§ 107.560 13 CFR Ch. I (1–1–20 Edition)

including any renewal of a secured line § 107.560 Subordination of SBA’s cred- of credit, increase in the maximum itor position. amount available under a secured line (a) Debentures purchased or guaranteed of credit, or expansion of the scope of a on or before July 1, 1991. Under the security interest or lien. For purposes terms of any Debenture purchased or of this paragraph (b), ‘‘expansion of the guaranteed by SBA on or before July 1, scope of a security interest or lien’’ 1991, SBA’s unsecured claims against does not include the substitution of you, as a Debenture-holder or as one asset or group of assets for an- subrogee, are subordinated in favor of other, provided the asset values (as re- all your other creditors, except to the ported on your most recent annual extent that such claims may be subject Form 468) are comparable. to equitable subordination in SBA’s (c) Additional rule for secured lines of favor. credit in existence on April 8, 1994. If you (b) Debentures purchased or guaranteed have outstanding Leverage and you after July 1, 1991, including refinancings have a secured line of credit that was of Debentures previously purchased or created on or before April 8, 1994, you guaranteed. (1) Under the terms of any must receive SBA’s written approval of Debenture purchased or guaranteed by the line before you increase the SBA after July 1, 1991, SBA’s unsecured amounts outstanding thereunder. claims against you, as a Debenture- (d) Conditions for SBA approval. As a holder or as subrogee, are subordinated condition of granting its approval only in favor of non-Associate lenders; under this § 107.550, SBA may impose and, to the extent that your indebted- such restrictions or limitations as it ness to such lenders exceeds the lesser deems appropriate, taking into account of $10,000,000 or 200 percent of your Reg- your historical performance, current ulatory Capital (determined as of the financial position, proposed terms of date your Debentures were purchased the secured debt and amount of aggre- or guaranteed), SBA’s unsecured gate debt you will have outstanding claims enjoy parity with those of other (including Leverage). SBA will not fa- unsecured creditors, except with re- vorably consider any requests for ap- spect to indebtedness created on or be- proval which include a blanket lien on fore July 1, 1991. all your assets, or a security interest (2) In order to induce others to lend in your investor commitments in ex- you money after your Debenture has cess of 125 percent of the proposed bor- been purchased or guaranteed, SBA rowing. may agree in writing on a case-by-case (e) Thirty day approval. Unless SBA basis to subordinate its unsecured notifies you otherwise within 30 days claims, on such terms as it may deter- after it receives your request, you may mine, in favor of one or more of your consider your request automatically Associates, or in favor of other lenders approved if: in excess of the amounts mentioned in paragraph (b)(1) of this section. (1) You are in regulatory compliance; (3) SBA reserves the authority to (2) The security interest in your as- refuse to subordinate its claims if it de- sets is limited to either those assets termines, at the time you request your being acquired with the borrowed funds Debenture be purchased or guaranteed, or an asset coverage ratio of no more that the exercise of reasonable invest- than 2:1; ment prudence and your financial con- (3) Your Leverage does not exceed 150 dition warrant such refusal. percent of your Leverageable Capital; and § 107.565 Restrictions on third-party (4) Your request is for approval of a debt of Early Stage SBICs. secured line of credit that would not If you are an Early Stage SBIC and cause your total outstanding bor- you have outstanding Leverage or a rowings (not including Leverage) to ex- Leverage commitment, you must get ceed 50 percent of your Leverageable SBA’s prior written approval to have, Capital. incur, or refinance any third-party

72

VerDate Sep<11>2014 09:09 May 18, 2020 Jkt 250045 PO 00000 Frm 00082 Fmt 8010 Sfmt 8010 Y:\SGML\250045.XXX 250045