Small Business Investment Company (SBIC) Regulatory Amendments

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<title>Federal Register, Volume 91 Issue 1 (Friday, January 2, 2026)</title>
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[Federal Register Volume 91, Number 1 (Friday, January 2, 2026)]
[Rules and Regulations]
[Pages 1-9]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-24232]

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Rules and Regulations
Federal Register
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Federal Register / Vol. 91, No. 1 / Friday, January 2, 2026 / Rules
and Regulations

[[Page 1]]

SMALL BUSINESS ADMINISTRATION

13 CFR Part 107

RIN 3245-AI14

Small Business Investment Company (SBIC) Regulatory Amendments

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: On July 7, 2025, the U.S. Small Business Administration
(``SBA'' or ``Agency'') published a notice of proposed rulemaking
(``NPRM'' or ``proposed rule'') to revise the regulations for the Small
Business Investment Company (``SBIC'') program 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'') and to remove
certain barriers to investments in critical mineral extraction and
processing and designated critical technologies. This final rule
implements proposed regulatory changes as modified to address comments
SBA received.

DATES: This rule is effective February 2, 2026.

FOR FURTHER INFORMATION CONTACT:
Policy: Joshua Carter, Associate Administrator of the Office of
Investment and Innovation, U.S. Small Business Administration,
<a href="/cdn-cgi/l/email-protection#3a555353144a55565359437a49585b145d554c"><span class="__cf_email__" data-cfemail="b1ded8d89fc1deddd8d2c8f1c2d3d09fd6dec7">[email&#160;protected]</span></a>, 202-205-7159. 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: Paul Van Eyl, Director of Financial Policy,
Office of Investment and Innovation, U.S. Small Business
Administration, <a href="/cdn-cgi/l/email-protection#4a252323643a25262329330a39282b642d253c"><span class="__cf_email__" data-cfemail="a1cec8c88fd1cecdc8c2d8e1d2c3c08fc6ced7">[email&#160;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 ten 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. Notice of Proposed Rulemaking

The Small Business Investment Act of 1958, as amended (the ``Act'')
declares that the policy of Congress and the purpose of the Act is to
improve and stimulate the national economy in general and the small
business segment thereof. The Act states the intention of Congress to
provide ``financial assistance under this Act, when practicable,
priority accorded to small business concerns which lease or purchase
equipment and supplies which are produced in the United States and
``financial assistance provided hereunder shall not result in a
substantial increase of unemployment in any area of the country.''
Additionally, the Act authorizes the SBA Administrator ``to prescribe
regulations governing the operations of small business investment
companies.''
On July 7, 2025, SBA proposed changes to 13 CFR 107 (90 FR 29794)
to remove eighteen 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 proposed to remove eight
regulations relating to ``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 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

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a result, no new SSBIC licenses have been issued since October 1, 1996,
but consistent with the Improvement Act of 1996, the then-existing
SSBIC licenses were not revoked. 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 proposed in the NPRM to
remove the regulations related to Subsidized Leverage. The SSBICs
remaining in the program will not be impacted by the changes finalized
in this rule and, if eligible, those SSBICs may continue to apply to
issue standard Debentures.
SBA proposed 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 made in this rule will not impact any
Participating Securities SBICs.
SBA proposed to remove one regulation relating to a category of
SBICs created by regulation in 2012 that were 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)
that defined this category of Early Stage SBICs stated that SBA's
intent was to license Early Stage SBICs over a five 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. In the NPRM, SBA proposed 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 proposed to remove, or revise, thirty regulations and four
definitions that are duplicative, redundant, or otherwise inefficient
or unnecessary. In connection with this rulemaking, SBA proposed
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 further proposed 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.''
To encourage SBIC investments into small businesses engaged in
critical technologies, or the extraction, conversion or processing of
critical minerals, SBA proposed to define Critical Technology that
would be permitted under an additional exception to the project finance
restriction if such investment is made by an SBICCT.

C. Comments

SBA received five submissions of comments in response to the
proposed rule. The comments related to the proposed rule were
supportive of the changes with one comment highlighting their support
of SBA's effort to streamline regulations governing the SBIC program to
remove obsolete provisions, improve regulatory efficiencies, and
establish terms and conditions that will help foster SBIC investments
in portfolio companies engaged in critical technologies and critical
mineral extraction and processing. While SBA appreciates the support
from those who submitted comments, some of the comments related to the
SBIC program were not directly within the scope or were germane to this
rulemaking. SBA will consider these comments as part of any future
rulemaking that SBA may undertake.

D. Section by Section Analysis

a. Section 107.50--Definition of Terms
SBA proposed 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.
One commentor indicated their support of SBA's proposed deletion as it
streamlines the regulation and limits redundancy. Accordingly, SBA is
removing paragraph (11) from this definition.
SBA proposed 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. SBA proposed to add
the definition of ``Critical Technology'' to identify a type of
investment that would be permitted under an additional exception to the
project finance restriction if such investment is made by an SBICCT.
No comments were directly received regarding the two proposed
additions to the definitions, however, one commentor indicated that
they supported the proposed amendments to the SBIC program regulations
that permit and encourage SBIC investments into small businesses
engaged in critical technologies, or the extraction, conversion or
processing of critical minerals. SBA is adopting the proposal without
change.
SBA proposed 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. No comments were received
regarding the proposed revision. Accordingly, SBA is adopting the
proposal without change.
SBA proposed 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 further

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proposed 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 proposed to revise the definition to
reference redesignated 13 CFR 107.1810(f)(10) rather than current 13
CFR 107.1810(f)(11) but did not propose any substantive changes to the
definition. No comments were received regarding the proposed revision.
Accordingly, SBA is adopting the revision without change.
SBA proposed 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.'' No comments were received
regarding the proposed removal. Accordingly, SBA is adopting the
proposal without change.
SBA proposed 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.'' No comments were
received regarding the proposed amendment. Accordingly, SBA is adopting
the proposal without change.
SBA proposed 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. No comments were
received regarding the proposed additional term. Accordingly, SBA is
adopting the proposal without change.
SBA proposed 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 proposed to remove 13 CFR
107.1160 and accompanying references to 13 CFR 107.1160. Accordingly,
this definition is no longer necessary. No comments were received
regarding the proposed removal, so SBA is removing the definition in
this final rule.
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, removes this section. No comments were received regarding
the proposed removal.
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 proposed to remove certain
requirements applicable to an SBIC's general partner pursuant to this
regulation. Specifically, SBA proposed 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 proposed to remove 13 CFR 107.460 as part of this
rulemaking and 107.680 does not include the term Licensee. No comments
were received regarding the proposed removal, and this removal is
adopted without change.
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, which 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 the current 13 CFR
107.250. SBA is removing this section, because it is no longer
necessary. No comments were received regarding the removal.
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 proposed 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 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.
One commentor indicated their support for SBA's proposed amendments
to its eligibility criteria including removal of elements (v)
(Consistent or Reduced Leverage Management), (vii) (Promotions from
Within), and (viii) (Inclusive Equity) because the amendments help to
streamline the review process while ensuring that evaluations under the
remaining eight elements remain robust. Accordingly, SBA is adopting
this proposed revision without change.
f. Section 107.305--Evaluation of License Applicants
This regulation currently sets forth the evaluation factors for
license applicants. SBA proposed 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. As stated above, comments were received
which support SBA's proposed amendments to its eligibility criteria
which will help to streamline the review process while ensuring that
evaluations under the remaining eight elements remain robust. As a
result, SBA is adopting this revision without change.

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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 is removing this section. No comments
were received regarding the proposed removal.
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 is removing it. No comments were received regarding
the proposed removal.
i. Section 107.507--Violations Based on False Filings and
Nonperformance of Agreements With SBA
SBA proposed 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 did not propose any substantive changes to
13 CFR 107.507. No comments were received regarding the proposed
amendment, so SBA is adopting the amendment without change.
j. Section 107.720--Small Businesses That May Be Ineligible for
Financing
SBA proposed 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.
One commentor expressed support for the proposed amendment to the
SBIC program regulations that would permit and encourage SBIC
investments into small businesses engaged in critical technologies, or
the extraction, conversion or processing of critical minerals. One
commentor recommended that the minimum duration of operations for a
small business portfolio company engaged in the extraction, conversion
or processing of critical minerals be extended to 60 months from the
proposed 48 months. SBA wishes to clarify that neither section
107.720(d) nor the proposed Exception included in this rulemaking
(107.720(d)(2)) prohibits a Financing of a business conducting or
engaged in one or more projects reasonably anticipated to have a
duration exceeding 48 months. Therefore, any project that has an
anticipated duration exceeding 48 months (including a 60-month project)
would be included in this proposed exception. SBA is adopting the
proposal without change.
k. Sections 107.830--Minimum Duration/Term of Financing, 107.835--
Exceptions to Minimum Duration/Term of Financing, 107.840--Maximum Term
of Financing, and 107.845--Maximum Rate of Amortization on Loans and
Debt Securities
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 unnecessary. Accordingly, SBA proposed to
streamline these regulations by moving the substance of sections
107.835,107.840, and 107.845 into section 107.830 and proposed to
remove sections 107.835, 107.840, and 107.845. SBA proposed 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. No
comments were received regarding the proposed changes. Accordingly, SBA
is adopting the proposal without change.
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 proposed 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.
One commentor provided their support to the proposed amendment
because it provides SBA with the necessary authority to protect the
program's fiscal and budgetary integrity based on real-time
macroeconomic and SBIC liquidation conditions. Following receipt of
this comment, SBA incorporated the anticipated changes into a separate
rulemaking which was undertaken to address separate modifications to 13
CFR 107.1130.
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 is removing 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. No
comments were received regarding the proposed removal.
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

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above, no Section 301(d) Licensee is authorized to issue or draw
Subsidized Leverage in the future. SBA is removing this section,
because it is no longer necessary. No comments were received regarding
the proposed removal.
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 is
removing it. No comments were received regarding the proposed removal.
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 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 removing these sections, because they are no longer
necessary. No comments were received regarding the proposed removal.
q. Section 107.1560--Distributions by Licensee--Required Distributions
to Private Investors and SBA
SBA proposed 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 making any substantive changes to 13 CFR 107.1560. No comments were
received regarding the proposed removal. Accordingly, the proposal is
adopted without change.
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 is removing it. No comments were received regarding the proposed
removal.
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 is removing this section. No comments were
received regarding the proposed removal.
t. Section 107.1700--Transfer by SBA of Its Interest in Licensee's
Leverage Security
SBA proposed 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. No comments were received regarding the proposed
removal. Accordingly, this proposal is adopted without change.
u. Section 107.1810--Events of Default and SBA's Remedies for
Licensee's Noncompliance With Terms of Debentures
SBA proposed 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 proposed to remove in this rulemaking. No comments were received
regarding the proposed removal, and SBA is removing this paragraph.
v. Section 107.1820--Conditions Affecting Issuers of Preferred
Securities and/or Participating Securities
SBA proposed to revise the caption of 13 CFR 107.1820 to remove the
reference to Preferred Securities. SBA further proposed to amend 13 CFR
107.1820(a) to remove all references to Preferred Securities. In
addition, SBA proposed 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. No
comments were received regarding the proposed removal, so SBA is making
the removals as proposed.
Compliance with Executive Orders 12866, 14241, 14272, 14192, 14219,
12988, and 13132, the Paperwork Reduction Act (44 U.S.C., Ch. 35), the
Congressional Review Act, 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 final rule constitutes a ``significant regulatory action'' under
section 3(f) of Executive Order 12866. An analysis of the estimated
cost savings of deregulation finalized in this rule is contained in the
section below on Executive Order 14192. SBA considered alternatives to
each regulation when complying with Executive Order 14219 to eliminate
regulations that impede private enterprise and entrepreneurship. SBA is
finalizing 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
final 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 finalizing 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 have
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 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

[[Page 6]]

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 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 14192

This final rule is an Executive Order 14192 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 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)............... 200 hours................. ..............
($50,000)................. $25,000................... ($25,000)
Years 2+................................ (256 hours)............... 0 hours................... ..............
($50,000)................. $0.00..................... ($50,000)
----------------------------------------------------------------------------------------------------------------

D. Executive Order 14219

On February 19, 2025, the President issued Executive Order 14219,
Ensuring Lawful Governance and Implementing the President's
``Department of Government Efficiency'' Deregulatory Initiative, which
further emphasized the goal of the Administration to alleviate the
regulatory burdens placed on the public. Under Executive Order 14219,
agencies must evaluate their existing regulations to determine which
ones should be repealed, replaced, or modified. SBA has engaged in this
process and has identified the regulations in this final rulemaking as
appropriate for removal in accordance with Executive Order 14219.

E. 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.

F. Executive Order 13132

This final 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.

G. Paperwork Reduction Act, 44 U.S.C., Ch. 35

SBA has determined that this final rule does not affect any
existing collection of information and does not include any new
collection of information.

H. Congressional Review Act, 5 U.S.C. 801-808

This rule has been determined not to meet the criteria set forth in
5 U.S.C. 804(2). SBA will submit the rule to Congress and the
Government Accountability Office consistent with the Congressional
Review Act's requirements.

I. Regulatory Flexibility Act, 5 U.S.C. 601-612

When an agency issues a final rulemaking, the Regulatory
Flexibility Act (``RFA'') requires the agency to ``prepare a final
regulatory flexibility analysis'' that will describe the impact of the
rule on small entities. 5 U.S.C. 604(a). Section 605 of the RFA allows
an agency to certify a rule, in lieu of preparing an analysis, if the
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 final 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

[[Page 7]]

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 14192 discussion above.
Therefore, the Administrator of the SBA hereby certifies that this
rule will not have a significant economic impact on a substantial
number of small entities.

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 amends 13
CFR part 107 as follows:

PART 107--SMALL BUSINESS INVESTMENT COMPANIES

0
1. The authority citation for part 107 continues to read as follows:

Authority: 15 U.S.C. 662, 681-687, 687b-h, 687k-m.

0
2. Amend Sec. 107.50 by:
0
(a) Removing paragraph (11) of the ``Associate'' definition;
0
(b) Removing the definitions of ``Preferred Securities'' and ``Venture
Capital Financing'';
0
(c) Revising the definitions of ``Debenture Rate'' and ``Early Stage
SBIC''; and
0
(d) Adding the definitions of ``Critical Minerals'', ``Critical
Technology'', ``Prior Fund'' and ``SBICCT'' in alphabetical order 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 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 paragraph (b)(2) and the second
sentence of paragraph (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. 107.30, includes all
of the Licensee's Control Persons. * * *
* * * * *

Sec. 107.250 [Removed and Reserved]

0
5. Remove and reserve Sec. 107.250.

0
6. Amend Sec. 107.300 by revising 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:
(1) 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
(2) 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. Should an applicant fulfill and
formally attest to meeting all of the following eligibility criteria as
to its prior Licensee and proposed new Licensee, the applicant may
apply for licensure under the ``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 Prior
Fund's Regulatory Capital of the most recently licensed Licensee
managed by the applicant's management team (the ``Prior Fund''),
accounting for inflation adjustments from date of Prior Fund's
licensure. 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 account for 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

[[Page 8]]

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. 107.310 [Removed and Reserved]

0
8. Remove and reserve Sec. 107.310.

Restrictions on Common Control or Ownership of Two or More Licensees
[Removed]

0
9. Remove undesignated center heading ``Restrictions on Common Control
or Ownership of Two or More Licensees''.

Sec. 107.460 [Removed and Reserved]

0
10. Remove and reserve Sec. Sec. 107.460.

0
11. 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
12. 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 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
13. Amend Sec. 107.830 by:
0
(a) Revising the section heading;
0
(b) Revising paragraph (a);
0
(c) Redesignating paragraphs (b) through (c) as paragraphs (c) through
(d); and
0
(d) Adding a new paragraph (b) 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. The principal
of any Loan (or the loan portion of any Debt Security) with a term of
one year or less cannot be amortized faster than straight line. If the
term is greater than one year, the principal cannot be amortized faster
than straight line for the first year.
(b) Exceptions. You may make 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;
(2) For protection of your prior investment(s);
(3) For the purpose of Financing a change of ownership under Sec.
107.750. The total amount of such Short-term 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.

Sec. 107.835 [Removed and Reserved]

0
14. Remove and reserve Sec. 107.835.

Sec. 107.840 [Removed and Reserved]

0
15. Remove and reserve Sec. 107.840.

Sec. 107.845 [Removed and Reserved]

0
16. Remove and reserve Sec. 107.845.

Sec. 107.1140 [Removed and Reserved]

0
17. Remove and reserve Sec. 107.1140.

Sec. 107.1160 [Removed and Reserved]

0
18. Remove and reserve Sec. 107.1160.

Sec. 107.1170 [Removed and Reserved]

0
19. Remove and reserve Sec. 107.1170.

Preferred Securities Leverage--Section 301(d) Licensees [Removed]

0
20. Remove undesignated center heading ``Preferred Securities
Leverage--Section 301(d) Licensees''.

[[Page 9]]

Sec. 107.1400 [Removed and Reserved]

0
21. Remove and reserve Sec. 107.1400.

Sec. 107.1410 [Removed and Reserved]

0
22. Remove and reserve Sec. 107.1410.

Sec. 107.1420 [Removed and Reserved]

0
23. Remove and reserve Sec. 107.1420.

Sec. 107.1430 [Removed and Reserved]

0
24. Remove and reserve Sec. 107.1430.

Sec. 107.1440 [Removed and Reserved]

0
25. Remove and reserve Sec. 107.1440.

Sec. 107.1450 [Removed and Reserved]

0
26. Remove and reserve Sec. 107.1450.

0
27. Amend Sec. 107.1560 by revising paragraphs (d)(2) and (g) 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) How SBA will apply your Distributions. Your Distributions to
SBA (or its designated agent or Trustee) under this Sec. 107.1560 will
be applied in the following order:
(1) First, to Profit Participation;
(2) Second, as a redemption of Participating Securities in order of
issue; and
(3) 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. 107.1585 [Removed and Reserved]

0
28. Remove and reserve Sec. 107.1585.

Sec. 107.1590 [Removed and Reserved]

0
29. Remove and reserve Sec. 107.1590.

0
30. Amend Sec. 107.1700 by revising the first 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. * * *

0
31. Amend Sec. 107.1800 by revising the last two sentences 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
32. Amend Sec. 107.1810 by removing paragraph (f)(9) and redesignating
paragraphs (f)(10) through (f)(12) as (f)(9) through (f)(11).

0
33. Amend Sec. 107.1820 by revising paragraphs (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 as a
condition to SBA's guarantee of Participating Securities and for as
long as you own Earmarked Assets.
* * * * *
(d) * * *
(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. 2025-24232 Filed 12-31-25; 8:45 am]
BILLING CODE 8026-09-P

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Small Business Investment Company (SBIC) Regulatory Amendments

Federal Register Citation

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