Description Of The Small Business Investment Company Program Participation By Unleveraged Funds - May 2019

Pepper Hamilton LLP

Pepper Hamilton LLP

A Small Business Investment Company (SBIC) is a privately owned and operated company that makes long-term investments in American small businesses and is licensed by the United States Small Business Administration (SBA).

The principal reason for a firm to become licensed as an unleveraged SBIC is the special rules applying to investments in SBICs made by certain financial institutions. Banks and Federal savings associations (as well as their holding companies) have the ability to own or to invest in SBICs and thereby to own indirectly more than 5 percent of the voting stock of a small business. The Dodd-Frank Wall Street Reform and Consumer Protection Act generally prohibits a banking entity from acquiring or retaining any equity, partnership or other ownership interest in or sponsoring a private equity fund. In addition, non-bank financial companies that engage in proprietary trading or ownership or sponsorship of a private equity fund may be subject to additional capital and quantitative limits. These prohibitions are not applicable to investments in SBICs. Additionally, banks, Federal savings associations and their holding companies also receive Community Reinvestment Act Credit for SBIC investments; and, in the case of banks and their holding companies, also receive exemptions from certain capital charge regulations and lending “affiliation” rules under the Gramm-Leach-Bliley Act. A business seeking a U.S. Government contract that is a set aside for small businesses does not lose its status as a small business by reason of a control investment by an SBIC.

This document provides a general overview of the SBIC Program for SBICs not using “Leverage” provided by SBA.

The U.S. Small Business Administration

SBA administers the SBIC Program through its Investment Division (which employs approximately 80 people). SBA is an independent Federal agency, located at 409 Third Street, SW, Washington, DC 20006 (202.205.6510). Useful information about the SBIC Program is available on SBA’s website at or may be obtained by contacting Samuel J. Boyd, Jr. (202.205.7546).


The SBIC industry is served by an active trade association, the Small Business Investor Alliance (SBIA), which is located at 1100 H Street, NW, Suite 1200, Washington, DC 20005 (202.628.5055), SBIA’s President is Brett Palmer. Harry Haskins, the long-term senior career SBA manager of the SBIC Program is SBIA’s Director of SBIC Relations. SBIA provides a variety of information and services to its members and represents the industry with SBA and on Capitol Hill. SBIA publishes regular updates and is a resource for information concerning the SBIC Program.

Historical Perspective

Established by the United States Congress in 1958 to stimulate long-term investment in American small businesses, the SBIC Program has evolved into a significant factor in financing smaller American businesses. From the SBIC Program's inception to December 31, 2018, SBICs have provided approximately $97.6 billion of funding in more than 181,185 financings to businesses, 1 including well-known companies such as Amgen, Apple Computer, Costco, Federal Express, Intel, Tesla and Whole Foods.2

The SBIC Program has undergone significant changes since its creation in 1958. The original Program permitted only Debenture Leverage. The Small Business Equity Enhancement Act of 1992 drastically changed the SBIC Program. It created a new form of SBA Leverage known as “Participating Securities” (essentially preferred limited partnership interests in an SBIC); increased the amount of Leverage available to an SBIC to $90 million (which subsequently was indexed to reflect changes in the cost of living since March 31, 1993 and then modified in 2009 to be $150 million and again in 2018 to be $175 million); required minimum private capital of $10 million for SBICs using Participating Securities and $5 million for SBICs using Debentures; provided for stricter SBA licensing standards; and enacted other changes to make the program more consistent with the private venture capital industry. Unlike the Debenture Program (where SBA is a creditor of the SBIC), which requires an SBIC to make periodic interest payments, the Participating Securities Program required an SBIC to pay SBA a prioritized payment (preferred return) and a profit share when the SBIC realized profits. As a consequence, the Participating Securities Program was designed to permit investing in equity securities whether or not those securities had a current pay component. This new program resulted in a large expansion of the number of SBIC licenses granted.

Following the burst of the “technology bubble” in 2002, the Administration decided there no longer was a need for an equity SBIC program and that the existing Participating Securities Program would cause significant losses to SBA. Accordingly, SBA decided to terminate the Participating Securities Program and announced that beginning on October 1, 2004, it would not issue commitments to use Participating Securities Leverage or license new SBICs using that Leverage.

SBA officials continue to emphasize that they believe the Debenture Program is working well and they want to expand it. The governing law and regulations for the Debenture Program have undergone several revisions since 1994 that have further streamlined and improved the SBIC Program. SBA has continued its outreach to institutional investors, bank regulators and prospective applicants in order to enlarge the existing Debenture Program and to create ways for SBICs to make certain kinds of equity investments without undermining the financial integrity of the Debenture Program.

As of March 31, 2019,3 there were 304 licensed SBICs with approximately $16.2 billion of private capital and $10.83 billion of outstanding SBA Leverage (of which $10.78 billion is Debenture Leverage and $6 million is Participating Securities Leverage). Of these SBICs: 227 use Debentures; 23 use Participating Securities; 48 do not use Leverage; and six are specialized SBICs.

During the 2018 Federal fiscal year (October 1 – September 30) ("Federal FY") ended September 30, 2018, SBA licensed a total of 25 SBICs with approximately $1.2 billion of private capital. Of those 21 were Debenture SBICs and four were Unleveraged SBICs. During the first two quarters the 2019 Federal FY ended March 31, 2019, SBA licensed a total of five SBICs (of which three were Debenture SBICs and two were Unleveraged SBICs) with approximately $490 million of private capital.

Community Reinvestment Act Credit

Current Community Reinvestment Act (CRA) regulations present banks (other than certain “small banks”) with a continuing need to make investments that qualify for CRA purposes. Investment in an SBIC is specifically identified in the CRA regulations as a type of investment that will be presumed by the regulatory agencies to be a “qualified investment” for CRA purposes. The investment should be in an SBIC that is located in or doing substantial business in the region in which the bank’s assessment area is located, but the SBIC is not required to be headquartered within the assessment area itself. The SBIC Act and other Federal statutes explicitly permit banks, bank holding companies, Federal savings associations and savings and loan holding companies to invest in SBICs.

Gramm-Leach-Bliley Act and Dodd-Frank Act Exemptions

As part of the implementation of the Gramm-Leach-Bliley Act (the GLB Act), effective April 1, 2002, the Federal Reserve Board, the FDIC and the Office of the Comptroller of the Currency adopted new regulations governing regulatory capital treatment for certain equity investments held by banks, bank holding companies and financial holding companies. Under the regulations, an 8 percent Tier 1 capital deduction applies on covered investments that in the aggregate are less than 15 percent of an organization’s Tier 1 capital, a 12 percent deduction applies to investments aggregating 15-24.99 percent of Tier 1 capital, and a 25 percent deduction applies to investments aggregating 25 percent and above of Tier 1 capital. The regulations exempt SBIC investments from such capital charges so long as their value is less than 15 percent of Tier 1 capital. However, the amount of SBIC investments will be considered when determining capital charges with respect to other investments. These rules, however, may be affected by contemplated changes to bank capital requirements to conform to the Basel III Accords.

In addition, ownership of a 15 percent equity interest in a portfolio company by a bank-affiliated SBIC will not give rise to a presumption that the portfolio company is an Affiliate under Sections 23(a) and (b) of the GLB Act.

The Dodd-Frank Act generally prohibits a banking entity from acquiring or retaining any equity, partnership or other ownership interest in or sponsoring a private equity fund. In addition, non-bank financial companies that engage in proprietary trading or ownership or sponsorship of a private equity fund may be subject to additional capital and quantitative limits. These prohibitions are not applicable to investments in SBICs. The final regulations implementing the “Volcker Rule” under Dodd-Frank Act permit banking entities to invest in licensed SBICs, as well as in funds that have received permission from SBA to file an SBIC license application, and to sponsor SBICs.

Investment Advisers Act Exemption

An adviser that solely advises SBICs, an entity that has received a “green light letter” authorizing it to submit a formal SBIC license application to SBA and an applicant that is affiliated with one or more SBICs and that has applied for another SBIC license is expressly exempted from the Dodd-Frank Act amendments to the Investment Advisers Act of 1940 (the Advisers Act) which amendments require advisers to certain types of private funds to register with the Securities and Exchange Commission or to become exempt reporting advisers.

The SBIC Advisers Relief Act, which became law on December 4, 2015, provides certain additional relief for investment advisers that advise private funds and SBICs, and for investment advisers that advise venture funds and SBICs. Before the enactment of the SBIC Advisers Relief Act, only advisers solely to private funds that had assets under management in the United States of less than $150 million could rely upon the so-called “private fund adviser exemption” from the Advisers Act’s investment adviser registration requirements. Also, prior to the enactment of the SBIC Advisers Relief Act, only advisers solely to one or more venture capital funds (as defined by the SEC) could rely upon the so-called “venture capital fund adviser exemption” from the Advisers Act’s investment adviser registration requirements. The SBIC Advisers Relief Act revised the private fund adviser exemption by excluding SBIC assets from counting towards the $150 million threshold for purposes of determining whether an investment adviser satisfies the conditions for the private fund adviser exemption and by deeming SBICs to be venture capital funds for purposes of the venture capital fund adviser exemption.

Certain Exemptions from SBA Regulations

Unleveraged SBICs are exempt from many SBA regulations which pertain to SBICs using Debentures, including:

  • the management-ownership diversity requirement, which generally prohibits a single investor from owning greater than 70 percent of an SBIC and requires that at least three “Institutional Investors” (which are entities or natural persons that satisfy certain net worth criteria) unaffiliated with management and one another and whose investments in the SBIC are significant in dollar and percentage own at least 30 percent of the SBIC
  • the “overline” limitations which restrict how much can be invested in any one portfolio company and its affiliates
  • restrictions on the SBIC’s use of its “idle funds"
  • restrictions on the SBIC’s incurrence of third party secured debt
  • certain recordkeeping requirements
  • limitations on distributions to the SBIC’s investors and the requirement to obtain SBA approval to decrease “Regulatory Capital”4 by more than 2 percent per year (but must notify SBA of any reduction within 30 days)
  • prohibitions the SBIC’s ability to sell assets to its “Associates” without SBA approval
  • SBA consent requirements for certain types of co-investments made with the SBIC’s Associates
  • the requirement that SBA approve management services contracts with the SBIC’s management company and the SBIC’s initial management expense and any changes thereto (although the SBIC is required to notify SBA of such initial management expenses and of any such changes)
  • the requirement to obtain SBA’s prior approval for new directors and officers other than the chief operating officer (although the SBIC is required to notify SBA of any such new directors or officers within 30 days), and
  • limitations on the amount of management fees the SBIC is permitted to pay.

SBIC Investments

An SBIC can only invest in “Small Businesses” and must invest at least 25 percent of its invested funds in “Smaller Enterprises.”5 SBA regulations define a “Small Business” as a company with tangible net worth (total net worth less goodwill) of less than $19.56 million and average after-tax income (exclusive of loss carry-forwards) for the prior two years of less than $6.5 million. A company failing that test can still qualify as a Small Business if it meets the size standards for its industry group under an alternative test. The size standards for industry groups under this alternative test are based on the number of employees (typically 500 to 1,000 for a manufacturing company) or gross revenues.6 A “Smaller Enterprise” is a company with a net worth (excluding goodwill) of less than $6 million and average after-tax income for the prior two years of less than $2 million or which meets the alternative test. Importantly, in making a determination under the size test and the alternative test, the company and all Affiliates of the company must be considered. Companies are “Affiliates” of each other if one controls or has the power to control the other or a third party or parties control or have the power to control both. SBICs and private funds exempted from registration under certain sections of the Investment Company Act of 1940 are not considered Affiliates of a company for purposes of determining whether that company qualifies as a Small Business or Smaller Enterprise. Certain debt-to-equity ratios must also be met if an SBIC finances the change of ownership of a Small Business with more than 500 employees.

SBIC regulations preclude investment in the following types of businesses: companies whose principal business is re-lending or re-investing (venture capital firms, leasing companies, factors, banks); many kinds of real estate projects; single-purpose projects that are not continuing businesses; companies that will use the proceeds outside of the United States or have more than 49 percent of their tangible assets or employees outside the United States at the time of financing or within one year following the financing (unless the funding is used for a specific U.S. purpose that is acceptable to SBA); businesses that are passive and do not carry on an active trade or business; and businesses that use 50 percent or more of the funds to buy goods or services from an associated supplier.

Historically, SBA regulations prevented an SBIC (or two or more SBICs acting together) and its Associates (controlled or related persons) from controlling a small business, except on a temporary basis to protect its investment or if the small business was a “start-up.” In December 2000, legislation was enacted eliminating the legislative basis for regulating “control during the investment period.” Effective November 21, 2002, SBA adopted final regulations permitting an SBIC and its Associates to control a small business for up to seven years, and with SBA’s consent, for a longer period to permit an orderly sale of the investment or to ensure the financial stability of the small business.

SBICs are precluded from making investments in a Small Business if it would give rise to a conflict of interest. Generally, a conflict of interest may arise if an Associate7 of the SBIC has or makes an investment in the Small Business or serves as one of its officers or directors or would otherwise benefit from the financing.Investing in an Associate generally requires prior SBA approval unless an exception applies. Joint investing with an Associate (such as another fund controlled by affiliates of the General Partner) may be made on the same terms and conditions and at the same time or on terms that are fair to the SBIC.

Terms of Portfolio Company Financings

An SBIC may make investments in the form of debt with no equity features (Loans), debt with equity features (Debt Securities), or stock, rights to acquire stock, and interests in limited partnerships, limited liability companies and joint ventures (Equity Securities). Investments must be made for a term of not less than one year (except for bridge loans in anticipation of a permanent financing in which the SBIC intends to participate or to protect the SBIC’s prior investment). Loans and Debt Securities must have amortization not exceeding “straight line.” The permissible interest rate depends on the type of debt. For straight Loans, the maximum permitted rate is the higher of (i) 19 percent or (ii) 11 percent over the higher of the SBIC’s weighted cost of Debenture Leverage or the current Debenture Rate. For Debt Securities, the maximum permitted rate is the higher of (i) 14 percent or (ii) 6 percent over the higher of the SBIC’s weighted cost of Debenture Leverage or the current Debenture Rate. Regulations define an SBIC’s weighted cost of Debenture Leverage and describe the maximum permitted rate when more than one SBIC participates in the financing.

The applicable interest rate is calculated adding in all points, fees, discounts and other costs of money, other than (i) application fees of up t 1 percent of the proposed financing and closing fees of up to 4 percent of the financing for Debt Securities, or 2 percent for Loans, (ii) permitted prepayment penalties, and (iii) reasonable monitoring expenses, each of which may be charged in addition to the permitted interest. In addition, an SBIC may be reimbursed for its reasonable closing costs (including legal fees). An SBIC may also charge a default rate of interest of up to 7 percent and a royalty based on improvement in the performance of a portfolio company after the financing.

An SBIC is permitted to require a Small Business to redeem Equity Securities, but only after one year and only for a price equal to either (i) the purchase price or (ii) a price determined at the time of redemption based on (a) a reasonable formula that reflects the performance of the company (e.g., based on the book value or earnings) or (b) fair market value determined by a professional, third party appraiser. Mandatory redemptions not complying with these requirements will result in the investment being treated as a Debt Security, subject to the interest restrictions described above. However, the Small Business can be required to redeem the SBIC’s equity security earlier than one year after its issuance if the Small Business has a public offering, has a change of control or management or defaults under its investment agreement.

An SBIC is permitted to retain its investment in a business that ceases to be a Small Business and is permitted to continue to invest in such a “large” business until the company has a public offering. Following a public offering, the SBIC is permitted to exercise rights to acquire securities that were obtained prior to the public offering.

If within one year of the initial financing by an SBIC a portfolio company changes its business to one in which an SBIC is prohibited from investing, then the SBIC must divest itself of the investment absent SBA’s approval to retain the investment.

SBIC Operations

SBA has adopted a number of regulations and policies concerning operating requirements of SBICs intended to assure their proper management. Principal regulations and policies include:

An SBIC and its Associates may provide management services to Small Businesses in which the SBIC invests, but only may charge for services at competitive rates for services actually rendered.

Unleveraged SBICs are required to value their assets annually pursuant to valuation guidelines approved by SBA. SBA has issued model valuation guidelines that are similar to those customarily used by venture capital firms, but do not conform with generally accepted accounting principles.

An SBIC’s ability to borrow funds from third parties is subject to SBA regulation. Although SBICs using Debentures may only incur unsecured debt, unleveraged SBICs may incur secured debt.

SBICs are required to file a variety of reports with SBA, none of which generally are considered burdensome. These reports include an annual financial statement which is certified to by the SBIC’s independent certified public accountants (and contains information concerning each portfolio company), valuation reports as described above, capital certificates reporting, among other things, changes in “Regulatory Capital,” reports as to changes in the SBIC’s management, material litigation, a brief report describing each investment, and copies of reports sent to investors and, if applicable, to the SEC. SBA will conduct regulatory examinations of each SBIC on an annual basis.

SBA has certain rights and remedies if the SBIC violates SBA regulations. Remedies for regulatory violations are graduated in severity depending on the seriousness of the regulatory violation. For minor regulatory infractions, warnings are given. For serious infractions restrictions on distributions and making new investments may be imposed, management fees may be required to be reduced, and investors may be required to pay their unfunded capital commitments to the SBIC. In severe cases, SBA may require the Limited Partners to remove the Partnership’s general partner or manager or its officers, directors, managers or partners, or SBA may obtain appointment of a receiver for the Partnership.


SBICs are organized under state law as corporations, limited partnerships or limited liability companies.


Investors may be either domestic or foreign individuals or entities. The SBIC Act specifically authorizes banks and Federal savings associations to invest up to 5 percent of their capital and surplus in SBICs. Certain investors owning 33 percent or more of an SBIC are required to submit certain background information to SBA and are subject to SBA’s fingerprinting requirements. All investors in an SBIC and anyone owning 10 percent or more of any investor owning 10 percent of an SBIC must be identified to SBA in the SBIC’s license application.

Restrictions on Transfer

Investors in an SBIC may not transfer their interests without SBA’s prior consent. Additionally, without SBA’s consent, an SBIC may not release any of its investors from the liability to make the full amount of their capital contribution.


SBA uses a two-step licensing process for “first time” SBICs. In the first phase, an applicant completes and submits to SBA a form entitled Management Assessment Questionnaire (MAQ). An applicant must pay SBA a non-refundable fee of $10,000 at the time it submits the MAQ.8 The MAQ contains the elements of the applicant’s business plan as well as detailed information concerning the experience of each of the “Principals” to carry out the business plan.

SBA generally requires that at least two, substantially full-time, Principals have at least five years of successful investment experience at a decision-making level in the types of investments the applicant is proposing to make. Generally each individual’s track record should include at least 10-15 investments with a reasonable number of complete realizations during the last ten years (and preferably including some that are quite recent). SBA also considers how long and in what ways the management team has worked together. SBA views the track record of the Principals and the “cohesiveness” of the key Principals as being fundamentally important. Additionally, SBA is concerned about the internal management of the SBIC. They prefer a team composed of three to five Principals, although as few as two and as many as six also are acceptable. However, SBA does not want dominance by a single Principal over investment and other management decisions (including personnel matters). They do not want to license a “one man band.” SBA looks at the division of the SBIC’s carried interest to evaluate relationships. They have an informal rule that no Principal may own 50 percent or more of the carried interest, unless there are only two Principals and they each have 50 percent.

The MAQ is then reviewed by SBA’s “Investment Committee,” after which the Principals, if appearing qualified, are invited to meet with the members of the Investment Committee. After the meeting with the applicant’s Principals, SBA’s Investment Committee may turn the application down or issue a “green light” letter indicating that the applicant has passed the first part of the application process and now is authorized to file a formal application. At the present time, a “green light” letter usually is issued three to four months following submission of the MAQ and immediately after the interview.

An applicant that receives a green light letter must file its formal license application not more than 18 months after the date of that letter. Applicants must pay he MAQ, applicants must pay SBA an additional non-refundable license application fee of $25,000 at the time they submit their formal application for an SBIC license.9

After receipt of the “green light” letter and obtaining commitments for at least the minimum required Regulatory Capital from investors satisfying the “diversity” requirement, the applicant files a formal application which contains additional information about the applicant and the management team, as well as the applicant’s and its general partner’s or manager’s organizational applicant documents. Although the Regulations require a Debenture SBIC to have at least $5 million of Regulatory Capital, SBA generally requires an SBIC to have firm commitments when its formal license application is filed for an amount of capital that is sufficient to enable the SBIC to have a first closing and conduct its operations, even if it does not subsequently raise additional funds. Depending on the projected size of the SBIC, SBA could require $10 – 20 million of private commitments for an Unleveraged SBIC, or more, at the time the application is filed. During the formal licensing process, SBA seeks to determine that there is a qualified management team and that the SBIC has a good chance of operating profitably. SBA reviews the applicant’s business plan, projections and organizational documents, and conducts reference and other background checks (including litigation searches and an FBI fingerprint check) on the management team. The process presently is taking approximately six to nine months. SBA requires applicants to advise their investors that the investors are not entitled to rely on SBA’s review of the applicant in deciding whether to invest.

After a license application is filed and accepted for processing by SBA, an applicant may make “pre-licensing investments,” which will be included in the applicant’s Regulatory Capital if they are submitted to and approved by SBA prior to the investment being made. SBA requires 10 business days to review such pre-licensing investments (but approvals frequently take longer). SBA does not determine the quality or wisdom of the investment. Rather, SBA simply seeks to determine if the investment is made in compliance with SBA Regulations. Once licensed, SBA pre-approval of investments is not required. SBA requires all principal members of the management team to attend a one-day regulations class run by SBA and will only permit one “pre-licensing” investment to be made prior to at least one person from applicant attending the class. Arrangements for attending the regulations class are made by contacting SBIA.


Applicants should assume the following timeline for securing a license:

Management Assessment Questionnaire

3-6 months

Formal License Approval

6-12 months


9-18 months

This timeline assumes the license application is filed immediately upon receipt of the “green light” letter.

Licensing Second Funds

For “second” SBIC funds, SBA follows a process that is similar to licensing new funds with one important exception if certain conditions are satisfied. Instead of filing a MAQ, the process is initiated by submitting a formal written request asking SBA to issue a “green light” letter for the new fund. SBA now requires the submission of a nonrefundable fee in the same amount that would have been paid had a MAQ been submitted. To utilize this process and avoid writing a new MAQ to obtain a “green light” letter, there should be substantially the same management team that is pursuing an investment strategy that is substantially similar to that of the existing SBIC. After submission of a request outlining the proposed new SBIC, SBA’s Office of Operations compares the new fund and the prior fund(s) (similarity of business plan, changes in management team, track record, profitability, liquidity and prior SBA compliance record) and makes a recommendation to the Investment Committee that in turn makes a decision whether to issue a “green light” letter for the new fund. Following receipt of that letter, when the new fund has received commitments for the minimum required capital that also satisfies the “diversity” requirement, the fund may submit a formal application for processing. Under SBA policy, the prior SBIC and the follow-on SBIC must each agree not to co-invest more than 30 percent of its investable capital with the other SBIC.


1 U.S. Small Business Administration Offering Circular, Series SBIC 2019-10 A, March 12, 2019.

2 Small Business Administration – 2017 SBIC Update Summary.

3 SBICs that have surrendered their licenses or have been transferred to the Office of Liquidation are not included in these figures.

4 “Regulatory Capital” is an important metric for SBICs and is represented by the sum of an SBIC’s funded commitments from its investors plus unfunded commitments from investors that have sufficient financial means to qualify as Institutional Investors. SBA regulations describe the qualifications of “Institutional Investors.” Most forms of business entities with a net worth (excluding, however, unfunded capital commitments from that entity’s investors) of at least $10 million qualify as Institutional Investors, as do banks or savings and loan associations or their holding companies, insurance companies, pension plans for private or public sector employees, and tax-exempt foundations or trusts, in each case with a net worth of at least $1 million. If an entity Institutional Investor has a net worth of less than $10 million, only that part of its unfunded commitment that is less than 10% of its net worth will be included in Regulatory Capital. Institutional Investors also include individuals with a net worth (exclusive of the equity of their most valuable residence) of at least $10 million or, if the amount committed to the SBIC does not exceed 10% of their net worth, $2 million. Not more than 33% of the SBIC’s Regulatory Capital may be invested by state or local government entities that are not pension plans.

5 This percentage may be lower for certain SBICs licensed before February 17, 2009.

6 The alternative size test uses the predominant industry for the company together with its affiliates taken together.

7 The definition of an Associate is complex, generally covering all control persons and their respective control persons, but also includes other persons.

8 Before December 13, 2017, SBA did not charge a fee for MAQ filings. The $10,000 fee for MAQ filings will apply until September 30, 2021. Beginning October 1, 2021, the fee for MAQ filings will be adjusted for inflation.

9 Starting October 1, 2018, the fee for formal SBIC license applications increased from $20,000 to $25,000 and will increase annually on a Federal FY basis in $5,000 increments through September 30, 2021. Beginning October 1, 2021, the fee for formal SBIC license applications will be adjusted for inflation.

Written by:

Pepper Hamilton LLP

Pepper Hamilton LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.