Amount
In general
Exception
The Administrator may, in the discretion of the Administrator and based on a showing of special circumstances and good cause, permit the private capital of a licensee authorized or seeking authorization to issue participating securities to be purchased or guaranteed by the Administration to be less than $10,000,000, but not less than $5,000,000, if the Administrator determines that such action would not create or otherwise contribute to an unreasonable risk of default or loss to the Federal Government.
Adequacy
Exemption from capital requirements
Financial institution investments
Certain banks
2
Certain savings associations
Notwithstanding any other provision of law, any Federal savings association may invest in any one or more small business investment companies, or in any entity established to invest solely in small business investment companies, except that in no event may the total amount of such investments by any such Federal savings association exceed 5 percent of the capital and surplus of the Federal savings association.
Diversification of ownership
The Administrator shall ensure that the management of each licensee licensed after , is sufficiently diversified from and unaffiliated with the ownership of the licensee in a manner that ensures independence and objectivity in the financial management and oversight of the investments and operations of the licensee.
Pub. L. 85–699, title III, § 30272 Stat. 692Pub. L. 86–502, § 574 Stat. 196Pub. L. 87–341, § 375 Stat. 752Pub. L. 88–273, § 278 Stat. 146Pub. L. 90–104, title II81 Stat. 269Pub. L. 94–305, title I90 Stat. 666Pub. L. 95–89, title II, § 21091 Stat. 558Pub. L. 95–507, title I, § 10592 Stat. 1758Pub. L. 102–366, title IV106 Stat. 1015Pub. L. 104–208, div. D, title II, § 208(c)110 Stat. 3009–742Pub. L. 105–135, title II, § 215(a)111 Stat. 2601Pub. L. 106–554, § 1(a)(9) [title IV, § 403]114 Stat. 2763(, , ; , , ; , , ; , , ; , §§ 203(a), 204, , , 270; , §§ 106(e), 107, , ; , , ; , , ; , §§ 406(a), 409, , , 1017; , , ; , , ; , , , 2763A–690.)
Editorial Notes
References in Text
section 661 of this titleFor definition of “this chapter”, referred to in subsec. (a)(1)(B), see References in Text note set out under .
section 681 of this titlePub. L. 104–208, div. D, title II, § 208(b)(3)(A)110 Stat. 3009–742Subsection (d) of , referred to in subsec. (a)(4), was repealed by , , .
Section 1845(a)(1) of title 12Pub. L. 89–485, § 980 Stat. 240section 371c of Title 12, referred to in subsec. (b)(1), was repealed by , , . See , Banks and Banking.
Codification
, referred to in subsecs. (a)(4) and (c), was in the original “the date of enactment of the Small Business Program Improvement Act of 1996”, which was translated as meaning the date of enactment of the Small Business Programs Improvement Act of 1996, to reflect the probable intent of Congress.
Amendments
Pub. L. 106–5542000—Subsec. (b). inserted subsec. heading, designated existing provisions as par. (1), inserted par. heading, and added par. (2).
Pub. L. 105–1351997—Subsec. (b). substituted “any national bank, or any member bank of the Federal Reserve System or nonmember insured bank to the extent permitted under applicable State law, may invest in any 1 or more small business investment companies, or in any entity established to invest solely in small business investment companies, except that in no event shall the total amount of such investments of any such bank exceed 5 percent of the capital and surplus of the bank.” for “shares of stock in small business investment companies shall be eligible for purchase by national banks, and shall be eligible for purchase by other member banks of the Federal Reserve System and nonmember insured banks to the extent permitted under applicable State law; except that in no event may any such bank acquire shares in any small business investment company if, upon the making of that acquisition, the aggregate amount of shares in small business investment companies then held by the bank would exceed 5 percent of its capital and surplus.”
Pub. L. 104–208, § 208(c)(1)Provided, howeversection 681(c) of this titlesection 681(d) of this title1996—Subsec. (a). , inserted heading and substituted pars. (1) to (3)(A) and “determine that the licensee will be able” in par. (3)(B) for “The combined private paid-in capital and paid-in surplus of any company licensed pursuant to section 681(c) and (d) of this title shall not be less than $150,000: , That the combined private paid-in capital and paid-in surplus of any company licensed on or after pursuant to shall be not less than $2,500,000 and pursuant to shall be not less than $1,500,000. In all cases, such capital and surplus shall be adequate to assure a reasonable prospect that the company will be operated soundly and profitably, and managed actively and prudently in accordance with its articles. The Administration shall also determine the ability of the company,”.
Pub. L. 104–208, § 208(c)(2)Subsec. (a)(4). , added par. (4).
Pub. L. 104–208, § 208(c)(3)Subsec. (c). , inserted heading and amended text of subsec. (c) generally. Prior to amendment, text read as follows: “The aggregate amount of shares in any such company or companies which may be owned or controlled by any stockholder, or by any group or class of stockholders, may be limited by the Administration.”
Pub. L. 102–366section 681(c) of this titlesection 681(d) of this title1992—Subsec. (a). substituted “1992 pursuant to shall be not less than $2,500,000 and pursuant to shall be not less than $1,500,000” for “1979 pursuant to section 681(c) and (d) of this title shall be not less than $500,000” and inserted at end “The Administration shall also determine the ability of the company, both prior to licensing and prior to approving any request for financing, to make periodic payments on any debt of the company which is interest bearing and shall take into consideration the income which the company anticipates on its contemplated investments, the experience of the company’s owners and managers, the history of the company as an entity, if any, and the company’s financial resources.”
Pub. L. 95–5071978—Subsec. (a). provided that the combined private paid-in capital and paid-in surplus of any company licensed on or after pursuant to section 681(c) and (d) of this title would not be less than $500,000.
Pub. L. 95–891977—Subsec. (b). inserted “and” between “capital” and “surplus”.
Pub. L. 94–305, § 106(e)1976—Subsec. (a). , struck out “of incorporation” after “its articles”.
Pub. L. 94–305, § 107Subsec. (b). , struck out provisions prohibiting the bank from acquiring shares in a small business investment company if the bank would hold 50 percent or more of any class of equity securities issued by that investment company and having actual or potential voting rights.
Pub. L. 90–104, § 203(a)section 686(b) of this title1967—Subsec. (a). , substituted small business investment company minimum capital requirement, a combined private paid-in capital and paid-in surplus, of $150,000 and adequate to assure reasonable prospect of sound and profitable company operations and active and prudent management in accordance with the articles of incorporation for former requirement of a paid-in capital and surplus equal to at least $300,000, and eliminated provisions for purchase of debentures of such companies in an amount not to exceed the lesser of $700,000 or the amount of paid-in capital and surplus of the company from other sources and for subordination of debentures (both incorporated in ), for such purchases by the Administration only during certain prescribed period, and deeming the debentures part of the capital and surplus for certain purposes.
Pub. L. 90–104, § 204Subsec. (b). , substituted prohibition against bank acquisition of small business investment company stock if, upon such acquisition, the aggregate amount of shares in such companies then held by the bank would exceed 5 percent of the capital and surplus, or the bank would hold 50 percent or more of any class of equity securities issued by that investment company and having actual or potential voting rights for former prohibition against holding of shares in an amount aggregating more than 2 percent of its capital and surplus.
Pub. L. 88–273Pub. L. 87–341Pub. L. 88–2731964—Subsec. (a). increased the limitation on Administration purchase of debentures from $400,000 to $700,000 and extended the period for such purchase from three years after date of issuance of license or date of enactment of , the Small Business Investment Act Amendments of 1961 (), whichever is later, to five years after date of issuance of license or date of enactment of , the Small Business Investment Act Amendments of 1963 (), whichever is later.
Pub. L. 87–341, § 3(a)section 681c of this title1961—Subsec. (a). , inserted “and growth”, limited the purchase of debentures to the extent that necessary funds are not available to the company involved from private sources on reasonable terms, increased the amount of purchasable debentures to not more than the lesser of $400,000 or the paid-in capital and surplus of the company from other sources, and restricted such purchases to such period as may be fixed by the Administration, but not ending more than three years after the date of issuance of the company’s license under , or , whichever is later, and deleted provisions limiting purchase of debentures to $150,000.
Pub. L. 87–341, § 3(b)Subsec. (b). , increased the maximum amount of shares a bank may hold in small business investment companies to 2 percent of the capital and surplus.
Pub. L. 86–502section 1845(a)(1) of title 121960—Subsec. (b). substituted “Notwithstanding the provisions of , shares” for “Shares”.
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Pub. L. 105–135section 3 of Pub. L. 105–135section 631 of this titleAmendment by effective , see , set out as a note under .
Effective Date of 1967 Amendment
Pub. L. 90–104section 211 of Pub. L. 90–104section 681 of this titleAmendment by effective 90 days after , see , set out as a note under .
Effect of Small Business Equity Enhancement Act of 1992 on Securities Laws
Pub. L. 102–366section 418 of Pub. L. 102–366section 661 of this titleNothing in amendment by to be construed to affect applicability of securities laws or to otherwise supersede or limit jurisdiction of Securities and Exchange Commission, see , set out as a note under .