13 CFR § 107.1505 - Liquidity requirements for Licensees issuing Participating Securities.
If you have outstanding Participating Securities, you must maintain sufficient liquidity to avoid a condition of Liquidity Impairment. Such a condition will constitute noncompliance with the terms of your Leverage under § 107.1820(e).
(a) Definition of Liquidity Impairment. A condition of Liquidity Impairment exists when your Liquidity Ratio, as determined in paragraph (b) of this section, is less than 1.20. You are responsible for calculating whether you have a condition of Liquidity Impairment:
(1) As of the close of your fiscal year;
(3) At such time as you contemplate making any Distribution.
(b) Computation of Liquidity Ratio. Your Liquidity Ratio equals your Total Current Funds Available (A) divided by your Total Current Funds Required (B), as determined in the following table:
Calculation of Liquidity Ratio
|Financial account||Amount reported
on SBA form 468
|(1) Cash and invested idle funds||× 1.00|
|(2) Commitments from investors||× 1.00|
|(3) Current maturities||× 0.50|
|(4) Other current assets||× 1.00|
|(5) Publicly Traded and Marketable Securities||× 1.00|
|(6) Anticipated operating revenue for next 12 months||1||× 1.00|
|(7) Total Current Funds Available||A|
|(8) Current liabilities||× 1.00|
|(9) Commitments to Small Businesses||× 0.75|
|(10) Anticipated operating expense for next 12 months||1||× 1.00|
|(11) Anticipated interest expense for next 12 months||1||× 1.00|
|(12) Contingent liabilities (guarantees)||× 0.25|
|(13) Total Current Funds Required||B|
1 As determined by Licensee's management under its business plan.