13 CFR 107.1505 - Liquidity requirements for Licensees issuing Participating Securities.

§ 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;

(2) At the time you apply for Leverage, unless SBA permits otherwise; and

(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
Weight Weighted amount
(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.

[ 61 FR 3189, Jan. 31, 1996, as amended at 63 FR 5869, Feb. 5, 1998]

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United States Code
Statutes at Large

Title 13 published on 04-May-2017 03:04

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 13 CFR Part 107 after this date.

  • 2017-05-02; vol. 82 # 83 - Tuesday, May 2, 2017
    1. 82 FR 20433 - Small Business Investment Companies: Passive Business Expansion and Technical Clarifications
      GPO FDSys XML | Text
      SMALL BUSINESS ADMINISTRATION
      Final rule; delay of effective date and request for comment.
      The effective date of the SBA final rule published December 28, 2016 (81 FR 95419), delayed until March 21, 2017 at 82 FR 8499 and then further delayed until May 20, 2017 at 82 FR 14428, is further delayed until August 18, 2017. Comments on this document must be submitted no later than June 1, 2017.
      13 CFR Part 107