US Code

Public Law 119-73 (01/23/2026)

15 U.S.C. § 687

Operation and regulation of companies

(a)

Cooperation with banks and other financial institutions

Wherever practicable the operations of a small business investment company, including the generation of business, may be undertaken in cooperation with banks or other investors or lenders, incorporated or unincorporated, and any servicing or initial investigation required for loans or acquisitions of securities by the company under the provisions of this chapter may be handled through such banks or other investors or lenders on a fee basis. Any small business investment company may receive fees for services rendered to such banks and other investors and lenders.

(b)

Use of advisory services; depository or fiscal agents; investment of funds

Each small business investment company may make use, wherever practicable, of the advisory services of the Federal Reserve System and of the Department of Commerce which are available for and useful to industrial and commercial businesses, and may provide consulting and advisory services on a fee basis and have on its staff persons competent to provide such services. Any Federal Reserve bank is authorized to act as a depository or fiscal agent for any company operating under provisions of this chapter. Any such company that is licensed before and has outstanding financings is authorized to invest funds not needed for its operations—
(1)
in direct obligations of, or obligations guaranteed as to principal and interest by, the United States;
(2)
in certificates of deposit or other accounts of federally insured banks or other federally insured depository institutions, if the certificates or other accounts mature or are otherwise fully available not more than 1 year after the date of the investment; or
(3)
in mutual funds, securities, or other instruments that consist of, or represent pooled assets of, investments described in paragraphs (1) or (2).
(c)

Rules and regulations

The Administration is authorized to prescribe regulations governing the operations of small business investment companies, and to carry out the provisions of this chapter, in accordance with the purposes of this chapter.

(d)

Forfeiture of rights, privileges, and franchises; jurisdiction

Should any small business investment company violate or fail to comply with any of the provisions of this chapter or of regulations prescribed hereunder, all of its rights, privileges, and franchises derived therefrom may thereby be forfeited. Before any such company shall be declared dissolved, or its rights, privileges, and franchises forfeited, any noncompliance with or violation of this chapter shall be determined and adjudged by a court of the United States of competent jurisdiction in a suit brought for that purpose in the district, territory, or other place subject to the jurisdiction of the United States, in which the principal office of such company is located. Any such suit shall be brought by the United States at the instance of the Administration or the Attorney General.

(e)

Liability of United States

Except as expressly provided otherwise in this chapter, nothing in this chapter or in any other provision of law shall be deemed to impose any liability on the United States with respect to any obligation entered into, or stocks issued, or commitments made, by any company operating under the provisions of this chapter.

(f)

Performance of functions, powers, and duties by Administration and Administrator

15 U.S.C. 63115 U.S.C. 642In the performance of, and with respect to the functions, powers, and duties vested by this chapter, the Administrator and the Administration shall (in addition to any authority otherwise vested by this chapter) have the functions, powers, and duties set forth in the Small Business Act [ et seq.], and the provisions of sections 13 and 16 of that Act [, 645], insofar as applicable, are extended to the functions of the Administrator and the Administration under this chapter.

(g)

Annual report on Small Business Investment activities

(1)
15 U.S.C. 639(a) The Administration shall include in its annual report, made pursuant to section 10(a) of the Small Business Act [], a full and detailed account of its operations under this chapter. Such report shall set forth the amount of losses sustained by the Government as a result of such operations during the preceding fiscal year, together with an estimate of the total losses which the Government can reasonably expect to incur as a result of such operations during the then current fiscal year.
(2)
15 U.S.C. 639(a) In its annual report for the year ending , and in each succeeding annual report made pursuant to section 10(a) of the Small Business Act [], the Administration shall include full and detailed accounts relative to the following matters:
(A)
The Administration’s recommendations with respect to the feasibility and organization of a small business capital bank to encourage private financing of small business investment companies to replace Government financing of such companies.
(B)
The Administration’s plans to insure the provision of small business investment company financing and licensing to all areas of the country and to all eligible small business concerns including steps taken to accomplish same.
(C)
Steps taken by the Administration to improve the number of licensees in underlicensed States.
(D)
The Administration’s plans to support States that seek to increase the number of licensees in the State.
(E)
Steps taken by the Administration to maximize recoupment of Government funds incident to the inauguration and administration of the small business investment company program and to insure compliance with statutory and regulatory standards relating thereto.
(F)
An accounting by the Office of Management and Budget with respect to Federal expenditures to business by executive agencies, specifying the proportion of said expenditures going to business concerns falling above and below small business size standards applicable to small business investment companies.
(G)
An accounting by the Treasury Department with respect to tax revenues accruing to the Government from business concerns, incorporated and unincorporated, specifying the source of such revenues by concerns falling above and below the small business size standards applicable to small business investment companies.
(H)
An accounting by the Treasury Department with respect to both tax losses and increased tax revenues related to small business investment company financing of both individual and corporate business taxpayers.
(I)
Recommendations of the Treasury Department with respect to additional tax incentives to improve and facilitate the operations of small business investment companies and to encourage the use of their financing facilities by eligible small business concerns.
(J)
A report from the Securities and Exchange Commission enumerating actions undertaken by that agency to simplify and minimize the regulatory requirements governing small business investment companies under the Federal securities laws and to eliminate overlapping regulation and jurisdiction as between the Securities and Exchange Commission, the Administration, and other agencies of the executive branch.
(K)
A report from the Securities and Exchange Commission with respect to actions taken to facilitate and stabilize the access of small business concerns to the securities markets.
(L)
15 U.S.C. 80a–1section 851 of title 26 Actions undertaken by the Securities and Exchange Commission to simplify compliance by small business investment companies with the requirements of the Investment Company Act of 1940 [ et seq.] and to facilitate the election to be taxed as regulated investment companies pursuant to .
(3)
15 U.S.C. 639(a) In its annual report for the year ending on , and in each succeeding annual report made pursuant to section 10(a) of the Small Business Act [], the Administration shall include a full and detailed description or account relating to—
(A)
the number of small business investment companies the Administration licensed, the number of licensees that have been placed in liquidation, and the number of licensees that have surrendered their licenses in the previous year, identifying the amount of government leverage each has received and the type of leverage instruments each has used;
(B)
the amount of government leverage that each licensee received in the previous year and the types of leverage instruments each licensee used;
(C)
for each type of financing instrument, the sizes, geographic locations, and other characteristics of the small business investment companies using them, including the extent to which the investment companies have used the leverage from each instrument to make small business loans, equity investments, or both;
(D)
the frequency with which each type of investment instrument has been used in the current year and a comparison of the current year with previous years; and
(E)
the geographic dispersion of licensees in each State compared to the population of the State, identifying underlicensed States.
(h)

Certifications of eligibility

(1)

Certification by small business concern

section 681 of this titlePrior to receiving financial assistance from a company licensed pursuant to , a small business concern shall certify in writing that it meets the eligibility requirements of the Small Business Investment Company Program or the Specialized Small Business Investment Company Program, as applicable.

(2)

Certification by company

section 681 of this titlePrior to providing financial assistance to a small business concern under this chapter, a company licensed pursuant to shall certify in writing that it has reviewed the application for assistance of the small business concern and that all documentation and other information supports the eligibility of the applicant.

(3)

Retention of certifications

section 681 of this titleCertificates made pursuant to paragraphs (1) and (2) shall be retained by the company licensed pursuant to for the duration of the financial assistance.

(i)

Interest rates

(1)
The purpose of this subsection is to facilitate the orderly and necessary flow of long-term loans and equity funds from small business investment companies to small business concerns.
(2)
In the case of a business loan, the small business investment company making such loan may charge interest on such loan at a rate which does not exceed the maximum rate prescribed by regulation by the Administration for loans made by any licensee (determined without regard to any State rate incorporated by such regulation). In this paragraph, the term “interest” includes only the maximum mandatory sum, expressed in dollars or as a percentage rate, that is payable with respect to the business loan amount received by the small business concern, and does not include the value, if any, of contingent obligations, including warrants, royalty, or conversion rights, granting the small business investment company an ownership interest in the equity or increased future revenue of the small business concern receiving the business loan.
(3)
A State law or constitutional provision shall be preempted for purposes of paragraph (2) with respect to any loan if such loan is made before the date, on or after , on which such State adopts a law or certifies that the voters of such State have voted in favor of any provision, constitutional or otherwise, which states explicitly and by its terms that such State does not want the provisions of this subsection to apply with respect to loans made in such State, except that such State law or constitutional or other provision shall be preempted in the case of a loan made, on or after the date on which such law is adopted or such certification is made, pursuant to a commitment to make such loan which was entered into on or after , and prior to the date on which such law is adopted or such certification is made.
(4)
(A)
If the maximum rate of interest authorized under paragraph (2) on any loan made by a small business investment company exceeds the rate which would be authorized by applicable State law if such State law were not preempted for purposes of this subsection, the charging of interest at any rate in excess of the rate authorized by paragraph (2) shall be deemed a forfeiture of the greater of (i) all interest which the loan carries with it, or (ii) all interest which has been agreed to be paid thereon.
(B)
In the case of any loan with respect to which there is a forfeiture of interest under subparagraph (A), the person who paid the interest may recover from a small business investment company making such loan an amount equal to twice the amount of the interest paid on such loan. Such interest may be recovered in a civil action commenced in a court of appropriate jurisdiction not later than two years after the most recent payment of interest.

Pub. L. 85–699, title III, § 30872 Stat. 694Pub. L. 87–34175 Stat. 753Pub. L. 88–273, § 578 Stat. 147Pub. L. 89–779, § 380 Stat. 1359Pub. L. 90–104, title II, § 21081 Stat. 27184 Stat. 2085Pub. L. 93–501, title II, § 20488 Stat. 1559Pub. L. 95–507, title I, § 10292 Stat. 1757Pub. L. 96–104, title I, § 10493 Stat. 790Pub. L. 96–161, title II, § 20493 Stat. 1236Pub. L. 96–221, title V94 Stat. 166Pub. L. 99–226, § 199 Stat. 1744Pub. L. 99–514, § 2100 Stat. 2095Pub. L. 102–366, title IV106 Stat. 1016Pub. L. 103–403, title II, § 214108 Stat. 4184Pub. L. 104–208, div. D, title II, § 208(e)110 Stat. 3009–745Pub. L. 106–9, § 2(a)113 Stat. 17Pub. L. 108–447, div. K, title II, § 202118 Stat. 3465Pub. L. 115–333, § 2(3)132 Stat. 4488(, , ; , §§ 8, 11(c)(d), , , 756; , , ; , , ; , , ; 1970 Reorg. Plan No. 2, § 102, eff. , 35 F.R. 7959, ; , , ; , , ; , , ; , , ; , §§ 524, 529, , , 168; , , ; , , ; , §§ 408(c), 417(a), , , 1019; , , ; , (h)(1)(B), , , 3009–747; , , ; , , ; , , .)

Editorial Notes

References in Text

section 661 of this titleFor definition of “this chapter”, referred to in subsecs. (a) to (h), see References in Text note set out under .

Pub. L. 85–536, § 272 Stat. 384section 631 of this titleThe Small Business Act, referred to in subsec. (f), is (1 et seq.), , , which is classified generally to chapter 14A (§ 631 et seq.) of this title. For complete classification of this Act to the Code, see Short Title note set out under and Tables.

act Aug. 22, 1940, ch. 68654 Stat. 789section 80a–51 of this titleThe Investment Company Act of 1940, referred to in subsec. (g)(2)(L), is title I of , , which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see and Tables.

Codification

Section 204 of Pub. L. 96–161section 529 of Pub. L. 96–221, cited as a credit to this section, was repealed by effective at the close of . The amendment of this section by that repealed provision, described in the 1979 Amendment note set out under this section, shall continue to apply to any loan made, any deposit made, or any obligation issued in any State during any period when the amendment was in effect in such State.

Section 104 of Pub. L. 96–104section 212 of Pub. L. 96–161section 212 of Pub. L. 96–161section 212 of Pub. L. 96–161section 85 of Title 12, cited as a credit to this section, was repealed by , effective at the close of . The amendment of this section by that repealed provision, described in the 1979 Amendment note set out under this section, shall continue in effect for limited purposes pursuant to . See Saving Provisions note, describing the provisions of , set out under , Banks and Banking.

Section 204 of Pub. L. 93–501Pub. L. 96–104, § 193 Stat. 789section 1 of Pub. L. 96–104section 1 of Pub. L. 96–104section 85 of Title 12, cited as a credit to this section, was repealed by , , . The amendment of this section by that repealed provision, described in the 1974 Amendment note, shall continue in effect for limited purposes pursuant to . See Savings Provisions note, describing the provisions of , set out under , Banks and Banking.

Amendments

Pub. L. 115–333, § 2(3)(A)(i)2018—Subsec. (g)(2)(B). , inserted “and licensing” after “financing”.

Pub. L. 115–333, § 2(3)(A)(ii)Subsec. (g)(2)(C) to (L). , (iii), added subpars. (C) and (D) and redesignated former subpars. (C) to (J) as (E) to (L), respectively.

Pub. L. 115–333, § 2(3)(B)Subsec. (g)(3)(E). , added subpar. (E).

Pub. L. 108–4472004—Subsec. (b). , which directed the amendment of section 308(b) of the Small Business Investment Act by substituting “Any such company that is licensed before and has outstanding financings is authorized to invest funds not needed for its operations—” and pars. (1) to (3) for last sentence, was executed to this section, which is section 308 of the Small Business Investment Act of 1958, to reflect the probable intent of Congress. Prior to amendment, last sentence read as follows: “Such companies with outstanding financings are authorized to invest funds not reasonably needed for their operations in direct obligations of, or obligations guaranteed as to principal and interest by, the United States, or in certificates of deposit maturing within one year or less, issued by any institution the accounts of which are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or in savings accounts of such institutions.”

Pub. L. 106–91999—Subsec. (i)(2). inserted at end: “In this paragraph, the term ‘interest’ includes only the maximum mandatory sum, expressed in dollars or as a percentage rate, that is payable with respect to the business loan amount received by the small business concern, and does not include the value, if any, of contingent obligations, including warrants, royalty, or conversion rights, granting the small business investment company an ownership interest in the equity or increased future revenue of the small business concern receiving the business loan.”

Pub. L. 104–208, § 208(e)1996—Subsec. (e). , substituted “Except as expressly provided otherwise in this chapter, nothing” for “Nothing”.

Pub. L. 104–208, § 208(h)(1)(B)section 681 of this titlesection 681 of this titleSubsec. (h). , substituted “” for “subsection (c) or (d) of ” in pars. (1) to (3).

Pub. L. 103–4031994—Subsec. (h). added subsec. (h).

Pub. L. 102–366, § 408(c)1992—Subsec. (b). , inserted “with outstanding financings” after “Such companies” in third sentence.

Pub. L. 102–366, § 417(a)Subsec. (g)(3). , added par. (3).

Pub. L. 99–5141986—Subsec. (g)(2)(J). substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.

Pub. L. 99–226, § 1(a)1985—Subsec. (i)(2). , substituted “the maximum rate prescribed by regulation by the Administration for loans made by any licensee (determined without regard to any State rate incorporated by such regulation).” for “the lowest of the rates described in subparagraphs (A), (B), and (C)” and struck out subpars. (A), (B), and (C) which described the rates.

Pub. L. 99–226, § 1(b)Subsec. (i)(3). , substituted “paragraph (2)” for “paragraph (2)(B)”.

Pub. L. 96–221, § 529Pub. L. 96–104Pub. L. 96–1611980—Subsec. (h). , repealed and title II of , resulting in the striking out of subsec. (h) which related to the limitation on interest rates, overcharges, forfeitures, and the recovery of interest payments. See subsec. (i) of this section for successor provisions. See also Codification and 1979 Amendment notes under this section.

Pub. L. 96–221, § 524Subsec. (i). , added subsec. (i).

Pub. L. 96–161Pub. L. 96–1041979—Subsec. (h). reenacted subsec. (h) [as added by ] with three substitutions of dates: in par. (3)(A) “in the case of a State statute, ” was substituted for “”, in par. (3)(B) “” was substituted for “”, and in par. (3)(C) “” was substituted for “”.

Pub. L. 96–104section 1 of Pub. L. 96–104 added subsec. (h). A prior subsec. (h), also relating to limitation on interest rates, overcharges, forfeitures, and the recovery of interest payments, was repealed by .

Pub. L. 95–5071978—Subsec. (b). inserted provisions authorizing small business investment companies to invest funds not reasonably needed for their operations in certificates of deposit maturing within one year or less issued by particular insured institutions and savings accounts of institutions insured by the Federal Deposit Insurance Corporation.

Pub. L. 93–5011974—Subsec. (h). added subsec. (h).

Pub. L. 90–1041967—Subsec. (g). designated existing provisions as par. (1) and added par. (2).

Pub. L. 89–779, § 3(1)section 687b(b) of this title1966—Subsec. (c). , struck out provisions subjecting each small business investment company to examinations by examiners approved by the Administration and requiring the submission of reports by the companies. See .

Pub. L. 89–799, § 3(2)Subsecs. (f), (g). , added subsecs. (f) and (g).

Pub. L. 88–2731964—Subsec. (b). authorized investment of funds in insured savings accounts (up to the amount of insurance) in institutions insured by the Federal Savings and Loan Insurance Corporation.

Pub. L. 87–341, § 81961—Subsec. (a). , substituted “investors or lenders” for “financial institutions” wherever appearing, and provided that these investors or lenders can be either incorporated or unincorporated.

Pub. L. 87–341, § 11(c)Subsec. (b). , substituted “operating under the provisions of this chapter” for “organized under this chapter”.

Pub. L. 87–341, § 11(d)Subsec. (e). , redesignated subsec. (g) as (e), substituted “operating under the provisions of this chapter” for “organized under this chapter”, and repealed former subsec. (e) which related to obtaining restraining orders against violators of this chapter.

Pub. L. 87–341, § 11(d)section 681 of this titleSubsec. (f). , repealed subsec. (f) which permitted small business investment companies to extend their corporate existence for a term of not more than 30 years. See subsec. (a) of .

Pub. L. 87–341, § 11(d)Subsec. (g). , redesignated subsec. (g) as (e).

Statutory Notes and Related Subsidiaries

Effective Date of 1985 Amendment

Pub. L. 99–226, § 299 Stat. 1744

“This Act [amending this section] shall apply to maximum interest rates prescribed by the Administration on or after .”
, , , provided that:

Effective Date of 1980 Amendment

Pub. L. 96–221, title V, § 52994 Stat. 168, , , provided that the amendment made by that section is effective at the close of .

Effective Date of 1979 Amendments

Pub. L. 96–161, title II, § 20793 Stat. 1238Pub. L. 96–161Pub. L. 96–161Pub. L. 96–161Pub. L. 96–221, title V, § 52994 Stat. 168, , , which provided that amendment by was applicable to loans made in any State during the period beginning on , and ending on the earliest of (1) in the case of a State statute, ; (2) the date, after , on which such State adopts a law stating in substance that such State does not want the amendment of this section made by to apply with respect to loans made in such State; or (3) the date on which such State certifies that the voters of such State, after , have voted in favor of, or to retain, any law, provision of the constitution of such State, or amendment to the constitution of such State which prohibits the charging of interest at the rates provided in the amendment of this section by , was repealed by , , .

Pub. L. 96–104, title I, § 10793 Stat. 792Pub. L. 96–104Pub. L. 96–161, title II, § 21293 Stat. 1239, , , which provided that amendment by was applicable to loans made by any State during the period beginning on , and ending on the earlier of , or the date after , on which such State adopts a law stating in substance that such State does not want the amendment of this section to apply with respect to loans made in such State, or the date on which such State certifies that the voters of such State have voted in favor of, or to retain, any law, provision of the constitution of such State, or amendment of the constitution of such State, which prohibits the charging of interest at the rates provided in the amendment of this section, was repealed by , , .

Effective Date of 1974 Amendment

Pub. L. 93–501, title II, § 20688 Stat. 1560Pub. L. 93–501Pub. L. 96–104, § 193 Stat. 789, , , which provided that amendment by was applicable to loans made in any state after , but prior to the earlier of or the date of enactment by the state of a law prohibiting the charging of interest at the rates provided in the amendment of this section, was repealed by , , .

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 .

Savings Provision

Pub. L. 96–221, title V, § 52994 Stat. 168Pub. L. 96–104Pub. L. 96–161, , , provided in part that, notwithstanding the repeal of and title II of , the provisions of subsec. (h) of this section [which had been added to this section by those repealed laws] shall continue to apply to any loan made, any deposit made, or any obligation issued to any State during any period when those provisions were in effect in such State.

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 .

Choice of Highest Applicable Interest Rate

Pub. L. 96–221section 1735f–7a of Title 12section 85 of Title 12section 528 of Pub. L. 96–221section 1735f–7a of Title 12In any case in which one or more provisions of, or amendments made by, title V of , , Banks and Banking, or any other provisions of law, including , apply with respect to the same loan, mortgage, credit sale, or advance, such loan, mortgage, credit sale, or advance may be made at the highest applicable rate, see , set out as a note under .

States Having Constitutional Provisions Regarding Maximum Interest Rates

Pub. L. 96–161, title II, § 21393 Stat. 1240Pub. L. 96–161, , , provided that the provisions of title II of , which amended this section and repealed provisions which had formerly amended this section, to continue to apply until , in the case of any State having a constitutional provision regarding maximum interest rates.

Definition of “State”

section 527 of Pub. L. 96–221section 1735f–7a of Title 12For purposes of subsec. (i) of this section, the term “State” to include the several States, the Commonwealth of Puerto Rico, the District of Columbia, Guam, the Trust Territories of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands, see , set out as a note under , Banks and Banking.

Executive Documents

Transfer of Functions

Bureau of the Budget designated as Office of Management and Budget and Offices of Director, Deputy Director, and Assistant Directors of Bureau of the Budget designated Director, Deputy Director, and Assistant Directors of Office of Management and Budget, respectively. Records, property, personnel, and funds of Bureau of the Budget transferred to Office of Management and Budget. See Part I of Reorganization Plan 2 of 1970, set out in the Appendix to Title 5, Government Organization and Employees.