SBIC TechNotes Number 7a - Cover Memo
In December 2003, the Investment Division posted SBIC TechNote 7A to SBA’s website. This TechNote, entitled “Guidelines Concerning Allowable Management Expenses for Leveraged SBICs”, provided guidelines on allowable management fees for SBIC applicants submitting acceptable SBIC license applications on and after April 1, 2004.
In October 2006, the Investment Division posted a revised version of TechNote 7A. The allowable management expense formula has not changed and the October 2006 version applies to the same entities covered by the original December 2003 version: (1) any currently licensed SBIC that submitted its license application on or after April 1, 2004, and (2) any current or future SBIC license applicant
The revised TechNote 7A incorporates two changes, both of which are found in the "General Management Fee Policy Notes" at the end of the document:
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Note 6 now includes an exception to the requirement that all fees earned by Associates under 13 CFR 107.860 and 107.900 must be for the benefit of the SBIC. The exception allows an Associate to earn and retain investment banking fees under 13 CFR 107.900(e)(2), if it is regularly engaged in the provision of investment banking services and is a registered broker-dealer. Currently licensed SBICs wishing to make use of this exception may need to amend their limited partnership agreements, and are reminded that any such amendment must be submitted to SBA for prior approval
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Note 1 now includes a clarification about offsets against the SBIC's management fee and how they should be treated with respect to the calculation of excess management fees for Participating Securities distribution calculation purposes.
Questions with regard to this TechNote may be directed to sbic@sba.gov.
