Updated Requirements to SBA Form 468 Ease Burden on SBIC Funds

November 3, 2011

After having increased reporting and disclosure obligations of Small Business Investment Company (SBIC) Funds on the annual report Form 468 earlier this year, the U.S. Small Business Administration (SBA) recently eased some of the burden associated with completing the form by providing additional options and greater flexibility.

SBA Form 468 must be submitted annually by SBIC Funds, and SBA may intermittently request an updated Form 468 at any time from SBIC Funds. Form 468 requires disclosure of financial information relating to SBIC Funds’ portfolio companies and is intended to aid SBA in evaluating the performance of those companies and the economic impact of SBIC Funds’ investing activity.

Industry commenters voiced concerns that the Form 468, as revised in early 2011, was overly burdensome and that additional portfolio company performance data submitted to SBA could result in micro-management of SBIC Fund managers and decision makers. In June 2011, SBA released a revised Form 468 that incorporated several changes to Form 468, and, most recently, announced additional changes to address further industry comment.

In the near term, Form 468 quarterly reports were due at the end of October, but did not require Schedules 8 and 9 to be included. The information required by Schedule 8 of Form 468 may be reported in any format but should be submitted by November 30, 2011. The information on Schedule 9 is not required until SBA’s full web-based reporting system is in working order.

Going forward, quarterly Schedule 8 may be submitted in any format an SBIC Fund chooses. Annual Schedule 8 and quarterly and annual Schedule 9 must be submitted using SBA’s template for such schedules.

The Private Equity Practice Group at McGuireWoods LLP is dedicated to keeping clients advised of new legislative and business developments as they occur. If you have any questions regarding these issues, please feel free to contact the authors.