On November 1, 2022, the U.S. Small Business Administration (the "SBA") announced that it revised the application process by which a Small Business Investment Company ("SBIC") can request a commitment of debentures from the SBA (a "Commitment Application"). Changes to the Commitment Application are as follows1:
- Email submission of the Commitment Application. Completed Commitment Applications must be submitted to the SBA via email to SBICFunding@sba.gov. The SBA has required that Commitment Applications be submitted in this way since March 2020 as part of its COVID-19 procedures, and has now made this requirement permanent.
- Signature Requirements. All pages within a Commitment Application that require a signature must be scanned pages including a hand-executed signature from a person authorized to sign on behalf of the SBIC. Electronic signatures are not acceptable.
- Commitment Increments. The requested debenture commitment must be in an increment of $5,000.
- Form 468 Certification. As part of its Commitment Application, an SBIC must certify that it has submitted an SBA Form 4682 to the SBA via the SBA's web portal, SBIC-Web. Previously, the SBA required that an SBA Form 468 be included within the Commitment Application.
- Protecting Bank Identification. The Commitment Application requires that bank account information be included. The SBA recommends that the SBIC transmit its Commitment Application securely to protect this information.
- Interim Interest Rates. The short-term interest rate on SBA debentures is now calculated based on the Federal Home Loan Bank of Chicago Advance Rate. Previously, this short-term interest rate was based on LIBOR (the London Inter-Bank Offered Rate). Long-term interest rates on SBA debentures will continue to be set at the 10-year Treasury rate plus a spread that is based on market conditions
If you have questions regarding Commitment Applications, or the SBIC program in general, please contact your SBIC counsel at Winston & Strawn LLP.
Footnotes
1 The SBA's full instructions for completing the Commitment Application can be found at www.sba.gov/sites/default/files/2022-11/Commitment-Application-Instructions.pdf.
2 SBA Form 468 is a financial report that SBICs provide to the SBA.
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