e-CFR data is current as of February 20, 2020
TITLE 13—Business Credit and Assistance
CHAPTER I—SMALL BUSINESS ADMINISTRATION PART 107—SMALL BUSINESS INVESTMENT COMPANIES
Subpart A—INTRODUCTION TO PART 107
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| Legal basis and applicability of this part 107. |
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| Amendments to Act and regulations. |
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| How to read this part 107. |
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Subpart B—DEFINITION OF TERMS USED IN PART 107
Subpart C—QUALIFYING FOR AN SBIC LICENSE
Organizing an SBIC
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| Organizing a Section 301(c) Licensee. |
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| 1940 Act and 1980 Act Companies. |
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| Special rules for a Section 301(d) Licensee owned by another Licensee. |
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| Requirement for qualified management. |
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| SBA approval of initial Management Expenses. |
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| Management-ownership diversity requirement. |
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| Special rules for Licensees formed as limited partnerships. |
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Capitalizing an SBIC
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| Adequate capital for Licensees. |
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| Minimum capital requirements for Licensees. |
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| Permitted sources of Private Capital for Licensees. |
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| Limitations on including non-cash capital contributions in Private Capital. |
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| Exclusion of stock options issued by Licensee from Management Expenses. |
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Applying for an SBIC License
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| License application form and fee. |
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| Evaluation of license applicants. |
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| When and how to apply for licensing as an Early Stage SBIC. |
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| Evaluation of Early Stage SBICs. |
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Subpart D—CHANGES IN OWNERSHIP, CONTROL, OR STRUCTURE OF LICENSEE; TRANSFER OF LICENSE
Changes in Control or Ownership of Licensee
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| Changes in ownership of 10 percent or more of Licensee but no change of Control. |
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| Changes in Control of Licensee (through change in ownership or otherwise). |
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| Prohibition on exercise of ownership or Control rights in Licensee before SBA approval. |
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| Notification to SBA of transactions that may change ownership or Control. |
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| Standards governing prior SBA approval for a proposed transfer of Control. |
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| Notification to SBA of pledge of Licensee's shares. |
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Restrictions on Common Control or Ownership of Two or More Licensees
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| Restrictions on Common Control or ownership of two (or more) Licensees. |
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Change in Structure of Licensee
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| SBA approval of merger, consolidation, or reorganization of Licensee. |
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Transfer of License
Subpart E—MANAGING THE OPERATIONS OF A LICENSEE
General Requirements
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| Lawful operations under the Act. |
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| Identification as a Licensee. |
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| Representations to the public. |
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| Licensee's adoption of an approved valuation policy. |
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| Equipment and office requirements. |
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| Safeguarding Licensee's assets/Internal controls. |
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| Violations based on false filings and nonperformance of agreements with SBA. |
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| Employment of SBA officials. |
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Management and Compensation
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| SBA approval of Licensee's Investment Adviser/Manager. |
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| Management Expenses of a Licensee. |
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Cash Management by a Licensee
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| Restrictions on investments of idle funds by leveraged Licensees. |
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Borrowing by Licensees From Non-SBA Sources
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| Prior approval of secured third-party debt of leveraged Licensees. |
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| Subordination of SBA's creditor position. |
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| Restrictions on third-party debt of Early Stage SBICs. |
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| Restrictions on third-party debt of issuers of Participating Securities. |
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Voluntary Decrease in Licensee's Regulatory Capital
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| Voluntary decrease in Licensee's Regulatory Capital. |
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Requirement To Conduct Active Investment Operations
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| Licensee's requirement to maintain active operations. |
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Subpart F—RECORDKEEPING, REPORTING, AND EXAMINATION REQUIREMENTS FOR LICENSEES
Recordkeeping Requirements for Licensees
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| General requirement for Licensee to maintain and preserve records. |
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| Required certifications for Loans and Investments. |
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| Requirements to obtain information from Portfolio Concerns. |
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Reporting Requirements for Licensees
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| Requirement for Licensees to file financial statements with SBA (Form 468). |
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| Requirement to file Portfolio Financing Reports (SBA Form 1031). |
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| Requirement to report portfolio valuations to SBA. |
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| Other items required to be filed by Licensee with SBA. |
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| Application for exemption from civil penalty for late filing of reports. |
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| Reporting changes in Licensee not subject to prior SBA approval. |
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Examinations of Licensees by SBA for Regulatory Compliance
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| Responsibilities of Licensee during examination. |
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Subpart G—FINANCING OF SMALL BUSINESSES BY LICENSEES
Determining the Eligibility of a Small Business for SBIC Financing
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| Compliance with size standards in part 121 of this chapter as a condition of Assistance. |
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| Requirement to finance smaller enterprises. |
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| Small Businesses that may be ineligible for financing. |
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| Financings which constitute conflicts of interest. |
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| Portfolio diversification (“overline” limitation). |
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| Conditions for financing a change of ownership of a Small Business. |
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| How a change in size or activity of a Portfolio Concern affects the Licensee and the Portfolio Concern. |
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Structuring Licensee's Financing of Eligible Small Businesses: Types of Financing
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| Financings in the form of Equity Securities. |
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| Financings in the form of Loans. |
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| Financings in the form of Debt Securities. |
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| Financings in the form of guarantees. |
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| Purchasing securities from an underwriter or other third party. |
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Structuring Licensee's Financing of an Eligible Small Business: Terms and Conditions of Financing
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| Minimum duration/term of financing. |
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| Exceptions to minimum duration/term of Financing. |
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| Maximum term of Financing. |
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| Maximum rate of amortization on Loans and Debt Securities. |
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| Restrictions on redemption of Equity Securities. |
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| Interest rate ceiling and limitations on fees charged to Small Businesses (“Cost of Money”). |
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| Financing fees and expense reimbursements a Licensee may receive from a Small Business. |
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| Control of a Small Business by a Licensee. |
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| Assets acquired in liquidation of Portfolio securities. |
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Limitations on Disposition of Assets
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| Disposition of assets to Licensee's Associates or to competitors of Portfolio Concern. |
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Management Services and Fees
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| Management fees for services provided to a Small Business by Licensee or its Associate. |
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Subpart H—NON-LEVERAGED LICENSEES—EXCEPTIONS TO REGULATIONS
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| Licensees without Leverage—exceptions to the regulations. |
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Subpart I—SBA FINANCIAL ASSISTANCE FOR LICENSEES (LEVERAGE)
General Information About Obtaining Leverage
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| Types of Leverage and application procedures. |
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| General eligibility requirements for Leverage. |
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| Leverage fees and additional charges payable by Licensee. |
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| Licensee's acceptance of SBA remedies under §§107.1800 through 107.1820. |
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Maximum Amount of Leverage for Which a Licensee Is Eligible
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| Maximum amount of Leverage for a Section 301(c) Licensee. |
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| Maximum amount of Leverage for a Section 301(d) Licensee. |
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| Maximum amount of Participating Securities for any Licensee. |
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Special Rules for Leverage Issued by an Early Stage SBIC
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| Required distributions to SBA by Early Stage SBICs. |
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| Interest reserve requirements for Early Stage SBICs. |
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| Valuation requirements for Early Stage SBICs based on Capital Impairment Percentage. |
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Conditional Commitments by SBA To Reserve Leverage for a Licensee
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| SBA's Leverage commitment to a Licensee—application procedure, amount, and term. |
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| Payment of leverage fee upon receipt of commitment. |
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| Requirement for Licensee to file quarterly financial statements. |
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| Draw-downs by Licensee under SBA's Leverage commitment. |
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| Funding of Licensee's draw request through sale to short-term investor. |
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Preferred Securities Leverage—Section 301(d) Licensees
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| Dividends or partnership distributions on 4 percent Preferred Securities. |
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| Requirement to redeem 4 percent Preferred Securities. |
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| Articles requirements for 4 percent Preferred Securities. |
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| Redeeming 4 percent Preferred Securities with proceeds of non-subsidized Debentures. |
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| Three percent preferred stock issued before November 21, 1989. |
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| Optional redemption of Preferred Securities. |
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Participating Securities Leverage
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| General description of Participating Securities. |
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| Liquidity requirements for Licensees issuing Participating Securities. |
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| How a Licensee computes Earmarked Profit (Loss). |
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| How a Licensee computes and allocates Prioritized Payments to SBA. |
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| How a Licensee computes SBA's Profit Participation. |
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| Distributions by Licensee—Prioritized Payments and Adjustments. |
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| Distributions by Licensee—permitted “tax Distributions” to private investors and SBA. |
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| Distributions by Licensee—required Distributions to private investors and SBA. |
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| Distributions by Licensee—optional Distribution to private investors and SBA. |
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| Distributions on other than Payment Dates. |
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| Special rules for In-Kind Distributions by Licensees. |
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| Exchange of Debentures for Participating Securities. |
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| Special rules for companies licensed on or before March 31, 1993. |
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Funding Leverage by Use of SBA-Guaranteed Trust Certificates (“TCs”)
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| SBA authority to issue and guarantee Trust Certificates. |
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| Effect of prepayment or early redemption of Leverage on a Trust Certificate. |
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| Functions of agents, including Central Registration Agent, Selling Agent and Fiscal Agent. |
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| SBA regulation of Brokers and Dealers and disclosure to purchasers of Leverage or Trust Certificates. |
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| SBA access to records of the CRA, Brokers, Dealers and Pool or Trust assemblers. |
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Miscellaneous
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| Transfer by SBA of its interest in Licensee's Leverage security. |
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| SBA authority to collect or compromise its claims. |
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| Characteristics of SBA's guarantee. |
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Subpart J—LICENSEE'S NONCOMPLIANCE WITH TERMS OF LEVERAGE
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| Licensee's agreement to terms and conditions in §§107.1810 and 107.1820. |
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| Events of default and SBA's remedies for Licensee's noncompliance with terms of Debentures. |
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| Conditions affecting issuers of Preferred Securities and/or Participating Securities. |
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Computation of Licensee's Capital Impairment
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| Licensee's Capital Impairment—definition and general requirements. |
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| Computation of Licensee's Capital Impairment Percentage. |
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| Determination of Capital Impairment Percentage for Early Stage SBICs. |
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| Exceptions to Capital Impairment provisions for Licensees with outstanding Participating Securities. |
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Subpart K—ENDING OPERATIONS AS A LICENSEE
Subpart L—MISCELLANEOUS
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| Non-waiver of SBA's rights or terms of Leverage security. |
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| Licensee's application for exemption from a regulation in this part 107. |
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| Effect of changes in this part 107 on transactions previously consummated. |
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