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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: June 20, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration (SBA); Small Business Investment Companies

SOURCE: Federal Register, June 20, 2000, Vol. 65, No. 119, page 38223

AGENCIES: Small Business Administration (SBA)

ACTION: Proposed Rule

SYNOPSIS: SBA is proposing to amend its regulations to implement a provision of the Small Business Investment Improvement Act of 1999 (Public Law 106-9) that excludes certain types of consideration paid to a small business investment company (SBIC) by a small business from "cost of money" limitations.

EDITOR'S NOTE: The SBA's regulations being amended are in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; Chapter 1, Small Business Administration; Part 107, Small Business Investment Companies.

DATES: Submit comments on or before July 20, 2000.

ADDRESSES: Send comments to Don A. Christensen, Associate Administrator for Investment, U.S. Small Business Administration, 409 3rd Street, SW, Suite 6300, Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Leonard W. Fagan, Investment Division, 202-205-7583.

SUPPLEMENTAL INFORMATION: Public Law 106-9, enacted April 5, 1999, amended Section 308(i)(2) of the Small Business Investment Act of 1958 to provide that certain types of consideration paid to an SBIC by a small business are excluded from the regulatory limitations on "cost of money" established by the SBA -- specifically, any consideration consisting of "contingent obligations" which grant the SBIC an interest in the "equity or increased future revenue" of the small business.

To implement this change, SBA is proposing to revise Section 107.855, Interest Rate Ceiling and Limitations on Fees Charged to Small Businesses ("Cost of Money"), as follows:

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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