SBA program changes: accelerated debenture poolings, new forms and revised investment restrictions

This legal alert focuses on the following: (1) the final rules issued by the SBA (Amendments)¹ allowing SBICs to finance certain industries that historically have been considered off limits and expediting the application process for subsequent funds; (2) the update to the SBA’s debenture pooling process to adjust the frequency of standard debenture poolings from semi-annual pooling to quarterly; and (3) updates to the SBA’s Management Assessment Questionnaire (MAQ) and related documents that address practical issues in the prior forms. 

Overall, the recent enhancements to the SBIC program highlight the SBA’s focus on modernizing both the application process and the regulatory framework for SBICs and applicants. 

Critical mineral investments 

The recent Amendments issued by the SBA expand the types of businesses that SBICs can finance. SBICs are typically prohibited from financing individual projects, meaning that SBICs cannot make investments where (i) the primary purpose of the financing is to fund the production of a defined number of assets over a short period of time, or (ii) the investment is in a portfolio company whose assets will be reduced or consumed as the life of the business progresses. 

The Amendments create an exception to this prohibition for long-term projects relating to critical minerals. Specifically, SBICs now will be allowed to finance projects involving the production, mining, extraction, conversion or processing of critical minerals if the project is anticipated to last longer than 48 months. Additionally, SBICs licensed to operate as “Critical Technology” SBICs will be allowed to finance designated Critical Technologies (as defined in existing SBA regulations) that may otherwise be impermissible investments based on the project finance limitations. As explained in prior agency guidance, the SBA believes that the 48-month minimum duration requirement mitigates the credit risks associated with non-continuous revenue streams that are typical of project financing. 

The scope of what constitutes a “critical mineral” is broadly based on existing statutory and regulatory definitions. Critical minerals include any minerals that either the United States Geological Survey or the Department of Energy (DOE) have designated as such or designate in the future in any official report or publication. Currently, the list covers minerals such as uranium, copper, and other elements identified by the DOE as rare earth elements. 

Streamlined instructions for subsequent funds 

The Amendments also enhance the process for applicants with an existing SBIC that are seeking another license on an expedited basis. The SBA removed the following three eligibility requirements for subsequent fund applicants: (i) consistent or reduced leverage management; (ii) promotions from within; and (iii) inclusive equity. The SBA explained that it viewed these requirements as duplicative with existing eligibility criteria, and the Amendments aimed to clarify and consolidate what the SBA is looking for when evaluating subsequent fund license applications. As a result of the Amendments, an applicant must meet the following eligibility criteria to apply for a license under the “Expedited Subsequent Fund Evaluation Process”: 

1. consistent strategy and fund size;
2. clean regulatory history;
3. consistent limited partner-general partner dynamics;
4. investment performance stability;
5. firm stability;
6. clean FBI criminal and IRS background check;
7. no outstanding or unresolved material litigation matters; and
8. no outstanding tax liens.

Adjusted debenture pooling schedule for standard debentures

On April 22, 2026, the SBA announced an adjusted debenture pooling schedule for the standard debenture program. SBICs borrow leverage from the SBA by issuing debentures that bear a temporary interest rate until they are pooled and sold to the public. Historically, the SBA has pooled debentures on a semi-annual basis (in March and September). Going forward, the SBA will instead pool debentures on a quarterly schedule in March, June, September and December. This more frequent pooling schedule will allow the SBA to establish the fixed, long-term interest rates on debentures earlier, giving SBICs more certainty as to their borrowing costs. Importantly, the semi-annual payment structure of the debentures issued by the SBA will not change. Interest payments and SBA annual charge payments will continue to be due in March and September of each year. 

Revised MAQ forms 

On April 22, 2026, the SBA released an updated MAQ for SBIC applicants, which corrects technical issues and formatting obstacles in the prior forms (Revised MAQ). For example, the Form 2181 spreadsheet in the Revised MAQ has been expanded to allow applicants to include investment track record data for up to 14 vehicles in one spreadsheet, which will streamline the application process for applicants from larger platforms. The Revised MAQ also includes a new “legal document” certification where applicants can highlight in tabular format what documents have changed from the versions approved by the SBA at the green light stage compared to the documents submitted with the final license application. The form updates also include a new version of the capital certificate required to be submitted to the SBA by both new applicants and existing licensees. New applicants should begin using the Revised MAQ starting with the September 30, 2026, submission window, while current licensees should begin using the new capital certificate immediately.

Key takeaways 

These changes demonstrate the SBA’s continued effort to modernize the SBIC program by enhancing operational flexibility through the leverage process and allowing SBICs to align their investment strategies with certain of the SBA’s policy priorities. The changes to the subsequent fund licensing requirements and the improved licensing forms also highlight the SBA’s focus on streamlining the application process, particularly for applicants with demonstrated experience and success in the SBIC program. 

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

_{1 The Amendments became effective February 2, 2026.}