In July 2023, the U.S. Small Business Administration (SBA) released sweeping reforms to the Small Business Investment Company (SBIC) program. Many of those reforms were enacted through the Small Business Investment Company Investment Diversification and Growth final rule effective on August 17, 2023 (SBIC IDG Final Rule), which reduced barriers to program participation for new SBIC fund managers and funds investing in underserved communities and geographies, capital intensive investments, and technologies critical to national security and economic development.
On January 19, 2024, SBA released a direct final rule (referred to below as the “Proposed Rule”), which clarifies and provides technical updates to the earlier SBIC IDG Final Rule. This rule is slated to come into effect on March 4, 2024, without further action, unless significant comment is received by February 20, 2024.
The Proposed Rule introduces a series of technical amendments and clarifying updates. These include, but are not limited to, the following key areas, which will be discussed in greater detail in this client alert:
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