years is fifty-seven (57)
basis points and the Annual Charge minimum floor (applicable to fiscal
year 2029) shall not exceed forty (40) basis points.
M. Section 107.1140--Licensee's Acceptance of SBA Remedies Under
Sec. Sec. 107.1800 Through 107.1820
This regulation provides that all SBICs issuing Leverage after
April 25, 1994, automatically agree to the terms and conditions in
sections 107.1800 through 107.1820, as they exist at the time of
issuance. The section is duplicative of 13 CFR 107.1800, 13 CFR
107.1810 and 13 CFR 107.1820. SBA proposes to remove the section
because it is unnecessary. For the avoidance of doubt, all outstanding
Leverage remains subject to 13 CFR 107.1800 through 107.1820, as
applicable.
N. Section 107.1160--Maximum Amount of Leverage for a Section 301(d)
Licensee
This regulation currently addresses Subsidized Leverage for Section
301(d) Licensees. No Section 301(d) Licensee currently has any form of
Subsidized Leverage outstanding, and, as a result of the Improvement
Act of 1996 discussed above, no Section 301(d) Licensee is authorized
to issue or draw Subsidized Leverage in the future. SBA proposes to
remove this section, because it is no longer necessary.
O. Section 107.1170--Maximum Amount of Participating Securities for Any
Licensee
This regulation addresses the maximum amount of Participating
Securities an SBIC may issue. As discussed above, since October 1,
2004, SBA has not been able to issue new commitments for Participating
Securities. Because this section is no longer necessary, SBA proposes
to remove it.
P. Sections 107.1400--107.1450 Preferred Securities Leverage--Section
301(d) Licensees
Sections 107.1400 through 107.1450 currently address Subsidized
Leverage for Section 301(d) Licensees. No Section 301(d) Licensee
currently has any form
[[Page 29798]]
of Subsidized Leverage outstanding, and, as a result of the Improvement
Act of 1996 discussed above, no Section 301(d) Licensee is authorized
to issue or draw Subsidized Leverage in the future. SBA proposes to
remove these sections, because they are no longer necessary.
Q. Section 107.1560--Distributions by Licensee--Required Distributions
to Private Investors and SBA
SBA is proposing to amend this regulation to remove references to
the term ``Preferred Securities.'' No Section 301(d) Licensee currently
has any form of Subsidized Leverage outstanding, and, as a result of
the Improvement Act of 1996 discussed above, no Section 301(d) Licensee
is authorized to issue or draw Subsidized Leverage in the future. SBA
is not proposing any substantive changes to 13 CFR 107.1560.
R. Section 107.1585--Exchange of Debentures for Participating
Securities
This regulation currently addresses the requirements of an exchange
of Debentures for Participating Securities. No Participating Securities
will be issued in the future. This section, therefore, is obsolete, and
SBA proposes to remove it.
S. Section 107.1590--Special Rules for Companies Licensed on or Before
March 31, 1993
This regulation applies to SBICs licensed on or before March 31,
1993, that apply to issue Participating Securities. No SBIC may apply
to issue Participating Securities and this rule does not have any
current applicability. SBA proposes to remove this section.
T. Section 107.1700 Transfer by SBA of Its Interest in Licensee's
Leverage Security
SBA is proposing to amend this regulation to remove reference to
the term ``Preferred Security'' in the first sentence. No Section
301(d) Licensee currently has any form of Subsidized Leverage
outstanding, and, as a result of the Improvement Act of 1996 discussed
above, no Section 301(d) Licensee is authorized to issue or draw
Subsidized Leverage in the future. SBA is not proposing any substantive
changes to 13 CFR 107.1700.
U. Section 107.1810--Events of Default and SBA's Remedies for
Licensee's Noncompliance With Terms of Debentures
SBA proposes to remove 13 CFR 107.1810(f)(9) in its entirety, which
is an event of default based solely on the failure to satisfy the
investment ratios required under 13 CFR 107.1160(c), a regulation which
SBA is proposing to remove in this rulemaking.
V. Section 107.1820--Conditions Affecting Issuers of Preferred
Securities and/or Participating Securities
SBA is proposing to revise the caption of 13 CFR 107.1820 to remove
the reference to Preferred Securities. SBA is further proposing to
amend 13 CFR 107.1820(a) to remove all references to Preferred
Securities. In addition, SBA is proposing to amend 13 CFR
107.1820(e)(9) to remove the events of default triggered by
noncompliance with 13 CFR 107.1160, a regulation which SBA is proposing
to remove in this rulemaking.
III. Compliance With Executive Orders 12866, 14219, 12988, and 13132,
the Paperwork Reduction Act (44 U.S.C., Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
A. Executive Order 12866
The Office of Management and Budget (``OMB'') has determined that
this proposed rule constitutes a ``significant regulatory action''
under Executive Order 12866. An analysis of the estimated cost savings
of deregulation proposed in this rule is contained in the section below
on Executive Order 14219. SBA considered alternatives to each
regulation when complying with Executive Order 14219 to eliminate
regulations that impede private enterprise and entrepreneurship. SBA
has proposed only those regulations that are obsolete, inefficient, or
otherwise unnecessarily impede the licensing of SBICs. The regulations
identified along with clarifying provisions will make part 107 less
confusing and less burdensome for the reader. When finalized, this
proposed rule is expected to result in an annualized net savings total
of approximately $42,000 at a seven percent discount rate.
B. Executive Orders 14241 and 14272
SBA is also proposing regulatory changes to clarify and provide
certainty for SBICs who may wish to make certain investments in
Critical Minerals related to Executive Order 14241 and Executive Order
14272, discussed above. SBICs have historically participated in such
financings, but many SBIC managers view SBA's regulations on project
finance restrictions to include the exploration, extraction, and
processing of critical minerals and rare earth elements as ineligible
financings. SBA considered alternatives to complying with Executive
Order 14241 and Executive Order 14272 by proposing regulations
expressly permitting SBIC investments in critical minerals, rare earth
elements, and their derivative products as vitally important to the
U.S. economy and national security. However, doing so would've
increased the number of new regulations, which would be inefficient and
in opposition to Executive Order 14219, as SBICs are not expressly
prohibited from such investing. SBA's approach in this proposed rule is
to seek minor clarifications to existing regulations to remove
perceived barriers and provide SBICs with more clarity and certainty in
a regulated environment.
Over the past ten years SBICs have invested an estimated total of
$305.6 million in small businesses focused on Mining, Quarrying, and
Oil and Gas Extraction, representing an overall 0.5 percent of the
program. Removing investments related to oil and gas and the mining and
quarrying of materials that are not Critical Minerals, SBA estimates
the overall SBIC portfolio concentration in Critical Minerals to be
less than 0.1 percent of the entire program. SBA does not anticipate an
outsized increase to the current percentage of the overall program, and
therefore the proposed changes would not pose significant risk to
portfolio concentration. Current SBIC Licensees have management teams
possessing particular industry knowledge and experience related to
their proposed business plans. SBA will mitigate any future risk posed
by SBIC applicants wishing to focus on Critical Minerals during the
licensing process.
C. Executive Order 14219
This proposed rule is expected to be an Executive Order 14219
deregulatory action with an annualized net savings total of
approximately $42,000 at a seven percent discount rate, discounted
relative to 2024, over a perpetual time horizon. This rule would remove
information that is redundant or concerns obsolete programs, which
would reduce confusion around whether these programs still exist and
simplify the reading of the regulations to improve efficiency.
There are currently 318 operating SBIC licensees, of which
approximately 40 are newly licensed to the program over the last year.
Newly licensed SBICs are expected to read the program regulations in
their entirety during the first year of operation. Established SBICs
and SBIC counsel familiar with the regulations are expected to revisit
sections of regulations pertaining to specific occurrences during the
life of the SBIC, and accordingly such instances are included in-part
in these calculations to account for those certain
[[Page 29799]]
situations. These calculations assume that 25 percent of all SBIC
licensees (80) and other SBIC stakeholders, including counsel to SBICs,
(20) will read the regulations in their entirety and that they will
save an estimated 4 hours each from reading less burdensome and
confusing regulations, because the regulations will no longer contain
obsolete information. This time is valued at $112.02 per hour- the mean
hourly wage for Financial and Investment Analysts, and at $175.20 per
hour- the mean hourly wage for Lawyers based on 2024 Bureau of Labor
Statistics (``BLS'') data, including 100 percent more for benefits and
overhead adjustment. This produces an estimated total savings per year
of approximately $50,000.
In the first year this rule is published, it is expected that 25
percent of all SBIC licensees (80) and other SBIC stakeholders,
including counsel, (20) will read this Federal Register notice, which
is estimated to take 2 hours to read. Assuming a weighted average of
$124.66 per hour, the estimated one-time cost in the first year will be
approximately $25,000. This estimated cost is not expected to continue
into subsequent years.
The table below displays the costs and savings of this rule over
the first two years it is published, with the savings and costs in the
second year expected to continue in perpetuity, providing a total
annualized net savings of approximately $42,000 at a seven percent
discount rate or approximately $500 per SBIC.
Schedule of Costs/(Savings), Current Dollars
----------------------------------------------------------------------------------------------------------------
Savings Costs Net total $
----------------------------------------------------------------------------------------------------------------
Year 1.................................. (256 hours) ($50,000)..... 200 hours $25,000......... ($25,000)
Years 2+................................ (256 hours) ($50,000)..... 0 hours $0.00............. (50,000)
-----------------------------------------------------------------------
Net Total Savings................... .......................... .......................... ($75,000)
----------------------------------------------------------------------------------------------------------------
D. Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
E. Executive Order 13132
This proposed rule does not have federalism implications as defined
in Executive Order 13132. It would not have substantial direct effects
on the States, on the relationship between the national government and
the States, or on the distribution of power and responsibilities among
the various levels of government, as specified in the Executive Order.
As such it does not warrant the preparation of a Federalism Assessment.
F. Paperwork Reduction Act, 44 U.S.C., Ch. 35
SBA has determined that this proposed rule does not affect any
existing collection of information and does not propose any new
collection of information.
G. Regulatory Flexibility Act, 5 U.S.C. 601-612
When an agency issues a rulemaking proposal, the Regulatory
Flexibility Act (``RFA'') requires the agency to ``prepare and make
available for public comment an initial regulatory flexibility
analysis'' that will ``describe the impact of the proposed rule on
small entities.'' (5 U.S.C. 603(a)). Section 605 of the RFA allows an
agency to certify a rule, in lieu of preparing an analysis, if the
proposed rulemaking is not expected to have a significant economic
impact on a substantial number of small entities.
There are currently 318 operating SBIC licensees, which represents
the universe of small entities impacted by this proposed rule to remove
regulations that are no longer necessary, because they are either
redundant, inefficient, or obsolete. These changes will afford these
entities more certainty on how to operate their business in a regulated
environment, and the cost savings to time spent on regulations will
provide more time investing in small businesses. The total annualized
net savings to these SBIC licensees is estimated at $74,793.60 in
current dollars, as quantified in the Executive Order 14219 discussion
above.
Therefore, SBA hereby certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
SBA invites comments from the public on this certification.
List of Subjects in 13 CFR Part 107
Investment companies, Loan programs--business, Reporting and
recordkeeping requirements, Small businesses.
Accordingly, for the reasons stated in the preamble, SBA proposes
to amend 13 CFR part 107 as follows:
PART 107--SMALL BUSINESS INVESTMENT COMPANIES
0
1. The authority citation for part 107 is revised to read as follows:
Authority: 15 U.S.C. 662, 681-687, 687b-h, 687k-m.
0
2. Amend Sec. 107.50 by deleting paragraph (11) of the Associate
definition, deleting the definition of ``Preferred Securities'' and
``Venture Capital Financing,'' revising the definitions of ``Debenture
Rate'' and ``Early Stage SBIC,'' and adding the defined terms
``Critical Minerals,'' ``Critical Technology,'' ``Prior Fund'' and
``SBICCT'' to read as follows:
Sec. 107.50 Definition of terms.
* * * * *
Critical Minerals has the meaning set forth in 13 CFR 107.720(d).
* * * * *
Critical Technology has the meaning set forth at 10 U.S.C. 4801(6)
and includes technologies, components, and processes duly designed by
the U.S. Department of Defense consistent with that provision for
investment by SBICCTs.
* * * * *
Debenture Rate means the interest rate, as published from time to
time on the SBIC website, for ten-year debentures issued by Licensees
and funded through public sales of certificates bearing SBA's
guarantee. User or guarantee fees, if any, paid by a Licensee are not
considered in determining the Debenture Rate.
* * * * *
Early Stage SBIC means a Section 301(c) Partnership Licensee,
licensed pursuant to SBA's Early Stage initiative, in which at least 50
percent of all Loans and Investments (in dollars) must be made to Small
Businesses that are ``early stage'' companies at the time of the
Licensee's initial Financing (see also Sec. 107.1810(f)(10)). For the
purposes of this definition, an ``early stage'' company is one that has
never achieved
[[Page 29800]]
positive cash flow from operations in any fiscal year.
* * * * *
Prior Fund has the meaning set forth in 13 CFR 107.305(e).
* * * * *
SBICCT means a Critical Technology Small Business Investment
Company, licensed and so designated pursuant to the March 2, 2023,
Memorandum of Agreement between the Department of Defense Office of
Strategic Capital and SBA's Office of Investment and Innovation or any
subsequent or successor memorandum, agreement, or regulation.
* * * * *
Sec. 107.120 [Removed and Reserved]
0
3. Remove and reserve Sec. 107.120.
0
4. Amend Sec. 107.160 by revising the second sentence of paragraphs
(b) and (d) to read as follows:
Sec. 107.160 Special rules for Licensees formed as limited
partnerships.
* * * * *
(b) * * *
(2) An Entity General Partner is subject to the same examination
and reporting requirements as a Licensee under section 310(b) of the
Act. The restrictions and obligations imposed upon a Licensee by
Sec. Sec. 107.1800 through 107.1820, and 107.30, 107.410 through
107.450, 107.470, 107.475, 107.500, 107.510, 107.600, 107.680, 107.690
through 107.692, 107.865, and 107.1910 apply also to an Entity General
Partner of a Licensee.
(d) * * * The term Licensee, as used in Sec. Sec. 107.30, includes
all of the Licensee's Control Persons. * * *
* * * * *
Sec. Sec. 107.250 [Removed and Reserved]
0
5. Remove and reserve Sec. 107.250.
0
6. Amend Sec. 107.300 by revising the third sentence in paragraph (a)
to read as follows:
Sec. 107.300 License application form and fee.
* * * * *
(a) Initial review. SBIC applicants must submit a Management
Assessment Questionnaire (``MAQ'') and the Initial Licensing Fee, as
defined in paragraph (c) of this section. Any applicants whose
management team currently manages an active Licensee may submit a
Subsequent Fund MAQ, provided that: (i) SBA retains discretion to
require that such applicant submit the standard MAQ or request
additional information if SBA is unable to properly evaluate an
applicant under the factors required by the Act and described in 13 CFR
107.305; and (ii) only those applicants meeting all of the criteria
described in Sec. 107.305(e) are entitled to an ``Expedited Subsequent
Fund Evaluation Process.''
* * * * *
0
7. Amend Sec. 107.305 by revising paragraph (e) to read as follows:
Sec. 107.305 Evaluation of license applicants.
* * * * *
(e) Subsequent fund applicants. Applicants operating an active
Licensee that meet the following eligibility criteria may apply under
an ``Expedited Subsequent Fund'' evaluation process. Should an
applicant fulfill and formally attest to meeting all of the following
eligibility criteria, the applicant may apply for an ``Expedited
Subsequent Fund'' evaluation process:
(1) Consistent Strategy and Fund Size. The applicant's targeted
Regulatory Capital is less than or equal to 133 percent of the
Regulatory Capital (accounting for inflation adjustments) of the most
recently licensed Licensee managed by the applicant's management team
(the ``Prior Fund''). The applicant's investment strategy and asset
class will be substantially the same as the Prior Fund.
(2) Clean Regulatory History. There are no major findings,
significant ``other matters,'' or unresolved ``other matters'' related
to Licensees managed by the principals of the applicant in the prior
three (3) years or three (3) SBIC examinations (whichever period is
longer).
(3) Consistent Limited Partner-General Partner Dynamics. No limited
partner will represent more than fifty percent (50%) of the Regulatory
Capital of the SBIC applicant or otherwise exercise Control with
respect to the applicant unless such limited partner was a Control
Person of the Prior Fund.
(4) Investment Performance Stability. The Prior Fund's net
distributions to paid-in capital (DPI) and net total value to paid-in
capital (TVPI) are at or above median vintage year and strategy
performance benchmarks for the prior three quarters. The principals of
the applicant are not managing a Licensee in default or with a Capital
Impairment Percentage (CIP) equal to or exceeding 75 percent of the
maximum permitted for that Licensee under 13 CFR 107.1830(c).
(5) Firm Stability. Subject to SBA's confirmation, no material
changes to the broader firm, including any resignations, terminations,
or retirements by members of the general partner, investment committee,
broader investment team, or key finance and operations personnel. SBA
retains the discretion to allow changes that were part of a routine and
customary firm succession plan previously communicated in writing to
SBA.
(6) Federal Bureau of Investigation (FBI) Criminal and Internal
Revenue Service (IRS) Background Check. Neither the applicant's
sponsoring entity nor any of the principals of the applicant have an
FBI criminal record that was not previously reviewed and cleared by SBA
during the Prior Fund's licensing application, and none of the
applicant's principals nor sponsoring entity have violated IRS or state
tax regulations from the date of the Prior Fund's license issuance.
(7) No Outstanding or Unresolved Material Litigation Matters. No
outstanding or unresolved litigation matters involving allegations of
dishonesty, fraud, or breach of fiduciary duty or otherwise requiring a
report under Sec. 107.660(c) or (d) in connection with the Prior Fund,
other Licensees managed by the applicant's principals, or any other
person who was required by SBA to complete a personal history statement
in connection with the license application.
(8) No Outstanding Tax Liens. There are no outstanding federal,
state, or local tax liens on the applicant's principals, the Prior
Fund, and/or the sponsoring entity of applicant.
Sec. Sec. 107.310 and 107.460 [Removed and Reserved]
0
8. Remove and reserve Sec. Sec. 107.310, and 107.460.
0
9. Amend Sec. 107.507 by revising paragraph (a) to read as follows:
Sec. 107.507 Violations based on false filings and nonperformance of
agreements with SBA.
* * * * *
(a) Nonperformance. Nonperformance of any of the requirements of
any Debenture or Participating Security or of any written agreement
with SBA.
* * * * *
0
10. Amend Sec. 107.720 by revising paragraph (d) to read as follows:
Sec. 107.720 Small Businesses that may be ineligible for financing.
* * * * *
(d) Project Financing--
(1) General Rule. You are not permitted to finance a business if:
(i) The assets of the business are to be reduced or consumed,
generally without replacement, as the life of the business progresses,
and the nature of the business requires that a stream of cash payments
be made to the business's financing sources, on a basis associated with
the continuing sale of assets. Examples include real estate
[[Page 29801]]
development projects and oil and gas wells; or
(ii) The primary purpose of the Financing is to fund production of
a single item or defined limited number of items, generally over a
defined production period, and such production will constitute the
majority of the activities of the Small Business. Examples include
motion pictures and electric generating plants.
(2) Exception. This paragraph (d) does not prohibit a Financing of
a business conducting or engaged in one or more projects reasonably
anticipated to have a duration exceeding 48 months and involving (i)
the production, mining, extraction, or beneficiation of Critical
Minerals, (ii) the conversion of Critical Mineral ores into oxides,
oxide concentrates, metals, metal powders, or alloys, (iii) any other
processing of Critical Minerals necessary for incorporation into semi-
finished goods or final products, or (iv) in the case of a Financing by
an SBICCT, a designated Critical Technology. For the purposes of this
section, the term ``Critical Minerals'' means those minerals included
in the ``Critical Minerals List'' published by the United States
Geological Survey (USGS) pursuant to section 7002(c) of the Energy Act
of 2020, 30 U.S.C. 1606, at 87 FR 10381, or any subsequent such list,
as well as uranium, copper, potash, gold, the 17 elements identified as
rare earth elements by the Department of Energy (DOE) in the April 2020
publication titled ``Critical Materials Rare Earths Supply Chain,'' and
any additional elements that either the USGS or DOE determines in any
subsequent official report or publication should be considered rare
earth elements.
* * * * *
0
11. Amend Sec. 107.830 by revising the section heading, revising
paragraph (a), inserting new paragraph (b), redesignating paragraph (b)
as paragraph (c), and redesignating paragraph (c) as paragraph (d) to
read as follows:
Sec. 107.830 Duration/term of financing.
(a) General rule. The duration/term of all your Financings must be
for a minimum period of one year and the maximum term of any Loan or
Debt Security Financing must be no longer than 20 years.
(b) Exceptions. You make may a Short-term Financing for a term less
than one year if the Financing is:
(1) An interim Financing in contemplation of long-term Financing.
The contemplated long-term Financing must be in an amount at least
equal to the short-term Financing, and must be made by you alone or in
participation with other investors; or
(2) For protection of your prior investment(s); or
(3) For the purpose of Financing a change of ownership under Sec.
107.750. The total amount of such Financings may not exceed 20 percent
of your Loans and Investments (at cost) at the end of any fiscal year;
or
(4) For the purposes of aiding a Disadvantaged Business certified
to perform a contract awarded under a Federal, State, or local
government set-aside program.
(c) * * *
(d) * * *
Sec. 107.835 [Removed and Reserved]
0
12. Remove and reserve Sec. 107.835
* * * * *
Sec. 107.840 [Removed and Reserved]
0
13. Remove and reserve Sec. 107.840.
* * * * *
Sec. 107.1130 Leverage fees and Annual Charges
0
14. Amend Sec. 107.1130 by revising the second sentence of paragraph
(d)(1) to read as follows:
* * * * *
(d) * * *
(1) * * * Unless otherwise determined by SBA and published in the
Federal Register, for Leverage issued pursuant to Leverage commitments
approved on or after October 1, 2023, the Annual Charge, established
and published, shall not be less than 0.10 percent per annum, subject
to the following provisions:
* * * * *
Sec. 107.1140 [Removed and Reserved]
0
15. Remove and reserve Sec. 107.1140.
Sec. Sec. 107.1160, 107.1170, and 107.1400 through 107.1450 [Removed
and Reserved]
0
16. Remove and reserve Sec. 107.1160, 107.1170, and 107.1400 through
107.1450.
Sec. 107.1560 Distributions by Licensee--required Distributions to
private investors and SBA.
0
17. Amend Sec. 107.1560 by:
0
a. Revising paragraph (d)(2);
0
b. Deleting paragraph (g)(2);
0
c. Revising paragraph (g)(3);
0
d. Deleting paragraph (g)(4); and
0
e. Revising paragraph (g)(5).
The revision to read as follows:
Sec. 107.1560 Distributions by Licensee--required Distributions to
private investors and SBA.
* * * * *
(d) * * *
(2) Distributions to SBA, or its designated agent or Trustee,
reduce Retained Earnings Available for Distribution if they are applied
as payments of Profit Participation (see paragraph (g) of this
section). * * *
* * * * *
(g) * * *
(2) Second, as a redemption of Participating Securities in order of
issue;
(4) Third, as the repayment of principal of any outstanding
Debentures, with such repayment to be made into escrow on terms and
conditions SBA determines.
* * * * *
Sec. Sec. 107.1585 and 107.1590 [Removed and Reserved]
0
18. Remove and reserve Sec. 107.1585 and 107.1590.
Sec. 107.1700 [Amended]
0
19. Amend Sec. 107.1700 by revising the first sentence of the
introductory paragraph to read as follows:
Sec. 107.1700 Transfer by SBA of its interest in Licensee's Leverage
security.
Upon such conditions and for such consideration as it deems
reasonable, SBA may sell, assign, transfer, or otherwise dispose of any
Debenture, Participating Security, or other security held by or on
behalf of SBA in connection with Leverage. * * *
* * * * *
Sec. 107.1800 [Amended]
0
20. Amend Sec. 107.1800 by revising the second sentence of the
introductory paragraph to read as follows:
Sec. 107.1800 Licensee's agreement to terms and conditions in
Sec. Sec. 107.1810 and 107.1820.
* * * * *
The terms, conditions and remedies in Sec. 107.1810 apply to
outstanding Debentures issued after April 25, 1994. The terms,
conditions and remedies in Sec. 107.1820 apply to outstanding
Participating Securities issued after April 25, 1994, or if you have
Earmarked Assets in your portfolio.
Sec. 107.1810 [Amended]
0
21. Amend Sec. 107.1810 by removing paragraph (f)(9) and redesignating
paragraphs (f)(10) through (f)(12) as (f)(9) through (f)(11).
0
22. Amend Sec. 107.1820 by revising paragraph (a) and (e)(9) to read
as follows:
Sec. 107.1820 Conditions affecting issuers of Participating
Securities.
(a) Applicability of this section. This section applies if you have
Participating Securities or have Earmarked Assets in your portfolio.
Your Articles must include the provisions of this Sec. 107.1820
[[Page 29802]]
as a condition to SBA's guarantee of Participating Securities and for
as long as you own Earmarked Assets.
* * * * *
(e) * * *
(9) Failure to meet investment requirements. You fail to make the
amount of Equity Capital Investments required for Participating
Securities (Sec. 107.1500(b)(4)), if applicable to you.
Kelly Loeffler,
Administrator.
[FR Doc. 2025-12584 Filed 7-3-25; 8:45 am]
BILLING CODE 8026-09-P
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</html>Indexed from Federal Register on July 7, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.