On February 12, 2009, the U.S. Small Business Administration (SBA) issued a letter regarding a new process for the expedited approval of transfers of limited partnership interests in Small Business Investment Companies (SBICs). Pursuant to 13 CFR §107.400 and the SBA’s Model Limited Partnership Agreement, the SBA requires Licensees to seek the SBA’s approval of the release of a transferring limited partner from its obligations to the Licensee. In response to requests from the industry to expedite this approval process, the SBA has created a standardized approval process for all transfers that do not result in a change of control pursuant to 13 CFR §107.410.

Pursuant to this expedited process, the transferor and the transferee must enter into a Transfer Agreement:

  • in which the transferor proposes to transfer a certain percentage of its partnership interest to the transferee, including all rights, title and interest therein
  • that states the ownership percentage the transferee will have in the Licensee upon such transfer; and
  • in which the transferee:

(a) indicates whether it is an Institutional Investor

(b) accepts the transferred interest

(c) agrees to comply with and be bound by the Licensee’s limited partnership agreement (the “Partnership Agreement”)

(d) assumes all of the transferor’s duties and obligations under the Partnership Agreement

(e) makes all representations required of a limited partner under the Partnership Agreement

After the transferor and transferee enter a Transfer Agreement, the Licensee must submit the following documents to the Licensee’s Area Chief:

  • The Request for Approval Transfer Certificate executed by the Licensee, the transferee and the transferor
  • An updated capital certificate reflecting the transfer
  • A copy of a signature page to the Partnership Agreement executed by the transferee
  • The $200 fee, if applicable
  • In the case of a transfer of a partnership interest constituting 10% or more of the Licensee’s private capital, a list of all of the 10% owners of the transferee

The Area Chief for the Licensee will review the submitted documents and, if he or she finds them sufficient, will execute the Transfer Certificate and send it to the Licensee. Execution by the Area Chief of the Transfer Certificate will constitute the SBA’s consent to the transfer. The SBA believes that this new process will expedite the SBA’s approval of transfers of limited partnership interests in SBICs without compromising the quality of the SBA’s review.