SBA Issues Supplemental Notice on Increased SBIC Leverage Under the Investing in All of America Act — Requests Due September 1, 2026

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Key Takeaways

  • All requests for increased SBIC Leverage must be submitted to the SBA by September 1, 2026, with no extensions indicated. Fund managers should begin preparing required materials now, particularly where LPA amendments, revised MAQs or additional fundraising will be necessary.
  • Existing Licensees that have held a final close and lack sufficient Regulatory Capital may raise additional capital only from existing investors, with soft-circled commitments due by the Request Deadline and closing required within 30 days of submission.
  • Licensees remain subject to their approved Leverage ratios and existing SBIC Act limitations. Increased Leverage does not automatically increase overline limits, and management fees may not be retroactively adjusted based on the Leverage increase.

The U.S. Small Business Administration (SBA) has issued a Supplemental Notice (Supplemental Notice) to small business investment companies (SBICs or Licensees) and SBIC license applicants describing the process for accessing the increased SBA leverage (Leverage) maximums made available to standard debenture Licensees under the Investing in All of America Act of 2025, Pub. L. 119-92. The Supplemental Notice amends and supersedes SBA’s original notice on this subject, which was issued on May 27, 2026 (Original Notice).

Most significantly for fund managers and sponsors, the Supplemental Notice sets a hard deadline of September 1, 2026, (Request Deadline) by which all requests for increased Leverage must be received. Managers considering a request should begin preparing now, particularly where updated fund documents, a revised Management Assessment Questionnaire, or additional fundraising will be required.

What Does the Supplemental Notice Do?

The Supplemental Notice:

  1. Amends and supersedes the Original Notice.
  2. Restates the procedures by which SBIC applicants — entities applying for, or that have already received, a “Green Light” letter — may obtain access to increased Leverage under section 303(b)(2)(A) of the Small Business Investment Act of 1958, as amended by the Investing in All of America Act (SBIC Act).
  3. Establishes procedures for Licensees still in their Investment Period to raise additional Regulatory Capital from existing partners in order to access increased Leverage under section 303(b)(2)(A).
  4. Sets the September 1, 2026, Request Deadline as the date by which all requests for increased Leverage must be received.

What Must SBIC License Applicants Submit to Request Increased Leverage?

Applicants for a standard debenture SBIC license whose applications remain pending as of the date of the Supplemental Notice, including both those that have received a Green Light letter and those that have not, must submit the following to their assigned licensing analyst to be considered for increased Leverage:

  1. A Cover Letter describing the following:
    • The amount of additional Leverage requested, and the total Leverage the applicant would be eligible for if SBA approves the request.
    • The applicant’s projected Regulatory Capital (inclusive of soft-circled commitment increases) and the Leverage ratio sought.
    • The business case for additional Leverage in light of the matters reflected in the applicant’s original Management Assessment Questionnaire (MAQ), and a demonstration that the proposed use of the additional Leverage aligns with that business case.
    • The SBIC’s ability to repay all SBA obligations.
    • The management team’s capacity to support a larger fund — including bandwidth, deployment capability and operational infrastructure — and how the team has demonstrated the underwriting pace, execution capability and portfolio management experience necessary to manage the increased fund size.
  1. A revised MAQ (SBA Form 2181), together with a redline against the most recently submitted version, updating at least the following:
    • MAQ tabs — Info Release (Target Fund Size); Overview (Capitalization and Leverage fields); Fund Overview (Fundraising Target fields); Narrative (Investment Strategy / Portfolio Construction, e.g., average deal size and number of portfolio companies, and Capitalization sections); and the Capitalization tab.
    • MAQ attachments — a 10-year Licensee Cash Flow Forecast Model and, if applicable, amendments to the PPM or investor pitchbook reflecting the revised fund size.
    • Fund documents — amendments or updates to the limited partnership agreement (LPA), to the extent needed.

How Can Current SBIC Licensees Request Increased Leverage?

The Supplemental Notice divides existing standard debenture Licensees into two groups.

What Must Licensees with Sufficient Regulatory Capital Submit?

A Licensee that either (A) has not yet held a final close and intends to seek increased Leverage, or (B) has held a final close and already has sufficient Regulatory Capital to obtain the increased Leverage at its approved Leverage ratio, may submit the following to its assigned IPM Investment Analyst:

  1. A Cover Letter as described above (modified as applicable).
  2. Certifications that:
    • There have been no material adverse changes to the SBIC’s management team, investment operations or financial performance since the most recently filed audited Form 468 (or since licensure, for a Licensee that has not yet filed an audited Form 468).
    • Other than as disclosed, there are no outstanding or unresolved regulatory violations or LPA violations (i.e., none that remain outstanding or that have not been resolved through an approved corrective action plan).
    • Other than as disclosed, to the extent the Licensee has been examined under section 310 of the SBIC Act, there are no outstanding or unresolved examination issues — though SBA may waive this provision, in its sole discretion, for disclosed issues it considers insignificant or easily cured.
    • The Licensee is otherwise eligible to draw Leverage under 13 C.F.R. § 107.1230(c).
    • The Licensee has sufficient Regulatory Capital to support the increased Leverage sought (supported by a current or updated Capital Certificate).
  1. Updated business plan reflecting that the increased Leverage cap aligns with the investment strategy approved at licensure and demonstrating the SBIC’s ability to repay all SBA obligations in accordance with their terms.
  2. Updated 10-year Licensee Cash Flow Forecast Model showing projected Leverage repayment.
  3. Certification that the current LPA permits access to and use of the increased Leverage or, alternatively, any draft LPA amendments necessary to obtain access to the additional Leverage.
What Are the Rules for Licensees That Must Raise Additional Capital?

A Licensee that has held a final close but lacks sufficient Regulatory Capital to access the increased Leverage may engage in additional fundraising, provided that:

  • The SBIC’s Investment Period will not expire before September 30, 2026.
  • Fundraising is conducted solely from existing investors — the Supplemental Notice does not authorize post-final-close fundraising from new investors.
  • Additional commitments are soft-circled no later than the Request Deadline, and investors increasing their commitments close no later than 30 days after the Licensee submits its request.
  • The offering complies with all applicable securities laws.

In addition to the items listed above, these Licensees must include a pro forma Capital Certificate (in lieu of an updated Capital Certificate) reflecting projected increased Regulatory Capital based on soft-circled commitment increases from existing partners, with a final executed Capital Certificate to follow upon closing of the increased commitments.

What Are the Key Conditions and Practical Considerations for SBIC Leverage Increases?

Several conditions in the Supplemental Notice warrant particular attention:

  1. Leverage ratios and statutory caps are unchanged. Licensees remain subject to the Leverage ratios approved at licensure and to the limitations under the SBIC Act.
  2. No retroactive management fee benefit. Consistent with SBA’s SOP 10 10 1, an SBIC may not apply any increase in assumed Leverage retroactively for purposes of calculating its management fee.
  3. Overline limits generally will not increase. Under the SBIC Act, an SBIC’s overline calculation is based in part on the total Leverage projected in the business plan approved at the time of licensure. While an increase in a Licensee’s Private Capital will increase its overline limit, additional Leverage made available as a consequence of that Private Capital increase will not increase the total Leverage projected at licensure. For SBICs with sufficient Private Capital to obtain increased Leverage, or that do not raise additional Private Capital, the overline limit will not change.
  4. LPA amendments may be required. Amendments may be necessary to address contractual limitations on Private Capital, Regulatory Capital and total Leverage. For Licensees conducting additional fundraising under the Supplemental Notice, an amendment to section 5.04 of the LPA may also be necessary.
  5. Case-by-case review. SBA will process requests on a case-by-case basis, applying the standards set out in SOP 10-10-1.

What Should SBIC Managers Do Before the Deadline of September 1, 2026?

With the Request Deadline approaching, managers considering a request should:

  • Confirm eligibility and identify which pathway applies (pending applicant, Licensee with sufficient capital or Licensee that must raise additional capital from existing investors).
  • Model projected Regulatory Capital, the target Leverage ratio, and Leverage repayment in an updated 10-year cash flow forecast.
  • Review the LPA — including any Private Capital, Regulatory Capital, total Leverage and section 5.04 provisions — and prepare any necessary amendments.
  • For Licensees intending to raise additional capital, confirm the Investment Period will not expire before September 30, 2026, and structure a soft-circle and close timeline that satisfies the Request Deadline and the 30-day closing requirement while complying with applicable securities laws.
  • Prepare the required cover letter, certifications, Capital Certificate (or pro forma Capital Certificate) and, for applicants, a revised MAQ and redline.

If you have any questions about the Supplemental Notice, whether your fund is eligible for increased Leverage, or how to prepare and submit a request before the September 1, 2026, deadline, please contact one of the authors.

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Key Takeaways

  • All requests for increased SBIC Leverage must be submitted to the SBA by September 1, 2026, with no extensions indicated. Fund managers should begin preparing required materials now, particularly where LPA amendments, revised MAQs or additional fundraising will be necessary.
  • Existing Licensees that have held a final close and lack sufficient Regulatory Capital may raise additional capital only from existing investors, with soft-circled commitments due by the Request Deadline and closing required within 30 days of submission.
  • Licensees remain subject to their approved Leverage ratios and existing SBIC Act limitations. Increased Leverage does not automatically increase overline limits, and management fees may not be retroactively adjusted based on the Leverage increase.

The U.S. Small Business Administration (SBA) has issued a Supplemental Notice (Supplemental Notice) to small business investment companies (SBICs or Licensees) and SBIC license applicants describing the process for accessing the increased SBA leverage (Leverage) maximums made available to standard debenture Licensees under the Investing in All of America Act of 2025, Pub. L. 119-92. The Supplemental Notice amends and supersedes SBA’s original notice on this subject, which was issued on May 27, 2026 (Original Notice).

Most significantly for fund managers and sponsors, the Supplemental Notice sets a hard deadline of September 1, 2026, (Request Deadline) by which all requests for increased Leverage must be received. Managers considering a request should begin preparing now, particularly where updated fund documents, a revised Management Assessment Questionnaire, or additional fundraising will be required.

What Does the Supplemental Notice Do?

The Supplemental Notice:

  1. Amends and supersedes the Original Notice.
  2. Restates the procedures by which SBIC applicants — entities applying for, or that have already received, a “Green Light” letter — may obtain access to increased Leverage under section 303(b)(2)(A) of the Small Business Investment Act of 1958, as amended by the Investing in All of America Act (SBIC Act).
  3. Establishes procedures for Licensees still in their Investment Period to raise additional Regulatory Capital from existing partners in order to access increased Leverage under section 303(b)(2)(A).
  4. Sets the September 1, 2026, Request Deadline as the date by which all requests for increased Leverage must be received.

What Must SBIC License Applicants Submit to Request Increased Leverage?

Applicants for a standard debenture SBIC license whose applications remain pending as of the date of the Supplemental Notice, including both those that have received a Green Light letter and those that have not, must submit the following to their assigned licensing analyst to be considered for increased Leverage:

  1. A Cover Letter describing the following:
    • The amount of additional Leverage requested, and the total Leverage the applicant would be eligible for if SBA approves the request.
    • The applicant’s projected Regulatory Capital (inclusive of soft-circled commitment increases) and the Leverage ratio sought.
    • The business case for additional Leverage in light of the matters reflected in the applicant’s original Management Assessment Questionnaire (MAQ), and a demonstration that the proposed use of the additional Leverage aligns with that business case.
    • The SBIC’s ability to repay all SBA obligations.
    • The management team’s capacity to support a larger fund — including bandwidth, deployment capability and operational infrastructure — and how the team has demonstrated the underwriting pace, execution capability and portfolio management experience necessary to manage the increased fund size.
  1. A revised MAQ (SBA Form 2181), together with a redline against the most recently submitted version, updating at least the following:
    • MAQ tabs — Info Release (Target Fund Size); Overview (Capitalization and Leverage fields); Fund Overview (Fundraising Target fields); Narrative (Investment Strategy / Portfolio Construction, e.g., average deal size and number of portfolio companies, and Capitalization sections); and the Capitalization tab.
    • MAQ attachments — a 10-year Licensee Cash Flow Forecast Model and, if applicable, amendments to the PPM or investor pitchbook reflecting the revised fund size.
    • Fund documents — amendments or updates to the limited partnership agreement (LPA), to the extent needed.

How Can Current SBIC Licensees Request Increased Leverage?

The Supplemental Notice divides existing standard debenture Licensees into two groups.

What Must Licensees with Sufficient Regulatory Capital Submit?

A Licensee that either (A) has not yet held a final close and intends to seek increased Leverage, or (B) has held a final close and already has sufficient Regulatory Capital to obtain the increased Leverage at its approved Leverage ratio, may submit the following to its assigned IPM Investment Analyst:

  1. A Cover Letter as described above (modified as applicable).
  2. Certifications that:
    • There have been no material adverse changes to the SBIC’s management team, investment operations or financial performance since the most recently filed audited Form 468 (or since licensure, for a Licensee that has not yet filed an audited Form 468).
    • Other than as disclosed, there are no outstanding or unresolved regulatory violations or LPA violations (i.e., none that remain outstanding or that have not been resolved through an approved corrective action plan).
    • Other than as disclosed, to the extent the Licensee has been examined under section 310 of the SBIC Act, there are no outstanding or unresolved examination issues — though SBA may waive this provision, in its sole discretion, for disclosed issues it considers insignificant or easily cured.
    • The Licensee is otherwise eligible to draw Leverage under 13 C.F.R. § 107.1230(c).
    • The Licensee has sufficient Regulatory Capital to support the increased Leverage sought (supported by a current or updated Capital Certificate).
  1. Updated business plan reflecting that the increased Leverage cap aligns with the investment strategy approved at licensure and demonstrating the SBIC’s ability to repay all SBA obligations in accordance with their terms.
  2. Updated 10-year Licensee Cash Flow Forecast Model showing projected Leverage repayment.
  3. Certification that the current LPA permits access to and use of the increased Leverage or, alternatively, any draft LPA amendments necessary to obtain access to the additional Leverage.
What Are the Rules for Licensees That Must Raise Additional Capital?

A Licensee that has held a final close but lacks sufficient Regulatory Capital to access the increased Leverage may engage in additional fundraising, provided that:

  • The SBIC’s Investment Period will not expire before September 30, 2026.
  • Fundraising is conducted solely from existing investors — the Supplemental Notice does not authorize post-final-close fundraising from new investors.
  • Additional commitments are soft-circled no later than the Request Deadline, and investors increasing their commitments close no later than 30 days after the Licensee submits its request.
  • The offering complies with all applicable securities laws.

In addition to the items listed above, these Licensees must include a pro forma Capital Certificate (in lieu of an updated Capital Certificate) reflecting projected increased Regulatory Capital based on soft-circled commitment increases from existing partners, with a final executed Capital Certificate to follow upon closing of the increased commitments.

What Are the Key Conditions and Practical Considerations for SBIC Leverage Increases?

Several conditions in the Supplemental Notice warrant particular attention:

  1. Leverage ratios and statutory caps are unchanged. Licensees remain subject to the Leverage ratios approved at licensure and to the limitations under the SBIC Act.
  2. No retroactive management fee benefit. Consistent with SBA’s SOP 10 10 1, an SBIC may not apply any increase in assumed Leverage retroactively for purposes of calculating its management fee.
  3. Overline limits generally will not increase. Under the SBIC Act, an SBIC’s overline calculation is based in part on the total Leverage projected in the business plan approved at the time of licensure. While an increase in a Licensee’s Private Capital will increase its overline limit, additional Leverage made available as a consequence of that Private Capital increase will not increase the total Leverage projected at licensure. For SBICs with sufficient Private Capital to obtain increased Leverage, or that do not raise additional Private Capital, the overline limit will not change.
  4. LPA amendments may be required. Amendments may be necessary to address contractual limitations on Private Capital, Regulatory Capital and total Leverage. For Licensees conducting additional fundraising under the Supplemental Notice, an amendment to section 5.04 of the LPA may also be necessary.
  5. Case-by-case review. SBA will process requests on a case-by-case basis, applying the standards set out in SOP 10-10-1.

What Should SBIC Managers Do Before the Deadline of September 1, 2026?

With the Request Deadline approaching, managers considering a request should:

  • Confirm eligibility and identify which pathway applies (pending applicant, Licensee with sufficient capital or Licensee that must raise additional capital from existing investors).
  • Model projected Regulatory Capital, the target Leverage ratio, and Leverage repayment in an updated 10-year cash flow forecast.
  • Review the LPA — including any Private Capital, Regulatory Capital, total Leverage and section 5.04 provisions — and prepare any necessary amendments.
  • For Licensees intending to raise additional capital, confirm the Investment Period will not expire before September 30, 2026, and structure a soft-circle and close timeline that satisfies the Request Deadline and the 30-day closing requirement while complying with applicable securities laws.
  • Prepare the required cover letter, certifications, Capital Certificate (or pro forma Capital Certificate) and, for applicants, a revised MAQ and redline.

If you have any questions about the Supplemental Notice, whether your fund is eligible for increased Leverage, or how to prepare and submit a request before the September 1, 2026, deadline, please contact one of the authors.

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