From: SBA Investment Division
To: All SBICs and Other Interested Parties
Subject: New TechNotes Posted in December 2003

In December 2003, the SBA Investment Division posted two new TechNotes to the SBA’s website as follows:

• TechNote 10: TechNote Number 10, “Post-Licensing SBIC Risk Management Procedures,” provides a comprehensive description of SBA’s post-licensing risk management and oversight. Three new elements are described:
  
  (1) A new Risk Assessment Model;
  (2) A set of day-to-day oversight activities, and
  (3) Portfolio Review Meetings.
  
  Attached to TechNote10 are a Participating Securities Worksheet and a Debenture worksheet used to calculate risk rating points. SBICs with Questions regarding TechNote 10 should direct them to their Area Chief or financial analyst in the Office of SBIC operations. Applicants or other interested parties with questions regarding this TechNote should direct them to sbic@sba.gov.
  
  
• TechNote 7a: TechNote Number 7a, “Guidelines Concerning Allowable Management Expenses for Leveraged SBICs” provides guidelines on allowable management fees for SBIC applicants submitting acceptable SBIC license applications on and after April 1, 2004. All current SBICs and applicants submitting acceptable SBIC license applications to the SBA prior to April 1, 2004 may continue to follow TechNote 7 issued in December 2000. Questions with regard to this TechNote may be directed to sbic@sba.gov.

Both of these TechNotes were developed to promote best fund management practices among SBICs and to ensure that SBIC financial terms and conditions are consistent with developments in the private equity market.