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pdfInstructions for Form 468
Small Business Investment Company (SBIC)
Licensee Financial Statements and Investment
Performance
Version 5.0
Date: 2/11/2025
Prepared by the
Office of Investment & Innovation
U.S. Small Business Administration
Instructions for Form 468
Small Business Investment Company Financial Statements
Table of Contents
I.
Introduction ...............................................................................................................4
II.
Form 468 Overview .....................................................................................................5
A.
Purpose ..................................................................................................................5
B.
General Structure ....................................................................................................5
C.
Limitations ..............................................................................................................7
D.
Other References .....................................................................................................7
III. Form 468 Requirements...............................................................................................8
A.
System Requirements ..............................................................................................8
B.
Due Date and Filing Requirements .............................................................................8
1.
Annual Form 468 Requirements .............................................................................8
2.
Quarterly Form 468 Requirements ..........................................................................8
3.
Interim Financial Statements .................................................................................9
C.
Conduct of the Annual Audit ......................................................................................9
1.
Confirmations. .....................................................................................................9
2.
Auditing Standards. ..............................................................................................9
3.
Auditor’s Opinion. .................................................................................................9
4.
Special Reporting Requirement for SBICs. ............................................................. 10
D.
Accounting Matters and Special Considerations.......................................................... 10
1.
Reporting Valuations on SBA Form 468. ................................................................ 10
2.
Financial Highlights............................................................................................. 10
3.
Organization Costs. ............................................................................................ 10
4.
Debt Issuance Costs. .......................................................................................... 10
5.
Investments in Flow-through Entities. ................................................................... 10
6.
Consolidation of Portfolio Companies. ................................................................... 11
7.
“Blocker” Entity. ................................................................................................. 11
E.
Civil Penalties and Requests for Extensions. .............................................................. 11
1.
Civil Penalty. ..................................................................................................... 11
2.
Request for Extensions and Exemption of Civil Penalty ............................................ 11
IV. Form 468 Workbook Navigation and General Features ................................................... 12
A.
Navigation ............................................................................................................ 12
B.
Fields ................................................................................................................... 13
V.
Completing the Form 468 ........................................................................................... 14
A.
Cover ................................................................................................................... 14
B.
Schedule 11: SBIC Cumulative Performance ............................................................. 16
C.
Schedule 1: Schedule of Loans and Investments ....................................................... 19
D.
Schedule 1c: Schedule of Additions and Deductions to Loan and Investment Cost.......... 24
E.
Schedule 1 A & B: Summary of Loans and Investments and Smaller Enterprise Financings27
F.
Schedule 2: Schedule of Realized Gains and Losses on Loans and Investments ............. 28
G.
Schedule 3: Schedule of Non-cash Gains/Income....................................................... 29
H.
Schedule 4: Schedule of Delinquent Loans and Investments ....................................... 30
I.
Schedule 5: Schedule of Commitments..................................................................... 30
J.
Schedule 6: Schedule of Guarantees ........................................................................ 32
K.
Schedule 12: Portfolio Company Update ................................................................... 33
L.
Schedule 7: Schedule of Cash and Invested Idle Funds .............................................. 35
M.
Balance Sheet / Statement of Financial Position ......................................................... 35
N.
Statement of Operations / Income Statement ........................................................... 40
O.
Cash Flow Statement ............................................................................................. 42
P.
Statement of Partners' Capital ................................................................................. 45
Q.
Retained Earnings Available for Distribution and Regulatory and Leverageable Capital .... 46
R.
Schedule 8: SBIC Distribution Schedule.................................................................... 48
S.
Schedule 9: Schedule of Activity ............................................................................. 50
T.
Schedule 10: SBIC Customer Relationship Management Information ............................ 51
U.
Executive Summary ............................................................................................... 52
V.
Certifications ......................................................................................................... 54
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Instructions for Form 468
Small Business Investment Company Financial Statements
W.
Wind-Down Plan Supplement .................................................................................. 54
1.
Wind-Down Plan Supplement Main Spreadsheet ..................................................... 55
2.
Wind-Down Plan Supplement Schedule A .............................................................. 56
3.
Wind-Down Plan Supplement Schedule B .............................................................. 58
X.
Additional Tools ..................................................................................................... 59
1.
Key SBA Leverage Metrics ................................................................................... 59
2.
NAICS Search Tool ............................................................................................. 59
Y.
Reinvestor SBIC Appendix ...................................................................................... 60
VI. Appendix A – Differences in Corporate Form 468 Reporting ............................................ 60
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Instructions for Form 468
Small Business Investment Company Financial Statements
List of Exhibits
Exhibit
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Exhibit
Exhibit
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Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
II-1: Form 468 Section List ..................................................................................................... 5
IV-1: Form 468 Workbook Table of Contents........................................................................... 12
IV-3: Form 468 Table of Contents by Recommended Entry Order .............................................. 13
IV-4: Form 468 Field Formatting Example............................................................................... 13
IV-5: Form 468 Field Selection Example ................................................................................. 14
IV-6: Form 468 Field Note Example ....................................................................................... 14
V-1: Cover Page Fields ......................................................................................................... 14
V-2: Schedule 11 – SBIC Cumulative Performance Fields .......................................................... 17
V-3: Schedule 1 – Schedule of Loans and Investments Fields .................................................... 20
V-4: Schedule 1c – Schedule of Additions and Deductions to Loans and Investment Fields............ 24
V-5: Schedule 1c – Schedule of Additions and Deductions Example............................................ 27
V-6: Schedule 1b – Smaller Enterprise Financings ................................................................... 28
V-7: Schedule 2 – Schedule of Realized Gains and Losses on Loans and Investment Fields ........... 28
V-8: Schedule 3 – Schedule of Noncash Gains/Income Fields .................................................... 29
V-9: Schedule 4 – Schedule of Delinquent Loans and Investments Fields .................................... 30
V-10: Schedule 5 – Schedule of Commitments ........................................................................ 30
V-11: Example Line of Credit Form Actions ............................................................................. 31
V-12: Schedule 6 – Schedule of Guarantee Fields .................................................................... 32
V-13: Schedule 12 – Portfolio Company Update Worksheet ....................................................... 33
V-14: Schedule 12 – Portfolio Company Update Fields .............................................................. 33
V-15: Balance Sheet/Statement of Financial Position................................................................ 36
V-16: Statement of Operations Realized ................................................................................. 40
V-17: Statement of Cash Flows Fields .................................................................................... 42
V-18: Statement of Partners’ Capital Part I – Private Partners’ Contributed Capital Fields ............. 45
V-19: Statement of Partners’ Capital Part II – Undistributed Realized Earnings Fields ................... 46
V-20: Part I – Retained Earnings Available for Distribution Fields ............................................... 47
V-21: Part II – Regulatory and Leverageable Capital Fields ....................................................... 47
V-22: Schedule 8 - Distribution Schedule Fields....................................................................... 48
V-23: Schedule 9 – Schedule of Activity Fields ........................................................................ 50
V-24: Schedule 10 – SBIC Customer Relationship Management Information Fields ...................... 51
V-25: Executive Summary Fields ........................................................................................... 53
V-26: SBA Form 468 Wind-Down Plan Supplement Main (WDSup) Fields .................................... 55
V-27: SBA Form 468 Wind-Down Plan Supplement A (WDSupA) Fields ....................................... 56
V-28: SBA Form 468 Wind-Down Plan Supplement B (WDSupB) Fields ....................................... 58
V-29: Example Wind-down Plan Supplement B ........................................................................ 59
VI-1: Differences Between Corporate and Partnership Form 468 ................................................ 60
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Instructions for Form 468
Small Business Investment Company Financial Statements
I.
Introduction
This document provides instructions on how to complete the Small Business Administration (“SBA”)
Form 468 Small Business Investment Company (“SBIC”) financial statements (“Form 468”). This form
provides SBA the information required to monitor and examine SBICs from both a financial and
regulatory perspective. It is intended to provide financial information at the fund, portfolio company,
and investment level. In developing this form, SBA has reviewed best practices from industry as well as
requirements under the Small Business Act of 1958, as amended, and implementing regulations.
To the extent practicable, SBA utilized the reporting templates made available by the Institutional
Limited Partners Association (ILPA). By using more standard reporting, SBA seeks to align with industry
best practices and reduce the burden on SBICs, who are typically required to submit similar reports to
its investors.
SBA also recognizes that while SBA continues to require its SBA Valuation Guidelines for Licensees
with Leverage or intending to issue Debentures (“Leveraged Licensees”), most SBICs prepare valuations
that meet Generally Accepted Accounting Principles (“GAAP”) for their investors. Currently, SBA
generally approves valuation guidelines that meet GAAP for Licensees that do not have Leverage and
do not intend to issue Leverage (“Non-leveraged Licensees”).
SBA recognizes that various changes to GAAP in recent years have resulted in several significant
differences between the SBA Form 468 and GAAP financial statements (including, but not limited to, the
treatment of unrealized gain/loss, presentation of financial highlights, and valuation of certain loans and
investments). As a result, the financial statement presentation on SBA Form 468, based on SBA’s
“Accounting Standards and Financial Reporting Requirements for SBICs” may be considered an Other
Comprehensive Basis of Accounting (“OCBOA”).
To simplify the Form 468 process for SBICs, SBA now collects the Form 468 in a Microsoft Excel
format. This is intended to give SBICs more flexibility and control of the process by allowing SBICs to
perform entry in a format in which they are familiar and can easily import or cut and paste information.
SBICs will then submit the Excel file to SBA through a secure portal.
This document provides an overview of the different parts of the Form 468, what is expected at
each of the regulatory due dates, and instructions for completing the Form 468. Questions regarding
these instructions should be directed to your Investment Analyst in the Office of SBIC Investment
Portfolio Management and Operations.
4|Page
Instructions for Form 468
Small Business Investment Company Financial Statements
II.
Form 468 Overview
A. Purpose
The Form 468 is intended to provide critical financial and investment information to help SBA assess
each SBIC’s investment performance and regulatory status. The Form 468 consists of financial
statements, schedules, Licensee investment performance, and portfolio company information. SBA also
uses this information in aggregate to report on the overall SBIC program’s small business and broader
economic impact.
Historically, SBA utilized four different Form 468 variants, based on a Licensee’s structure and
whether the report was for quarterly or annual, as follows: 1) Partnership Annual; 2) Partnership
Quarterly; 3) Corporate Annual; and 4) Corporate Quarterly. The primary differences between
Partnership and Corporate deal with private capital terminology and income tax differences as noted in
Appendix A. The differences between annual and quarterly are related to certain schedules not needed
as part of the quarterly reporting. Licensees can now choose between “partnership” or “corporate”
reporting in a single workbook. The Form 468 is also broken into a “short form” version with a reduced
set of filing requirements for quarterly reporting (“Short Form 468”) and a “long form” version for annual
reporting (“Long Form 468”). These instructions apply to all SBICs with differences for those using the
Corporate Form 468 identified in Appendix A.
B. General Structure
This Exhibit II-1 provides a table of contents for the key parts of the Long Form 468 workbook. The
first column provides the name of each section. The second column provides a brief description of the
information to be provided in each section. The third column provides the order in which such columns
appear in the Long Form 468. The fourth column identifies the recommended order of entry. (In general,
it is best to complete the schedules first since the schedules feed into parts of the financial statements
and the executive summary). The fifth column identifies those sections that are only required as part of
annual Form 468. The last column identifies those sections that do not require auditor review.
Exhibit II-1: Form 468 Section List
Form 468 Section
Description
Cover
Identifies basic information on
Licensee and reporting period.
Identifies the assets, liabilities,
and capital of the fund as of
the reporting period.
Identifies the income and
expenses of the fund for the
reporting period.
Identifies the fund’s cash
flows.
Provides additions and
deductions for Partner’s
contributed capital and
calculation of undistributed
realized earnings.
Provides calculations for
Retained Earnings Available for
Distribution and Regulatory
and Leverageable Capital.
Statement of Financial
Position / Balance Sheet
Statement of
Operations / Income
Statement
Cash Flow Statement
Statement of Partners'
Capital
READ & Regulatory &
Leverageable Capital
Form
Order
Entry
Order
1
1
2
13
3
14
4
15
5
17
6
18
Annual
Only
Unaudited
5|Page
Instructions for Form 468
Small Business Investment Company Financial Statements
Form 468 Section
Description
Schedule 1: Schedule
of Loans and
Investments
Provides a schedule of active
loans and investments held by
the Licensee during that
reporting period.
Provides a summary of the
loans and investments and
identifies the licensees
statutorily required smaller
enterprise financings amounts.
Provides a schedule of all
additions and deductions to
the cost of all loans and
investments in Schedule 1 for
that reporting period. This
includes financings, Payment
in Kind (PIK), repayments,
realizations, and charge-offs.
Provides information on
realizations during the
reporting period.
Schedule 1 A & B:
Summary of Loans and
Investments and
Smaller Enterprise
Financings
Schedule 1 C:
Schedule of Additions
and Deductions to Loan
and Investment Cost
Schedule 2: Schedule
of Realized Gains and
Losses on Loans and
Investments
Schedule 3: Schedule
of Non-Cash
Gains/Income
Schedule 4: Schedule
of Delinquent Loans and
Investments
Schedule 5: Schedule
of Commitments
Schedule 6: Schedule
of Guarantees
Schedule 7: Schedule
of Cash and Invested
Idle Funds
Schedule 8: SBIC
Distribution Schedule*
Schedule 9: Schedule
of Activity
Certifications
Schedule 10: SBIC
Customer Relationship
Management
Information
Schedule 11: SBIC
Cumulative
Performance
Provides information on NonCash changes during the
reporting period.
Provides further information on
delinquent loans and
investments as of the
reporting period.
Provides information on
commitments for financings
held by SBIC.
Provides information on any
guarantees made by the SBIC.
Provides detail regarding cash
and idle funds presented on
the balance sheet.
Provides a breakdown of
distributions required per 13
CFR 107.585(c).
Provides information to help
SBA determine whether SBIC
meets activity tests.
Provides certification by SBIC
on the data submitted in the
Form 468.
Contact ad voluntary
demographic information on
management teams.
Provides a list of all portfolio
companies (active and
inactive) financed by the SBIC,
including all investment,
proceeds, and residual value.
Form
Order
Entry
Order
7
3
8
12
9
4
10
5
11
6
12
7
13
8
14
9
15
11
16
16
17
19
18
22
Annual
Only
X
X
19
Unaudited
X
20
X
20
2
6|Page
Instructions for Form 468
Small Business Investment Company Financial Statements
Form 468 Section
Description
Schedule 12: Portfolio
Company Update
Provides updates on the
financial and economic
condition of all active portfolio
companies.
Provides overview on status
and performance of fund.
Identifies SBIC cash flows
during Wind-down.
Identifies anticipated income
and realization proceeds.
Executive Summary
Wind-Down Plan
Supplement**
Wind-Down Plan
Supplement Schedule
A**
Wind-Down Plan
Supplement Schedule
B**
Identifies anticipated
financings to portfolio
concerns.
Form
Order
Entry
Order
21
10
22
21
23
23
24
24
25
Annual
Only
Unaudited
X
X
X
X
X
X
X
X
25
Key SBA Leverage
Metrics
Tool that automatically
calculates key SBA Leverage
metrics using the data
presented in the Form 468,
n/a
n/a
n/a
n/a
including capital impairment
percentage and leverage
coverage ratio.
NAICS Search Tool
Tool to help search for the
appropriate North American
n/a
n/a
n/a
n/a
Industry Classification System
(NAICS) code.
* Schedule 8 is only required for SBICs subject to 13 CFR 107.585(c). It should be completed as
distributions are made and checked against the Statement of Partners' Capital.
** Wind-Down plans are only required for SBICs that are in Wind-Down, per 13 CFR 107.590, or being
monitored by the Office of Liquidation.
C. Limitations
In order to reduce any risk of document corruption or loss of data, SBA has locked the workbook
and corresponding formulas. SBA requires that data be presented in the format provided in the
workbook. As such, SBA will reject any submission that alters the format or placement of the
data.
D. Other References
SBA notes the following documents that should be used as references in completing the Form 468:
•
•
•
•
SBIC Regulations 13 CFR 107: This contains the regulations for the SBIC program, including
definitions of several of the terms used in the preparation of the Form 468. The regulations
also establish the general reporting requirements for the Form 468.
Appendix 14: Accounting Standards and Financial Reporting Requirements for SBICs: This
document provides guidance to SBICs on accounting policies and procedures, financial
reporting to SBA, and selection of an auditor.
Appendix 15: Valuation Guidelines for SBICs: This document outlines the policies and
procedures to which SBICs must conform in valuing their Loans and Investments and
provides guidance as to the techniques and standards which are generally applicable to such
valuations.
Appendix 16: Chart of Accounts for SBICs: This contains an index of the financial accounts
required in the Licensee’s general ledger.
7|Page
Instructions for Form 468
Small Business Investment Company Financial Statements
The last three references may be found in the “Accounting and valuation standards” section located
on the SBIC Website’s Resource Library, which can be accessed through the following link: Resource
library (sba.gov).
III. Form 468 Requirements
A. System Requirements
You will need a Microsoft Excel compatible with Version 2016 or Microsoft 365. To complete the
Form 468. You will also need internet access to submit the Form and any supplemental material to SBA’s
secure portal.
There are two workbooks available for use by both partnership and corporate SBICs: a Short Form
468 (for quarterly reporting) and a Long Form 468 (for annual reporting). Both partnership and
corporate SBICs may indicate their organizational structure on the “Cover” page of the Form 468.
B. Due Date and Filing Requirements
1.
Annual Form 468 Requirements
All SBICs are required to submit the annual Form 468 within 90 calendar days following the end of
their fiscal year. A complete annual Long Form 468 submission should include the following:
•
•
•
•
•
•
•
The Microsoft Excel workbook file(s) containing the Annual Form 468.
A .pdf file of the submitted Form 468 with a signed Certifications page.
A .pdf of the Independent Auditor’s Report and the Notes to Financial Statements (see paragraph
C – Conduct of the Annual Audit, below for further details regarding the audit)
Reinvestor SBIC Appendix (if applicable) within 120 days of the close of their fiscal year.
A .pdf and any supplementary files containing your updated Wind-down plan if you are in Winddown (see 13 CFR 107.590). 1
Any other supplementary uploaded .pdf, .xls, .doc, or .csv files (such as valuation meeting
minutes, valuation reports, audited fund performance provided to all investors, capitalization
information, wind-down plan updates, operating plan, etc.).
If more time is required for completion of reporting, Licensees should notify their IPM
Investment Analyst, the Director of IPM and the Director of Patient Capital Investments via email
within 30 days of the close of the fiscal year detailing the rationale of the request and the
additional time being requested.
2.
Quarterly Form 468 Requirements
Each Leveraged Licensee must submit its Form 468 within 45 calendar days of the close of each
quarter (with the exception of the 4th quarter). As noted in Section II, Schedules 9 and 10 are not
required as part of this submission. A complete quarterly Form 468 submission should include the
following:
•
•
•
•
The Microsoft Excel Workbook file(s) containing the quarterly Form 468.
A .pdf file of the submitted Form 468 with a signed Certifications page.
Reinvestor SBIC Appendix (if applicable) within 90 days of the close of each quarter.
Any other supplementary uploaded .pdf, .xls, .doc, or .csv files (such as valuation meeting
minutes, valuation reports, audited fund performance provided to all investors, capitalization
information, wind-down plan updates as needed, etc.).
1
Mature funds that are no longer making new investments are reminded to review §107.590(c) to
determine if you are required to submit a Wind-down plan for SBA’s review and approval. If you are
already operating under an SBA-approved wind-down plan, your SBA Form 468 filing must include
updates to your wind-down plan, such as changes in the expected timing or amounts of liquidity events
and distributions to SBA and your investors.
8|Page
Instructions for Form 468
Small Business Investment Company Financial Statements
•
If more time is required for completion of reporting, Licensees should notify their IPM
Investment Analyst, the Director of IPM and the Director of Patient Capital Investments via email
within 15 days of the close of the fiscal quarter detailing the rationale of the request and the
additional time being requested.
3.
Interim Financial Statements
If you are submitting a request to draw Leverage more than 30 days after the end of your fiscal
year, but before the due date of your audited Annual Financial Report, SBA Form 468, you must file an
unaudited quarterly SBA Form 468 (select the Q4 quarterly filing option) as of your fiscal year end on
the cover sheet. The interim SBA Form 468 must be signed and may not be stamped or marked in any
manner.
C. Conduct of the Annual Audit
1.
Confirmations.
As part of the annual audit of a leveraged SBIC, SBA is typically asked to confirm the SBIC’s
outstanding leverage balance. Your independent public accountant may e-mail confirmation requests to
SBA’s Denver Finance Center at [DFC@sba.gov]. Please include the SBIC’s license number in the request
and allow five (5) business days for a response.
Confirmation requests can only be fulfilled by e-mail. E-mailed confirmations will be certified by
secured electronic signature.
2.
Auditing Standards.
Audits are to be performed in accordance with Generally Accepted Auditing Standards (“GAAS”). It
is not necessary to follow Government Auditing Standards.
3.
Auditor’s Opinion.
The financial statements contained in the Form 468 are the subject of the independent public
accountant's opinion and must be referred to, specifically in the opinion. Auditors may elect to provide
SBA with an OCBOA opinion rather than a GAAP opinion, with the auditor’s report stating that the
financial statements have been prepared in accordance with accounting practices prescribed or
permitted by SBA. SBA encourages this practice in preference to the issuance of a qualified GAAP
opinion. The notes to the financial statement should include an appropriate description of the SBIC’s
basis of accounting.
SBA will accept an auditor’s opinion stating that an SBIC’s financial statements are presented fairly
in accordance with GAAP (in particular, SBA notes that a number of non-Leveraged SBICs have received
SBA approval to value their investments on a GAAP basis; in addition, some Leveraged SBICs may
provide types of financing for which the valuations under GAAP and SBA guidelines are not materially
different). SBA will also accept a qualified GAAP opinion if the qualification is not material to the financial
statements. SBA will not accept an auditor’s opinion that is qualified because the investments in portfolio
companies included in the financial statements have been valued by the general partners using the SBA
valuation guidelines applicable to the SBIC, which are not in accordance with GAAP (ASC 820). Because
investments in portfolio companies typically represent a very high percentage of an SBIC’s assets, these
qualified opinions do not provide SBA with adequate assurance regarding the financial statements as a
whole.
The auditor’s opinion must be uploaded to SBA’s secure portal in a .pdf document that also includes
the notes to the financial statements that are the subject of the opinion. It is within the auditor’s
discretion to include the audited SBA Form 468 schedules and the unaudited Schedules.
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Instructions for Form 468
Small Business Investment Company Financial Statements
4.
Special Reporting Requirement for SBICs.
The annual audit of an SBIC must include a statement by the independent certified public accountant
that an SBIC's valuations were prepared in conformity with its SBA-approved valuation policy. This is
required by section 310(d) of the Small Business Investment Act of 1958, as amended, and
§107.503(e)(2) of the SBA regulations. SBA has determined that this legal requirement can be satisfied
using the following explanatory paragraph in the auditor's report on the Form 468 financial statements:
“As discussed in Note [number], the investment securities included in the financial statements have
been valued by the [board of directors, or general partner(s)] using valuation criteria applicable to the
licensee. These criteria were established in accordance with section 310(d)(2) of the Small Business
Investment Act of 1958, as amended.” The referenced section 310(d)(2) states that each valuation
submitted by an SBIC must be prepared in accordance with valuation criteria that (1) shall be
“established or approved” by SBA, and (2) “include appropriate safeguards to ensure that the noncash
assets of a licensee are not overvalued.” For further information, please see section IV, paragraph B, of
“Accounting Standards and Financial Reporting Requirements for SBICs”. Please note that this
requirement applies only to reports on SBA Form 468 and not to reports on any other financial
statements that an SBIC may prepare.
D. Accounting Matters and Special Considerations
1.
Reporting Valuations on SBA Form 468.
FAS 157 (codified as ASC Topic 820) “Fair Value Measurements” provide a framework for measuring
fair value under GAAP. SBA has not adopted FAS 157 for reporting valuations on SBA Form 468, and
SBICs are not required to include FAS 157 valuation disclosures in the footnotes to their SBA Form 468
financial statements. SBICs should continue to determine and report portfolio valuations in accordance
with SBA’s “Valuation Guidelines for Small Business Investment Companies.”
2.
Financial Highlights.
SBA does not require “Financial Highlights” of the type described in AICPA Statement of Position 952 (ASC Topic 946).
3.
Organization Costs.
In accordance with AICPA Statement of Position 98-5 (ASC Topic 720), organization costs of an
SBIC are to be expensed as they are incurred. This accounting treatment applies only to organization
costs, not to SBA leverage fees or partnership syndication costs.
4.
Debt Issuance Costs.
In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of interest (Subtopic 835-30):
Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to
a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying
amount of that debt liability rather than as an asset. SBA has not adopted ASU 2015-03. On SBA Form
468, SBICs must continue to present unamortized debt issuance costs related to SBA leverage as “Net
Leverage Fees” in the Other Assets section of the Statement of Financial Position. Amortization of debt
issuance costs will continue to be reported as “Amortization of Leverage Fees” in the Expenses section
of the Statement of Operations Realized.
5.
Investments in Flow-through Entities.
The Statement of Operations Realized or Income Statement includes a line for “Income (Loss) from
Investments in Partnerships/Flow-through Entities” (line 3). Investors in such entities typically use the
equity method of accounting, under which the cost basis of the investment is adjusted at the end of
each accounting period to recognize the investor's allocated share of earnings or losses, and the amount
of the adjustment is included in the net income of the investor. However, SBA has determined that this
method is not appropriate for SBICs.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Under SBA’s guidelines, instead of using the equity method, SBICs with portfolio investments in
flow-through entities must report these investments at their fair value in the Statement of Financial
Position, with the difference between cost and value reflected as unrealized appreciation or depreciation.
Any income or loss allocated to the SBIC may, if appropriate, be a factor in the SBIC's estimate of the
investment's fair value, but such allocations are not recognized as income or loss in the Statement of
Operations Realized. Furthermore, the SBIC's cost basis is not adjusted to reflect such allocations. SBICs
are to recognize income or loss when realized upon disposition or liquidation of all or part of their
ownership interest. Income is also recognized when the SBIC receives a cash dividend or other
distribution from the investee (unless the distribution represents a return of capital, which does not
result in the recognition of income, but is treated as a reduction of the SBIC's cost basis).
6.
Consolidation of Portfolio Companies.
For most SBICs, the reporting entity is the SBIC only (for exceptions, see section V, paragraph C,
of “Accounting Standards and Financial Reporting Requirements for SBICs”). Portfolio companies should
not be consolidated.
7.
“Blocker” Entity.
Under §107.720(b)(3), an SBIC may form one or more wholly owned blocker entities through which
it provides financing to small businesses organized as LLCs, limited partnerships, or other flow-through
entities, in order to avoid causing tax-exempt investors in the SBIC to incur “unrelated business taxable
income” (UBTI) or foreign investors to incur “effectively connected income” (ECI). Under these
circumstances, the SBIC should report its investment on the Schedule 1 – Schedule of Loans and
Investments under the name of the eligible small business that is the ultimate recipient of the financing.
In the “Security Description” field, the SBIC must indicate the name of the blocker entity through which
it holds the investment. If the SBIC performed a financing under §107.720(b)(3)(ii), the SBIC must
indicate in that field both the name of the blocker entity and the passive Small Business through which
it holds the investment.
E. Civil Penalties and Requests for Extensions.
1.
Civil Penalty.
Under 13 CFR 107.665, any Licensee that violates any regulation or written directive issued by SBA
requiring the filing of any regular or special report shall be fined a civil penalty as stated therein for each
day the Licensee fails to file such report.
2.
Request for Extensions and Exemption of Civil Penalty
Under 13 CFR 107.670, an SBIC may apply for an exemption from the civil penalty for late filing of
reports when extenuating circumstances make it impracticable to file a required report within the
allowed time.
The request for an extension of time to file a required report must:
•
•
•
•
•
Be in writing (email is acceptable);
Submitted to SBA before the filing due date;
Include the date you expect to file your report;
Certify to an extraordinary occurrence, not within your control, that makes timely filing of the
report impractical; and
Be accompanied by written evidence of such occurrence, where appropriate (See Section 1,
Item 4).
Upon receipt of your request, SBA may exempt you from the civil penalty provision of §107.665 in
such manner and under such conditions as SBA determines. Please be advised that a request for an
extension of time to file required reports must be justified and approval is not routine.
11 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
If the extenuating circumstance is related to SBA’s portal, your request for an exemption under
§107.670 should include evidence that you contacted the SBIC-Web support team (at ITSC@sba.gov)
prior to the filing due date.
If the extenuating circumstance is related to the Form 468 Excel workbook, your request for an
exemption under §107.670 should include evidence that you contacted your analyst and that
circumstances were such that you were not able to resolve. SBA expects that all SBICs have or have
access to a person with knowledge of both Excel and financial statements.
IV.
Form 468 Workbook Navigation and General Features
A. Navigation
Each of the sections in Exhibit II-1 represent a separate worksheet/tab within the Form 468
workbook. The first tab includes a table of contents identifying each section as shown in the exhibit
below.
Exhibit IV-1: Form 468 Workbook Table of Contents
Table of C ontents
"Ctrl-t" will take you back to this table of contents.
Form Section
C over
Balance Sheet
Statement of Operations / Income Statement
C ash Flow Statement
Statement of Partners' C apital
READ & Regulatory & Leverageable C apital
Schedule 1: Schedule of Loans and Investments
Schedule 1 A & B: Summary of Loans and Investments and Smaller Enterprise Financings
Schedule 1 C : Schedule of Additions and Deductions to Loan and Investment C ost
Schedule 2: Schedule of Realized Gains and Losses on Loans and Investments
Schedule 3: Schedule of Non-cash Gains/Income
Schedule 4: Schedule of Delinquent Loans and Investments
Schedule 5: Schedule of C ommitments
Schedule 6: Schedule of Guarantees
Schedule 7: Schedule of C ash and Invested Idle Funds
Schedule 8: SBIC Distribution Schedule (1)
Schedule 9: Schedule of Activity
C ertifications
Schedule 10: SBIC C ustomer Relationship Management Information
Schedule 11: SBIC C umulative Performance
Schedule 12: Portfolio C ompany Updates
Executive Summary
Wind-Down Plan Supplement (2)
Wind-Down Plan Supplement Schedule A
Wind-Down Plan Supplement Schedule B
Key SBA Leverage Metrics
NAIC S Search Tool
Form / Page Recommended
Annual
Quarterly
Order
Entry Order Submission Submission
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
n/a
n/a
1
14
15
16
12
13
3
5
4
6
7
8
9
10
11
17
18
22
19
2
21
20
23
24
25
n/a
n/a
as needed
as needed
as needed
n/a
n/a
Accrual/Rei
nvestor
SBIC ONLY
Leveraged
Licensees
Only
Audited
Tab Name
1-C over
2&3-Bal
4-NI
5&6-C F
7-Pcap
8-READ_C ap
S1Inv
S1AB
S1C
S2RG
S3NC
S4Del
S5C ommit
S6Guar
S7C ash
S8Dist
S9Activity
C ertifications
S10crm
S11cumperf
S12pc
ExecSum
WDSup
WDSupA
WDSupB
KeyMetrics
NAIC S Search
Notes
1. Schedule 8 is only required for Accrual and Reinvestor SBIC s. It should be completed
as distributions are made and checked against statement of partners' capital.
2. Wind-Down Plans are only required for SBIC s that are in Wind-Down, per 13 C FR
107.590.
You can navigate to each tab by 1) clicking on the tab at the bottom; 2) activating Microsoft Excel’s
vertical tab navigator by right clicking on the Excel navigator buttons; or 3) by using this table of
contents (“TOC”), which are linked to each of the sections. You can return to the TOC tab at any time
by pressing ctrl-t.
You can also sort the TOC by Recommended Entry Order by using the Excel sort and filter feature
at the top of the column. This feature is helpful because you should complete the schedules before
completing the financial statements since the schedules provide input to the balance sheet and other
financials. This feature reorders the hyperlinked sections in the table to follow in an easier manner. The
chart below shows the table re-ordered by recommended order of entry.
12 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit IV-2: Form 468 Table of Contents by Recommended Entry Order
Form Section
C over
Schedule 11: SBIC C umulative Performance
Schedule 1: Schedule of Loans and Investments
Schedule 1 C : Schedule of Additions and Deductions to Loan and Investment C ost
Schedule 1 A & B: Summary of Loans and Investments and Smaller Enterprise Financings
Schedule 2: Schedule of Realized Gains and Losses on Loans and Investments
Schedule 3: Schedule of Non-cash Gains/Income
Schedule 4: Schedule of Delinquent Loans and Investments
Schedule 5: Schedule of C ommitments
Schedule 6: Schedule of Guarantees
Schedule 7: Schedule of C ash and Invested Idle Funds
Statement of Partners' C apital
READ & Regulatory & Leverageable C apital
Balance Sheet
Statement of Operations / Income Statement
C ash Flow Statement
Schedule 8: SBIC Distribution Schedule (1)
Schedule 9: Schedule of Activity
Schedule 10: SBIC C ustomer Relationship Management Information
Executive Summary
Schedule 12: Portfolio C ompany Updates
C ertifications
Wind-Down Plan Supplement (2)
Wind-Down Plan Supplement Schedule A
Wind-Down Plan Supplement Schedule B
Key SBA Leverage Metrics
NAIC S Search Tool
Form / Page Recommended
Order
Entry Order
1
20
7
9
8
10
11
12
13
14
15
5
6
2
3
4
16
17
19
22
21
18
23
24
25
n/a
n/a
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
n/a
n/a
B. Fields
As a general rule, the fields that need to be completed are white or unshaded. Shaded cells represent
titles or formulas that are calculated or attempt to look up a value elsewhere.
As shown in the example below, the 2-character State abbreviation is an entry field, while the name
of the state is automatically looked up.
Exhibit IV-3: Form 468 Field Formatting Example
City:
State:
Zip Code:
County:
Fairfax
VA
20413
Fairfax City
Virginia
Several of the input cells have drop down menus from which you may select values, such as the
State field. When you click on the field, you will see several selections.
13 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit IV-4: Form 468 Field Selection Example
Additionally, notes have been provided for several of the fields. Cells with red triangles in the right
upper corner of the cell will identify those with notes. If you hover your mouse above the cell, the note
should appear, as shown below.
Exhibit IV-5: Form 468 Field Note Example
V.
Completing the Form 468
This section will provide general instructions for completing the Form 468 on a section-by-section
basis, based on the recommended order of entry shown in Exhibits II-1 and IV-3. You should navigate
to the appropriate tab as described in Section IV-A. These fields will be described in this section and
clearly identified by bold italics and highlighting in blue.
A. Cover
The cover page provides general information regarding your SBIC and the reporting period to which
the Form 468 applies. Complete each of the unshaded cells as follows:
Exhibit V-1: Cover Page Fields
Field/Label
Annual, Quarterly, or
Interim Financial Report
Cell
Location
Instructions/Description
D1
Select whether you the report will be Annual, Quarterly,
or an Interim Financial Report.
Partnership or Corporate
Reporting
D3
Select whether you report using “Partnership SBIC” or
“Corporate SBIC”. Partnerships and limited liability
companies (“LLCs”) should select “Partnership SBIC”.
If you select “Corporate SBIC” you can highlight the
differences between the partnership and corporate
reporting in blue font by selecting “X” in cell A53 on the
Cover Sheet. Appendix A identifies the differences
between the partnership and corporate reporting
option.
Name of Licensee
C6
Enter the name of your SBIC.
License Number
C8
Enter your 9-digit SBIC license number as a whole
number. The form will automatically format it into the
license number format.
14 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field / Label
Cell
Location
Instructions / Description
Street Address
C10:E11
Enter the street address for your SBIC headquarters
office.
City
C13
Enter the city for your SBIC headquarters office.
State
C14
Select the state where your SBIC headquarters office
resides.
Zip Code
C15
Enter the zip code for your SBIC headquarters office.
County
C16
Enter the country for your SBIC headquarters office.
Licensee Employer ID
Number
C18
Enter your SBIC’s employer ID number for which you
file taxes. The Form will automatically format into the
licensee employer ID number.
For the Reporting Period
Ended
C20
Enter the ending date of the reporting period for which
you are submitting the Form 468.
Number of Months
C22
Enter the number of months the reporting period
covers. SBIC quarterly financials should report through
the end of the reporting period (typically 3 months for
the first quarter, 6 months for the second quarter, 9
months for the third quarter, and 12 months for the
annual or 4th quarter.
Filing Type
C24
Independent Public
Accountant
C26
Select from the dropdown menu the filing type (Annual
Audited, Annual Unaudited, Quarterly, Interim, Annual
Amended, or Quarterly Amended)
Input full legal name of your Independent Public
Accountant
C28
Select the valuation guidance for which SBA has
approved for your SBIC. Most SBICs adhere to the SBA
Valuation Guidelines; however, SBA will generally
approve for Non-leveraged Licensees valuation
guidelines that meet GAAP.
Vintage Year
C30
SBA considers the vintage year to be the year in which
the license was approved. SBA may use your vintage
year to compare the performance of your fund with all
other similar types of funds form in that particular year.
Approved Tiers of
Leverage
C32
Enter the tiers of leverage SBA approved for Licensee at
Licensing (generally ranges from 0 to 2)
Fund Style
C34
Select the fund style that best describes your SBIC fund
Approved Valuation
Guidance
Fund of Funds
Venture
Growth Equity
Secondaries
Private Credit
Private Equity
Hybrid
15 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field / Label
Investment Strategy
Cell
Location
C36
Instructions / Description
Select the strategy that best describes your SBIC. The
following are the strategies with their description.
Venture Capital
Growth Equity
Buyout
Special Situations
Distressed
Mezzanine
Direct Lending
Fund Secondary
Direct Secondary
Co-Investments
Multiple
Seed
Early Venture
Late Venture
Expansion
Balanced Venture
Hybrid Debt/Equity
Venture Debt
Angel
Has SBA approved a Winddown Plan?
a.
C39
Select “Y” if SBA has approved your Wind-down Plan;
otherwise enter “N”.
Annual filing only - An updated Wind-Down plan (including supplement in Section V-W) if:
•
SBA has previously approved your Wind-Down plan;
•
your SBIC is in the Office of SBIC Liquidation; or
•
as requested by SBA.
B. Schedule 11: SBIC Cumulative Performance
The SBIC Cumulative Performance schedule (“Schedule 11”) contains the cumulative investment
performance for SBIC investments at the portfolio company level and is located on the tab named
“S11cumperf.” It contains all portfolio companies that the SBIC invested, both realized and unrealized
since your fund’s commencement date or October 1, 1993, whichever is later. If historical information
is unavailable in the format requested, you may omit (1) investments realized or written off on or before
June 30, 2011, and (2) for investments held as of July 1, 2011, gross receipts received on or before
June 30, 2011. 2
This information in this form has been a requirement since June 30, 2011. Only the GAAP reported value and
voluntary demographic information are new. GAAP reported values on this form are pulled from Schedule 1 and are
only required for active investments as of the reporting date. Demographic information is optional.
2
16 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
All other schedules will utilize the list of portfolio companies on Schedule 11 from which to select.
The other schedules will also use Schedule 11 to automatically populate the employer-ID number. The
schedule will total both the number of investments and total investment cashflows presented in Schedule
11, which will then be used to populate your executive summary.
Reinvestor SBICs enter the names of the underlying funds committed and invested in under
“portfolio companies” on Schedule 11. Look through detail is entered in the Reinvestor SBIC Appendix.
Table entry begins in cell A19, with one row per portfolio company. The following information is
required:
Exhibit V-2: Schedule 11 – SBIC Cumulative Performance Fields
Field/Label
Column
Instructions/Description
Enter the name of the operating portfolio concern. If you used
a passive business to finance the portfolio company, you will
need to create a line for each operating portfolio concern. Note
that you may have an operating portfolio concern with
subsidiaries, in which case you only need to enter the
consolidated operating portfolio concern.
Portfolio Company
Name
A
•
Passive Business Example: If you financed 4 operating
portfolio companies A1, A2, A3, and A4 through a passive
business: “Holdco A”, you must separately report A1, A2, A3
and A4. As required by the Form 1031 instructions, you must
report Holdco A as part of each of those financings.
•
Operating Consolidating Portfolio Company Example:
If you invested in an operating concern, “A Inc.” that is NOT a
passive business (see 13 CFR 107.720(b)) but has subsidiaries
A1, A2, A3, and A4, you only need to report “A Inc.”
SBA notes that other schedules will use Schedule 11 portfolio
concern names as a selection source for portfolio concern. This
is to facilitate and standardize the names across schedules.
B
Enter the portfolio concern’s 9-digit employer ID number as a
whole number. The worksheet will format the number
appropriately.
Realization Status
C
Choose the status from the drop-down menu: Unrealized,
Partially Realized or Fully Realized. If the security is a loan or
debt instrument, any repayment of original principal would be
considered partially realized. If all principal is repaid with no
other securities (such as warrants or earnouts) it would be
considered fully realized.
Date of 1st Investment
D
First date that the SBIC provided financing to the portfolio
company.
Number of Investments
Since Inception
E
Enter the number of investments you have made to the
portfolio concern since inception through the reporting period.
Employer ID
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Column
Instructions/Description
F
Provide the total dollars invested in the portfolio company.
This should not include PIK or any Non-Cash gains that you
received. Such value will be recorded in your SBA Reported
Value or GAAP Value. If you are providing a line of credit, only
include up to the amount of the line of credit. See line of credit
notes under Section V-H.
G
Provide the total dollars received from the investment,
including cash interest, dividends, income, fees, and gross
proceeds from realizations. This should not include any notes
received, escrows, or other Non-Cash assets. Such assets
would be held as an asset and recorded in your Schedule of
Loans and Investments (“Schedule 1”).
Gross Receipts: Equity
H
If you received marketable equity securities and distributed
them to your private investors, you may record the value at
the time of distribution. If you still hold the equity security,
this should not be included. You should report such assets in
Schedule 1 until such time that you sell or distribute such
securities.
Gross Receipts: Total
I
SBA Reported Value
J
GAAP Reported Value
K
This is a calculated field. It is computed by summing the GAAP
Reported Value from Schedule 1 based on the employer ID
number.*
L
This is a calculated field, representing the cash-on-cash
multiple. It is computed by dividing the total receipts in
column G and dividing it by the total dollars invested in
column D.*
Multiple See Note 2
M
This is a calculated field, representing the overall multiple
(including residual values) for teach investment. It is
computed by dividing the sum of the otal receipts in plus the
GAAP Reported Value by the total dollars invested.*
Full-Time Employees #
N
Number of employees working 32+ hours a week
Part-time Employees #
O
Number of employees working less than 32 hours a week
Total # of Employees
P
Total number of full time and part time employees
Net Employee count
Increase/Decrease in
last 12 months
Q
Total number of current employees minus number of
employees from 12 months prior equals net employee
increase/(decrease). Employee count should not include
increases/(decreases) resulting from mergers or acquisitions.
This is an organic employee increase/(decrease) figure.
# of Employees with
Company Equity
Ownership
R
Number of employees with company equity ownership.
Average Employee
Tenure (years)
S
Average length of time employees have worked for the
company. Calculated by adding up the total years employees
have worked for the company and dividing that number by
the total number of employees. Numbers only
Median Salary
T
Middle value of salary range of employees
Total Dollars Invested
Gross Receipts: Cash
Cash Multiple See Note
1
This is a calculated field. It is computed by adding the cash
and equity gross receipts, identified in columns E and F.
This is a calculated field. It is computed by summing the SBA
Reported Value from Schedule 1 based on the employer ID
number. *
18 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Voluntary Demographics Information. The below information is on a voluntary basis
only. SBA uses this information to report general statistics to Congress and the public.
To qualify as an “Owner” the individual must own over 50% of the company. In all cases,
you may identify that you prefer not to disclose or leave blank.
Field/Label
Founder or Owner
Veteran
Column
V
Instructions/Description
If the portfolio company founder or majority owner is a
veteran, select “Y”. Otherwise select “N”.
Identify the founder or majority owner sex as follows:
•
Male
•
Female
Founder or Owner
Sex
W
Founder or Owner Race
X
Select the race of the founder or the majority owner. (For
further information on meaning, see related notes under
Section V-K.)
Founder or Owner
Ethnicity
Y
Select whether founder or majority owner is Hispanic or
Latino.
Founder or Owner
Person with Disabilities
Z
Select whether the founder or majority owner has disabilities
(as defined in 35 CFR 108).
CEO (or Equivalent)
Veteran
AA
If the portfolio company CEO (or equivalent) is a veteran,
select “Y”; otherwise select “N”.
Identify the CEO (or equivalent) sex as follows:
CEO (or
Equivalent) Sex
AB
CEO or Equivalent Race
AC
•
Male
•
Female
Select the race of the CEO (or equivalent).
CEO or Equivalent
AD
Select whether CEO (or equivalent) is Hispanic or Latino.
Ethnicity
CEO or Equivalent
Select whether the CEO (or equivalent) has disabilities (as
AE
Person with Disabilities
defined in 35 CFR 108).
*Note: These fields use data required in Schedule 1. You will need to complete Schedule 1 before these
calculations will be performed. Once you complete Schedule 1, you should return to Schedule 11 to
ensure the information is properly presented.
C. Schedule 1: Schedule of Loans and Investments
The schedule of Loans and Investments (“Schedule 1”) is located on the tab named “S1Inv.” It
provides a list of all loans and investments that are active, not fully realized (including charge-offs) or
repaid at any point during the reporting period. If you realize or are repaid an investment during the
reporting period, you must continue to maintain that investment on Schedule 1 through the end of the
fiscal year in which you realized your investment or were repaid.
For example: ABC SBIC has a loan with Acme Co. for $5 million in cost on January 1, 2021. Acme
Co. repays the loan in its entirety on January 10, 2021. Assuming ABC SBIC has a 12/31 fiscal year
end, ABC SBIC will recognize the repayment in its March Form 468 but must continue to report and
19 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
maintain the loan on its Schedule 1 at zero cost and zero value through December 31, 2021. However,
it will no longer need to report that loan on its Schedule 1 on or after January 1, 2022.
Table entry begins at cell A22, with one row per loan and investment. Each type of security (e.g.,
loan, debt, equity, etc.) must be located on a separate line. Although, you may choose to combine all
equity securities for a portfolio company into a single row, SBA recommends that different types of
securities (such as Preferred A, Preferred B, etc.) be entered on separate rows.
The following information is required as follows:
Exhibit V-3: Schedule 1 – Schedule of Loans and Investments Fields
Field/Label
Column
Portfolio Company
Name
A
Employer ID
B
Critical Technology
(if Applicable
C
Financing Type
D
Instructions/Description
Select the name of the portfolio company from the list
you created in Schedule 11.
This is a calculated field. It looks up the employer ID
number based on the portfolio company name you
selected above.
Select from the dropdown list the Critical Technology
Industry the Portfolio Company is in, if applicable.
Otherwise, leave blank.
This refers to the type of security used to finance the
portfolio concern, including the following: Senior Debt;
Unitranche; Subordinated Debt; Convertible Debt;
Warrant; Common Stock; Preferred Stock; LP Interest;
Participation Interest; Option; Line of Credit; Earn-out;
Escrow; and Other.
Select from the list shown below. The worksheet will sum
by investment type in rows 6 through 18 and then be
used to populate both Schedule 1a and the balance
sheet.
Loan: A Loan is defined as set forth in 13 CFR 107.810.
Investment Type
E
Debt: Debt Securities are defined as set forth in 13 CFR
107.815
Equity: Equity Securities are defined as set forth in 13 CFR
107.800. For the avoidance of doubt, and for purposes of
this Column C, simple agreements for future equity (“SAFE
Notes”) and, in the case of seed or early-stage venture
funds, Convertible Notes shall be deemed Equity
Securities. If you financed a relender or reinvestor
pursuant to 13 CFR 107.720(a)(2), do not select “Equity” –
instead, you should select “Equity in Reinvestor/Relender
Exception”.
Equity in Reinvestor/Relender: An equity investment
in a Reinvestor or permitted Disadvantaged Relender,
pursuant to 13 CFR 107.720(a)(2).
Assets Acquired: Assets acquired in liquidation of
portfolio securities.
Notes and Other: Notes and other securities received in
the sale of portfolio securities.
20 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Investment Type
Column
E
Instructions/Description
Operating Concerns Acquired: As noted in the SBIC
Chart of Accounts in the Operating SBIC SOP, a Licensee
may take action to protect its investment in a portfolio
concern and as a result may acquire a controlling interest
in an operating concern. In such cases, the licensee will
reclassify the aggregate amount due from the portfolio.
Receivables from Sale of Assets Acquired:
Receivables due to a sale of assets acquired.
Financing
Description
F
Provide any relevant comments regarding the security,
such as escrow, passive business information, line of
credit, senior debt, subordinated debt, unitranche,
warrant, or types of stock.
Initial Financing
Date
G
Enter the date of the Financing.
Equity Capital
Investment
H
Interest or
Dividend Rate
I
Ownership % (Fully
Diluted)
J
Restructured
Loan/ Debt Status
K
L
This is a calculated field based on Column E Investment
Type, that can be overwritten if need be. Identify
whether this qualifies as an Equity Capital Investment, as
set forth in §107.50. This is established at the time of
financing but reported here to calculate your Capital
Impairment Percentage. If you used a debt instrument
that did not qualify as an equity capital investment at the
time of financing, but you convert it to an equity
investment, you cannot change this to an equity capital
investment for the purposes of establishing your
maximum capital impairment percentage.
Enter the interest or dividend rate of the security as
applicable. If you have multiple securities, you may
either identify each rate within this cell or create
separate rows to distinguish.
Enter your SBIC’s ownership in the portfolio concern
associated with the security as a percentage on a fully
diluted basis as of the end of the reporting period.
If you have restructured this security since the original
transaction, select “X”. You should address what changes
were made and the reasons within your Portfolio
Company Update (“Schedule 12”).
If this is a loan or debt security, please select the loan
status that best describes its status.
Performing: Portfolio company is making payments as
required based on the terms of the original security,
meeting all covenants, and there are no issues that
portfolio company will be unable to continue to make
payments.
Delinquent/Default: Portfolio company has failed to
make one or more payments based on the original terms,
even if you are forbearing.
Covenant Issues: The portfolio company has violated
covenants, although making current payments.
21 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Loan/ Debt Status
Column
Instructions/Description
Other Concerns: There are issues at the portfolio
company level that might impact ability to meet
obligations. This could include litigation, financial
performance, changes to capital structure (such
significant changes to debt senior to your security).
Paid in Full: The loan/debt was repaid in full during
reporting period.
Charge off: The security was charged off in full during
reporting period.
L
If you select “Delinquent” you must complete the
Schedule of Delinquent Loans and Investments
(“Schedule 4”). If you selected anything other than
“Performing” or “Paid in Full” you should discuss in your
Portfolio company Update (“Schedule 12”).
Total Cash
Invested (A)
M
Cost at Beginning
Period
N
Schedule 1c
Reference Number
O
Addition/Deduction
P
Non-Cash in Cost
at End of Period
Q
Cost at End of
Period
R
Unrealized
Appreciation
(Unrealized
Depreciation)
Class 1
S
T
U
Identify all cash invested into the portfolio company for
this investment type. Do not include PIK or accruing
dividends or accrued interest.
Enter the cost at the beginning of the fiscal year for all
investments active at any point during the reporting
period.
You must report any additions and deductions to your
cost basis on Schedule 1c. This field identifies the
reference number you will use to identify that those
additions and deductions change the cost basis
associated with this particular record. A reference
number must be different within a portfolio company.
The spreadsheet will match based on the portfolio
concern employer ID and the reference. (See example
under Schedule 1c.)
This is a calculated field. Based on the employer-id
number and the Schedule 1c reference number, the
workbook will sum the additions and deductions
identified in Schedule 1c.
This represents how much of the Cost at the End of
Period is represented by Non-Cash Gains. Example: If
your cost at the end of the period is $5,200,000 and
$200,000 is due to Non-Cash gains, this would be
$200,000.
This is a calculated field. This is the sum of the Cost at
the Beginning of the Period plus the
additions/deductions.
This is the amount of unrealized appreciation entered as
a positive number.
This is the amount of unrealized depreciation entered as
a negative number.
See 13 CFR 107.1840: Class 1 Appreciation is used to
calculate your Capital Impairment Percentage and
represents “Unrealized Appreciation on Publicly Traded
and Marketable securities.”
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Column
Instructions/Description
See 13 CFR 107.1840: Class 2 appreciation is used to
calculate your Capital Impairment Percentage and
represents “Unrealized Appreciation on securities that are
not Publicly Traded and Marketable and meet the
following criteria, which must be substantiated to the
satisfaction of SBA (this is your “Class 2 Appreciation”):
Class 2
Class 2 Date of Up
Round
SBA Reported
Value (B)
GAAP Reported
Value (C)
Cum. Cash
Proceeds (D)
Current SBA Mult
V
(i) The Small Business that issued the security
received a significant subsequent equity financing by an
investor whose objectives were not primarily strategic
and at a price that conclusively supports the Unrealized
Appreciation;
(ii) Such financing represents a substantial
investment in the form of an arm's length transaction by
a sophisticated new investor in the issuer's securities;
and
(iii) Except as provided for Early Stage SBICs in
§107.1845, such financing occurred within 24 months of
the date of the Capital Impairment computation, or the
Small Business's pre-tax cash flow from operations for its
most recent fiscal year was at least 10 percent of the
Small Business's average contributed capital for such
fiscal year.
W
If you are claiming Class 2 Appreciation, you must
provide the date of the financing for which the Class 2
Appreciation applies. As noted above, Class 2
Appreciation no longer applies after 24 months.
X
This represents the reported value based on your
approved Valuation Policy. For all Leveraged Licensees
and many Non-leveraged Licensees, the approved
Valuation Policy is the SBA Valuation Policy. If you have
been approved for something other than SBA Valuation
Guidelines, you should report that figure here.
Y
This represents the reported value based on valuation
guidelines that meet GAAP. If your valuation policy is
GAAP compliant and you already provided those figures
under SBA Reported Value, you do not need to complete
this. Similarly, if you do not use GAAP valuations that
you report elsewhere, you do not need to complete this.
SBA believes most SBICs report GAAP compliant
valuations to their investors. If you already prepare and
report such valuations to your private investors, you
should provide those valuations in this field.
Z
This represents the cash proceeds received from the
investment including interest, dividends, other income,
repayment, and realizations. You should also include any
securities you received and distributed to your investors
at the value you distributed said securities. If you
received securities that are considered Non-Cash gains,
such as PIK or stock, this should not be included in this
number. This is already included in both your cost basis
and reported value.
AA
This is a calculated field. It is calculated as (SBA
Reported Value + Cum. Cash Proceeds)/Total Cash
Invested.
23 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Column
Prior SBA Mult
AB
Current GAAP Mult
AC
Prior GAAP Mult
AD
First Investment
Date
AE
Instructions/Description
This is SBA multiple you provided at the end of your
previous Fiscal Year. You may leave this blank if this is a
new investment.
This is a calculated field. It is calculated as (GAAP
Reported Value + Cum. Cash Proceeds)/Total Cash
Invested.
This is the GAAP multiple you provided at the end of your
previous Fiscal Year. You may leave this blank if this is a
new investment.
The date is automatically pulled in from Schedule 11
based on the Portfolio Company Name.
D. Schedule 1c: Schedule of Additions and Deductions to Loan and Investment Cost
The schedule of Additions and Deductions to Loan and Investment Cost (“Schedule 1c”) is located
on the tab named “S1C.” It provides a list of all adjustments to cost since the beginning of your fiscal
year for the loans and investments located on Schedule 1, such as new financings, repayment of debt,
realizations, payment in kind (PIK), and accruing dividends. These amounts will then be totaled based
on the employer ID of the portfolio concern and reference number you identified in Schedule 1 and used
to populate the “Additions/Deductions” field on Schedule 1. An example is shown at the end of this
section.
Table entry begins at cell A10, with one row per addition/deduction. You may have multiple
addition/deductions for a single loan and investment. For example, if you make a financing of $1 million
in Preferred Stock A to a company and later during that period increase that amount by $500,000, you
will have two additions to the same loan and investment record.
The following information is required for each addition/deduction as follows:
Exhibit V-4: Schedule 1c – Schedule of Additions and Deductions to Loans and
Investment Fields
Field/Label
Column
Portfolio Company
Name
A
Employer ID
B
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number based
on the portfolio company name you selected above.
Reference Number
C
Enter the Schedule 1c Reference Number you provided in Schedule 1
for the loan and investment record for which the addition/deduction
applies.
Reference ID
D
This is a calculated field that combines the Employer-ID and
Reference Number.
Transaction Date
E
Enter the transaction date for the even that caused the
addition/deduction. For example: If your portfolio company repaid
a loan on 5/20/2022, that date would be the transaction date.
24 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Column
Instructions/Description
Select the addition/deduction category that best describes your
transaction. In general, additions begin with an “A” code. If a
transaction impacts the Schedule 2: Realized Gains Schedule
(“Schedule 2”), the code at the front will include “RG”. If a
transaction impacts Non-Cash Gains Schedule (“Schedule 3”), the
code at the front will include “RG”. The selections include the
following:
•
A: Cash Financing - Addition representing a financing to
a portfolio concern. You should identify the Financing in your SBA
Form 1031.
•
ANC: PIK - Non-Cash additions to cost which represent
PIK interest or dividends. These transactions should also be added
to Schedule 3.
•
ANC: Accrued Interest - Non-Cash additions to cost
which represent accrued interest. These transactions should also be
added to Schedule 3.
Description of
Addition/Deduction to
Loan and Investment
Cost
•
ARG: Exchange - Additions based on an exchange of
securities or receipt of securities due to a sale of securities. These
transactions should also be detailed in Schedule 2 and any gains
from such transactions may need to be added to Schedule 3.
F
•
AOIDA: Discount Amortization - Additions used to
record the amortized amount of the OID for the reporting period
•
D: Principal Repayment Deduction - indicates a
repayment of the principal.
•
DRG: Sale - Deduction is due to a sale of the security. The
transaction details should also be added to Schedule 2.
•
DRG: Distribution of Securities - Deduction is due to a
distribution of marketable securities to your investors. The
transaction details should also be added to Schedule 2.
•
DRG: Exchange - Deduction is due to an exchange of
securities. This transaction should also be added to Schedule 2.
•
DRG: Charge-Off - Deduction is due to a charge-off. This
transaction should also be added to Schedule 2.
•
DNC: Collection - Deduction is due to a collection of NonCash. This transaction should be added in Schedule 3.
· DOID: Original Issue Discount - used to record
discounted fee at the time of the disbursement of an investment.
This figure can be updated for each period in which a discount
amortized payment is recorded.
Addition/Deduction
Amount
G
Enter the amount associated with the transaction as a positive
number. The workbook will automatically make deductions
negative and additions positive in Changes to Cost field.
25 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Changes to Cost
Notes
Column
Instructions/Description
H
This is a calculated field. Based on whether you identified the
transaction as an addition or deduction, the field will make
additions increase cost and deductions as amounts that lower cost.
I
Enter any notes that you think may help explain the transaction.
You should note if this is a line of credit if this transaction is related
to the drawing or repaying of a line of credit and update your
Schedule of Commitments (“Schedule 5”) accordingly.
26 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-5: Schedule 1c – Schedule of Additions and Deductions Example
Example: ABC SBIC is reporting its Quarterly Form 468 for the period ending 6/30/2021. Its last fiscal
year ended on 12/31/2020. ABC SBIC has 3 securities in Company A during its reporting period.
•
•
•
The first security is Preferred Stock A with a $2.5 million cost basis at the beginning of the
reporting period and accruing dividends that increase the cost basis each quarter by $25,000.
The second security is a loan for $500,000 as of the beginning of the reporting period that is repaid
in full on March 2, 2021.
The third security is an equity investment in Preferred Stock B which is a new investment, in which
ABC SBIC provided $2 million on February 14, 2021, and then expanding their investment another
$1 million on April 20.
ABC SBIC also makes a new debt financing on 5/15/2021 for $2 million to Company B.
The tables below show key fields for the corresponding Schedule 1 and Schedule 1c entries for this
scenario.
Portfolio Company Name
Company A
Company A
Company A
Company B
Employer ID
Investment
Type
12-3456789
12-3456789
12-3456789
98-7654321
Equity
Loan
Equity
Debt
Security
Description
Preferred A
Line of Credit
Preferred B
Subdebt current
pay w 3%
warrants
Initial
Investment
Date
5/1/2018
11/15/2019
2/14/2021
4/1/2021
Restruct.
Schedule 1 Key Fields
Total Cash
Invested (A)
Cost at
Beginning
Period
Schedule 1c
Reference
Number
$ 2,250,000
$
500,000
$ 3,000,000
$ 2,000,000
$ 2,500,000
$
500,000
$
$
-
1
2
3
1
Addition/
Deduction
$
$
$
$
Non Cash in
Cost at End of
Period
50,000 $
(500,000)
3,000,000
2,000,000
300,000
Cost at End of
Period
$
$
$
$
2,550,000
3,000,000
2,000,000
Schedule 1c Key Fields
Name of Small
Business
Company A
Company A
Company A
Company A
Company A
Company B
Employer ID
12-3456789
12-3456789
12-3456789
12-3456789
12-3456789
98-7654321
Transaction
Reference
Reference ID
Date
Number
Description of Addition / Deduction to
Loan and Investment Cost
3/31/2021
6/30/2021
3/2/2021
2/14/2021
4/20/2021
5/15/2021
ANC: PIK / Accrued Interest or dividend
ANC: PIK / Accrued Interest or dividend
D: Principal Repayment
A: Cash Financing
A: Cash Financing
A: Cash Financing
1
1
2
3
3
1
123456789-1
123456789-1
123456789-2
123456789-3
123456789-3
987654321-1
Addition/
Deduction
Amount
$
$
$
$
$
$
25,000
25,000
500,000
2,000,000
1,000,000
2,000,000
Change to Cost
$
$
$
$
$
$
25,000
25,000
(500,000)
2,000,000
1,000,000
2,000,000
Notes
Accruing dividend
Accruing dividend
Paid in Full
Preferred B
Preferred B
Current pay; 3%
warrants
As shown above, each Schedule 1 entry has a different reference number. However, that reference
number may be associated with multiple additions/deductions.
Also, while both Company A and Company B share the same reference number “1”, the reference ID is
different since it is based both on the employer id and the reference number. This should allow SBICs to
add more additions or deductions without having to renumber reference numbers across its portfolio.
E. Schedule 1 A & B: Summary of Loans and Investments and Smaller Enterprise
Financings
The Summary of Loan and Investments (“Schedule 1A”) and Smaller Enterprise Financings
(“Schedule 1B”) is located on the tab named “S1AB”. Schedule 1A is calculated using your inputs from
Schedule 1. It provides a summary of the investments by type.
The Smaller Enterprise schedule (“Schedule 1B”) helps SBA assess your compliance with §107.710
to meet the required percentage of financings in smaller enterprises. The following information is
required for each of the fields as follows:
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Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-6: Schedule 1b – Smaller Enterprise Financings
Field/Label
1 Cumulative dollar amount of Smaller
Enterprise Financings extended between
April 25, 1994, and close of reporting
fiscal year.
2 Cumulative dollar amount of all
Financing extended between April 25,
1994, and close of reporting fiscal year.
3 Percentage of total Financings extended
to Smaller Enterprises (line 1 divided by
line 2)
Instructions/Description
Enter the cumulative number of financings
extended to Smaller Enterprises, as reported on
your Form 1031s. You should exclude any NonCash contributions.
Enter the cumulative amount of financings
extended, as reported on your Form 1031s. You
should exclude any Non-Cash contributions.
This is a calculated field which divides Line 1 by
Line 2. This is the percentage SBA will use to
evaluate whether you are compliant with
§107.710.
F. Schedule 2: Schedule of Realized Gains and Losses on Loans and Investments
The Schedule of Realized Gains and Losses on Loans and Investments (“Schedule 2”) is located on
the tab named “S2RG.” It provides a list of all realized gains and losses on loans and investments since
the beginning of your fiscal year. The results of this schedule are totaled and appear in the net realized
gain (loss) on investments field on the Statement of Operations Realized/Income Statement (tab 4-NI).
Table entry begins at cell A11, with one row per realized transaction. The following information is
required for each of the fields as follows:
Exhibit V-7: Schedule 2 – Schedule of Realized Gains and Losses on Loans and
Investment Fields
Field/Label
Portfolio Company
Name
Employer ID
Column
A
Financing Type
C
Transaction Date
Transaction Type
D
E
Cost
Net Sales Price
F
G
Realized Gains
(Losses)
Cash Component of
Net Sales Price
Note Component of
Net Sales Price
H
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number
based on the portfolio company name you selected above.
Select the financing type for the security being realized. The
selection list includes the same selections as identified in V-B
under the field “Financing Type”.
Enter the transaction date associated with the realization.
Select the transaction type as follows:
•
Sale: Sale of your security.
•
Distribution of Securities: Distribution of your marketable
securities to your private investors.
•
Exchange: Exchange of your current security for a different
security. This could include conversions or other exchanges
based on mergers or other events.
•
Charge-off: Charge-off of any security.
•
Other: If none of the above adequately describe the
transaction, select “Other” and provide an explanation in the
Comments field.
Enter the cost basis of the security being realized.
Enter the value of the total proceeds you received for the
securities.
This is a calculated field. It is the Net Sales Price minus the cost.
I
Enter the amount of cash you received in the transaction.
J
Enter the amount of any notes you received in the transaction.
B
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Equity Component of
Net Sales Price
Name
Address
Comments
Column
K
L
M
N
Instructions/Description
This is a calculated field. The equity component is calculated as
the Net Sales Price minus the Cash and Note components of Net
Sales Price.
Name of purchaser/acquirer of security.
Address of purchaser/acquirer of security.
Provide any comments regarding the transaction that might be
helpful. If you chose “Other” as your Transaction Type, provide an
explanation here.
G. Schedule 3: Schedule of Non-cash Gains/Income
The Schedule of Non-Cash Gains/Income on Loans and Investments (“Schedule 3”) is located on
the tab named “S3NC”. It provides a list of all Non-Cash gains and income. Examples include the
following:
•
•
•
•
Non-Cash gains on sale or exchange of securities.
Interest income accrued on deferred interest notes, zero coupon bonds or similar instruments.
Dividends received in kind.
Accrued interest converted into a new note or added to principal of an existing note. The amount
of any such interest which was previously included in Undistributed Net Realized Earnings must
be reclassified to Non-Cash Gains/Income.
Table entry begins at cell A11, with one row per realized transaction. The following information is
required for each of the fields as follows:
Exhibit V-8: Schedule 3 – Schedule of Noncash Gains/Income Fields
Field/Label
Portfolio Company
Name
Employer ID
Column
A
B
Description of NonCash Gains/Income
Balance at Beginning
C
D
Additions
Deductions
E
F
Balance at End of
Period
Amount of “Includible
Non-Cash Gains” for
Capital Impairment
G
H
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number
based on the portfolio company name you selected above.
Describe the type of Non-Cash gain/income (e.g., PIK, accrued
interest, gain from exchange or receipt of security due to a sale).
Identify the Non-Cash gains balance at the beginning of the
reporting period.
Identify the total additions during the reporting period.
Identify any deductions during the reporting period (such as
collections or charge-offs of Non-Cash gains).
This is a calculated field. It is computed as Balance at Beginning
+ Additions – Deductions.
Per 13 CFR 107.50, “Includible Non-Cash Gains” means those
Non-Cash gains (as reported on SBA Form 468) that are realized
in the form of Publicly Traded and Marketable securities or
investment grade debt instruments. For purposes of this
definition, investment grade debt instruments mean those
instruments that are rated “BBB” or “Baa”, or better, by Standard
& Poor's Corporation or Moody's Investors Service, respectively.
Non-rated debt may be considered to be investment grade if
Licensee obtains a written opinion from an investment banking
firm acceptable to SBA stating that the non-rated debt instrument
is equivalent in risk to the issuer's investment grade debt.
29 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
H. Schedule 4: Schedule of Delinquent Loans and Investments
The Schedule of Delinquent Loans and Investments (“Schedule 4”) is located on the tab named
“S4Del”. It provides a list of all delinquent loans and investments, as discussed under Paragraph V-C for
Schedule 1.
Table entry begins at cell A11, with one row per realized transaction. The following information is
required for each of the fields as follows:
Exhibit V-9: Schedule 4 – Schedule of Delinquent Loans and Investments Fields
Field/Label
Portfolio Company
Name
Employer ID
Outstanding Principal
Balance
Delinquent Principal:
Amount Past Due
Delinquent Principal:
Days Past Due
Delinquent Interest:
Amount Past Due
Delinquent Interest:
Days Past Due
Date of Last Payment:
Principal
Date of Last Payment:
Interest
Amount of Last
Payment: Principal
Amount of Last
Payment: Interest
Fair Market Value of
Collateral
I.
Column
A
J
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number
based on the portfolio company name you selected above.
Enter the outstanding principal of the amount owed by the
portfolio concern as of the reporting period.
Enter the amount of principal that was not paid according to the
original terms of the security.
Enter the number of calendar days since the first principal
payment was due and not paid.
Enter the amount of interest that was not paid according to the
original terms of the security.
Enter the number of calendar days since the first interest
payment was due and not paid.
Enter the last date on which the portfolio concern last made a
principal payment in m/dd/yyyy format.
Enter the last date on which the portfolio concern last made an
interest payment in m/dd/yyyy format.
Enter the amount of the last principal payment.
K
Enter the amount of the last Interest payment.
L
Enter the fair market value of any collateral. You should address
whether any other securities have a priority claim to this collateral
within Schedule 12 Portfolio Company Update.
B
C
D
E
F
G
H
I
Schedule 5: Schedule of Commitments
The Schedule of Commitments (“Schedule 5”) is located on the tab named “S5Commit”. It provides
a list of all outstanding commitments SBICs must provide financing to portfolio companies, including
undrawn lines of credit.
Table entry begins at cell A10, with one row per realized transaction. The following information is
required for each of the fields as follows:
Exhibit V-10: Schedule 5 – Schedule of Commitments
Field/Label
Portfolio Company
Name
Employer ID
Amount of
Commitment
Column
A
B
C
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number
based on the portfolio company name you selected above.
Enter the amount of your remaining commitment. For example, if
your original commitment were for $2 million, and you have
30 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Column
Date Made
Expiration Date
D
E
Security Type
F
Investment Type
G
Commitment Type
H
Instructions/Description
already provided $1 million, your remaining commitment would
be $1 million.
Enter the date you made the commitment.
Enter the expiration date of your commitment. You should
exclude any commitment which has expired.
Select the type of Investment associated with your commitment
(Loan, Debt, Equity and Equity in Reinvestor/Relender Exception).
If you have committed to more than one type of security, you
should enter separate rows, one for each type.
This refers to the type of security used to finance the portfolio
concern, including the following: Senior Debt; Unitranche;
Subordinated Debt; Convertible Note; SAFE Note; Warrant;
Common Stock; Preferred Stock; LP Interest; Participation
Interest; Option; Line of Credit; Earn-out; Royalty; RevenueBased Investment; Escrow; and Other.
Identify whether the commitment is a new investment into the
small business, a follow-on financing, or represents a line of credit
or an unfunded reinvestor commitment. (See note below on lines
of credit.)
Lines of Credit: Since lines of credit are typically used to help portfolio companies meet working
capital needs, they are often drawn, repaid, and then drawn again. (Note: You are reminded that any
financings drawn under your line of credit must meet the regulations identified in 13 CFR 107, including
§107.830 setting forth a minimum term of Financing.) If you have extended a line of credit to your
portfolio company, you should report the undrawn portion of the line of credit on Schedule 5. The amount
drawn and held by the portfolio company should be reported on Schedule 1, clearly identifying it as a
line of credit under the “Security Description”. As the portfolio company draws its line of credit, the
commitment in Schedule 5 would decrease and as it repays the loan, the commitment in Schedule 5
would increase.
In reporting the financing on the Portfolio Financing Form 1031 (“Form 1031”), the SBIC should
report all draws up to the maximum line of credit. If the portfolio company has repaid some of the line
of credit and then subsequently redraws the money, the SBIC should not report a new Financing on the
Form 1031. However, the SBIC would continue to report the financing on Schedule 1.
The table below provides an example of a line of credit over the course of several draws and
repayments.
Exhibit V-11: Example Line of Credit Form Actions
Action
1)
SBIC provides
$500,000 line of
credit to Company A
on 11/1/2019 which
expires on
10/31/2022. No
money has yet been
drawn.
2)
Company A
draws $250,000 on
the line of credit on
11/15/2019
Form 1031
None.
SBIC reports a
financing for
$250,000 in Form
1031.
Schedule 5
SBIC would report a
commitment to
Company A for
$500,000, made on
11/1/2019, expiration
date of 10/31/2022,
loan, and note that it
is a line of credit.
SBIC would decrease
its commitment to
Company A to
$250,000.
None.
Schedule 1/1C
SBIC would report a
financing on Schedule 1C to
Company A as an addition
and note that it is related to
a line of credit. It would also
report the loan on its
Schedule 1, noting under
Security Description that this
is a line of credit.
31 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Action
3)
Company A
draws another
$250,000 on the line
of credit on 5/1/2020
Form 1031
SBIC reports a
financing for
$250,000.
4)
Company A
repays $250,000 on
the line of credit on
8/1/2020.
None
5)
Company A
draws $250,000 on
the line of credit on
11/1/2020.
None. Since the
SBIC has already
reported financings
for the maximum
line of credit, no
further Form
1031s should be
reported.
None.
6)
Company A
repays $500,000 of
its line of credit loan
on 3/2/2021.
J.
Schedule 5
SBIC would decrease
its commitment to
Company A to $0.
SBA recommends that
you continue to report
a line of credit on
Schedule 5 until it
expires even at $0,
since this will retain
the balance at any
time.
SBIC would increase
its commitment to
Company A to
$250,000.
SBIC would decrease
its commitment to $0.
SBIC would increase
its commitment to
$500,000.
Schedule 1/1C
SBIC would increase the line
of credit financing by
$250,000 for a total of
$500,000.
SBIC would report the
repayment on the line of
credit on Schedule 1C and
Schedule 1 would reflect a
$250,000 balance.
SBIC would increase the line
of credit financing by
$250,000 for a total of
$500,000.
SBIC would report the
repayment on the line of
credit on Schedule 1C and
Schedule 1 would reflect a
$0 balance.
Schedule 6: Schedule of Guarantees
The Schedule of Realized Guarantees (“Schedule 6”) is located on the tab named “S6Guar”. It
provides a list of all third-party debt incurred by the portfolio company which you guaranteed. SBA uses
this schedule to identify potential SBIC obligations.
Table entry begins at cell A10, with one row per guarantee. The following information is required for
each of the fields as follows:
Exhibit V-12: Schedule 6 – Schedule of Guarantee Fields
Field/Label
Portfolio Company
Name
Employer ID
Guarantee Amount
Date Made
Expiration Date
Name of Guaranteed
Party(s)
Is guarantee
collateralized? If so,
by what?
Column
A
B
C
D
E
F
G
Instructions/Description
Select the portfolio company name from those you entered in
Schedule 11.
This is a calculated field. It looks up the employer ID number based
on the portfolio company name you selected above.
Enter the amount of the guarantee.
Identify the date you guaranteed the third-party debt.
Identify the date your guarantee expires.
Identify the name of the third party that extended the debt to the
portfolio company.
Identify whether the portfolio company collateralized your guarantee
and if so, by what.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Description of
underlying obligation
of Small Business
Column
H
Instructions/Description
Identify the obligations of the portfolio company both to you and to
the third-party debt provider. You should include any recompense
(e.g., fees, warrants, etc.…) you received and the basic terms of the
third-party debt.
K. Schedule 12: Portfolio Company Update
The Portfolio Company Update (“Schedule 12”) is located on the tab named “S12pc”. It provides an
overview and update for each active portfolio company in your portfolio. When you go to the tab, you
will see a screen like the following.
Exhibit V-13: Schedule 12 – Portfolio Company Update Worksheet
As shown, the portfolio company update form is grouped by portfolio company. You can expand a
template, by clicking on the “+” to the left of the spreadsheet. The worksheet contains entry for up to
53 active portfolio companies. If additional rows are required, a separate Excel file may be submitted to
SBA.
The following information is required for each of the fields as part of your annual Form 468 as
follows:
Exhibit V-14: Schedule 12 – Portfolio Company Update Fields
Field/Label
Portfolio Company
Name
Employer ID
Instructions/Description
Select the portfolio company name from those you entered in Schedule 11.
1st Date Invested
This is a calculated field. It looks up the 1st Date Invested from Schedule
11, based on the company you selected.
Select the 2022 NAICS Code and Industry for the portfolio company. If you
need help identifying the NAICS code, use the search tool located on tab
NAICS Search or you can go to North American Industry Classification
System (NAICS) U.S. Census Bureau.
Identify the city the portfolio company’s headquarters is located.
Select the state the portfolio company’s headquarters is located.
Identify the enterprise value at closing of your initial investment.
NAICS Code and
Industry
HQ City
HQ State
EV at 1st Closing
This is a calculated field. It looks up the employer ID number based on the
portfolio company name you selected above from Schedule 11.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Ticker Symbol
SBA Reported
Value
Fund Own%
Associate Own%
Management
Own%
Board
Representation
Board Members
Invest. Allocation
Invested Capital
Realized Proceeds
GAAP Value
Investment
Multiple
Gross IRR
Portfolio Company
Description
Co-Investors
Investment
Description
Investment Thesis
/ Expectations
Recent Events &
Key Initiatives
Financial Results
Instructions/Description
If the company is public, identify the ticker symbol.
This is a calculated field. It looks up the SBA Reported Value from Schedule
11 based on the portfolio company you selected.
This is a calculated field. It sums all the ownership holdings you reported
on Schedule 1 based on the portfolio company employer ID you selected.
You should make sure you correctly identified the ownership associated
with each of the securities you identified on Schedule 1.
If you invested with Associates, identify the ownership by your Associates
on a fully diluted basis. (See 13 CFR 107.50 for “Associate” definition.)
Enter the ownership retained by the portfolio company’s management on a
fully diluted basis.
Whether the Licensee holds a voting board seat, board observer seat or
select N/A.
If you hold board seats, identify the name of primary person representing
your fund.
Identify the total investment you are allocating for this portfolio company.
This number should include your current invested capital and may include
both formal commitments and forecast commitments not formalized. For
example, if you have invested $3 million, have a formal commitment for
another $1 million, but your fund is allocating for future financings another
$3 million in addition to the formal $1 million commitment, your
investment allocation would be $7 million. Your investment allocation
should not include PIK or accruing interest.
This is a calculated field. It looks up the invested capital you entered on
Schedule 11 based on the portfolio company you selected.
This is a calculated field. It looks up the realized proceeds you entered on
Schedule 11 based on the portfolio company you selected.
This is a calculated field. It looks up the GAAP Value you entered on
Schedule 11 based on the portfolio company you selected.
This is a calculated field. It looks up the Investment Multiple from Schedule
11 based on the portfolio company you selected.
Enter the gross internal rate of return (“IRR”). You should use the XIRR
function in Excel, with financings to portfolio company as negative
numbers, all proceeds from all your loans and investments plus any fees
you received as positive numbers, and your GAAP value reported as your
terminal value. You may choose to use actual dates for each event or
group quarterly cashflows. At the bottom of each template (beginning in
row 66 for the first template), an optional gross IRR template is provided
for your convenience.
Provide a short description of the company (elevator pitch) that discusses
what the company does and its competitive advantages.
Identify key co-investors and creditors in the company.
Discuss the investments your fund has made in the company, whether you
led the deal, including all securities.
Provide a short description of what factors led you to finance this portfolio
company, the opportunities, and exit expectations. Identify any critical
milestones.
Identify any recent events and key initiatives, including major customers
and relationships, acquisitions, management changes, and progress on
growth and other milestones.
Provide financial information for the last two fiscal year endings (“FYEs”)
(or each fiscal year since initial financing if your investment is less than 3
years old) and for a twelve trailing month period ending no less than 3
months prior to the end of your reporting period. All periods presented
should reflect a twelve-month period, unless at closing the portfolio
company had been in business less than 1 year.
34 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Instructions/Description
For example, if you closed your initial investment on 5/1/2018, the
portfolio company’s FYE corresponds to the calendar year (12/31), and
your Form 468 reporting period is 6/30/2021, you would provide financial
information for the following periods: TTM at Closing; FYE 12/31/2019; FYE
12/31/2020; and TTM 6/30/2021.
For each period, you must provide the following information:
•
As of Date: The date the reporting period ended.
•
Revenue: Gross revenues (expressed in dollars) for the portfolio
concern.
•
Revenue year over year (YOY) growth rate: See growth rate
computation in notes below.
•
EBITDA: Unadjusted earnings before interest, tax, depreciation,
and amortization. If you adjusted EBITDA in determining your
valuations, you should explain as part of your valuation
methodology, including what the adjustments were and the
adjusted EBITDA you used.
•
EBITDA YOY% Growth: See growth rate computation in notes
below.
•
EBITDA Margin: This is a calculated field computed as
EBITDA/Revenue.
•
Adj. EBITDA: Adjusted earnings before interest, tax, depreciation,
and amortization.
•
TEV: Total Enterprise Value, calculated as follows: TEV = Equity
Value (including preferred and common stock) + Debt – cash
•
TEV Multiple: This is a calculated field computed as TEV/EBITDA.
•
Total Leverage: The total interest-bearing loans/debt held by the
company.
•
Total Lev. Multiple: This is a calculated field computed as Total
Leverage/EBITDA.
•
Operating CF: Net operating cash flow for each period
•
Monthly Burn Rate: This represents the average monthly burn rate
based on the last three months of each period. It is computed by
totaling the net operating cashflows for the last 3 months prior to
the As of Date and dividing by 3.
Notes: To calculate the growth rate, take the current value and subtract
that from the previous value. Next, divide this difference by the previous
value to get a percentage representation of the rate of growth.
L. Schedule 7: Schedule of Cash and Invested Idle Funds
The Schedule of Cash and Invested Idle Funds (“Schedule 7”) is located on the tab named “S7Cash”
and is only required for Leveraged Licensees. As set forth in 13 CFR 107.530, for Leveraged Licensees,
funds not invested in Small Businesses must be maintained in certain types of assets and accounts.
This schedule is intended to help SBA determine if Leveraged Licensees are complying with this
regulation. You should complete the schedule, using 13 CFR 107.530 as a guide to determine any
definitions. The total cash, cash equivalents and idle funds must agree with lines 14 and 15 on your
balance sheet. For your convenience, that figure is automatically retrieved so that you may compare
after you complete the balance sheet.
M. Balance Sheet / Statement of Financial Position
The balance sheet or “Statement of Financial Position” is located on the tab named “2&3-Bal” and
identifies the assets, liabilities, and capital in the SBIC as of the end of the reporting date and the SBIC’s
prior FYE. This is located on tab “2&3–Bal”.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Recognizing that many SBICs value their assets using both SBA Valuation Guidelines and GAAP
valuations for their limited partners, the Form 468 collects both a balance sheet that reflects SBA
approved valuation guidelines (typically SBA Valuation Guidelines) in Columns F and H and a balance
sheet that uses GAAP compliant valuations, based on the data you entered in Schedule 1, in Columns J
and L. Columns F and J should contain values as of the end of the current reporting period and Columns
H and L should contain values as of the end of the prior fiscal year’s end. Note: If you are approved for
GAAP compliant valuations, the workbook will automatically make your primary columns a (Columns F
and H) GAAP valuation and you need only complete those columns.
The only difference between the SBA approved Valuation Guideline columns and the GAAP compliant
valuation are the values of the loans and investment in report lines 1 through 13 and line 49 (unrealized
gains/losses). Otherwise, values in Column F will automatically populate Column J and values in Column
H will automatically populate Column L; these cells can be overwritten in the event some GAAP values
do not equal SBA values. In any event, the GAAP columns should remain populated. If they are not
needed, they can be hidden using the grouping function at the top of the worksheet.
The table below provides field descriptions.
Exhibit V-15: Balance Sheet/Statement of Financial Position
Field/Label
Period End
ASSETS
LOANS AND INVESTMENTS
Portfolio Securities
1 Loans Cost
2 Debt Securities Cost
3 Equity Securities Cost
4a Portfolio Securities at Cost
4b Appreciation on Portfolio Securities
4c Depreciation on Portfolio Securities
4d Total Portfolio Securities at Value
Description
Identifies the period ending date pertaining to that
column.
•
Columns F and J: Calculated field that pulls the
current ending reporting period from the cover
sheet.
•
Columns H and L: In Column H, enter the ending
date of your prior fiscal year. Column L will
automatically reference that date.
Cost of Loans, Debt Securities and Equity Securities in
Schedule 1 at the end of the corresponding period.
These are calculated fields as follows.
•
Columns F and J: Based on cost (column P) in
Schedule 1 at end of the reporting period.
•
Columns H and L: Based cost at the beginning of
the period (Schedule 1, column L) to identify the
ending cost from the previous period.
Calculated fields which total cost of portfolio securities
(loans, debt securities, and equity securities).
•
Column F: Calculated field based on Appreciation
and Depreciation for loans, debt and equity
securities in Schedule 1, columns R(appreciation)
and S(depreciation). Total Portfolio Securities at
Value is calculated based on the sum of 4a and 4b
minus depreciation identified in 4c.
•
Column H: You must enter the appreciation and
depreciation for loans, debt, and equity securities
at the end of the prior reporting period based on
your SBA approved valuation policy. Total Portfolio
Securities at Value is calculated based on the sum
of 4a and 4b minus depreciation identified in 4c.
•
Column J: You must enter the depreciation for
loans, debt, and equity securities as of the end of
the current reporting period based on your GAAP
compliant valuation policy.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Assets Acquired in Liquidation of Portfolio
Securities:
5 Receivables from Sale of Assets Acquired
Cost
6 Assets Acquired Cost
7 Operating Concerns Acquired Cost
8 Notes and Other Securities Received Cost
9a Total Assets Acquired and Notes Received
Cost (Lines 5-8)
9b Appreciation on Assets Acquired and Notes
Received
9c Depreciation on Assets Acquired and Notes
Received
9d Assets acquired and Notes Received
Reported Value
10 Equity Investments in Reinvestors or
permitted Disadvantaged Relenders Exception
10a. Total Cost of Reinvestor Investments
10b. Appreciation on Reinvestor Investments
Description
The total value for these securities is retrieved from
Schedule 1, column W. The appreciation is
calculated based on the depreciation you entered
and the total value.
•
Column L: You must enter the appreciation and
depreciation for loans, debt, and equity securities
at the end of the prior reporting period based on
your GAAP compliant valuation policy. Total
Portfolio Securities at Value is calculated based on
the sum of 4a and 4b minus depreciation identified
in 4c.
Cost of receivables from sale of assets acquired, assets
acquired, operating concerns acquired, and notes and
other securities received in Schedule 1 at the end of
the corresponding period. These are calculated fields as
follows.
•
Columns F and J: Based on cost (column Q) in
Schedule 1 at end of the reporting period.
•
Columns H and L: Based cost at the beginning of
the period (Schedule 1, column L) to identify the
ending cost from the previous period.
Calculated field based on the total of lines 5 through 8
above.
Total appreciation and depreciation of lines 5 through
8:
•
Column F: Calculated field based on
Appreciation and Depreciation for assets
acquired and notes received (lines 5 through
8 securities) in Schedule 1 using columns R
(appreciation) and S (depreciation). Line 9d
is calculated based on the sum of 9a and 9b
minus depreciation identified in 9c.
•
Column H: You must enter the appreciation and
depreciation for assets acquired and notes received
(lines 5 through 8 securities) at the end of the prior
reporting period based on your SBA approved
valuation policy. Line 9d is calculated based on
the sum of 9a and 9b minus depreciation
identified in 9c.
•
Column J: You must enter the depreciation for
assets acquired and notes received (lines 5 through
8 securities) as of the end of the current reporting
period based on your GAAP compliant valuation
policy. The total value for these securities
(Line 9d) is retrieved from Schedule 1, column
X. The appreciation is calculated based on the
depreciation you entered and the total value.
•
Column L: You must enter the appreciation and
depreciation for assets acquired and notes received
(lines 5 through 8 securities) at the end of the prior
reporting period based on your GAAP compliant
valuation policy. Line 9d is calculated based on
the sum of 9a and 9b minus depreciation
identified in 9c.
Reflects the cost, appreciation, depreciation, and value
of SBIC investments Reinvestors or permitted
Disadvantaged Relenders as follows:
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
10c. Depreciation on Reinvestor Equity
Investments
10d. Total Reinvestor or permitted
Disadvantaged Relender Investments Value
11a TOTAL LOANS AND INVESTMENTS COST
(Line 4a + Line 9a + Line 10a)
11b TOTAL LOANS AND INVESTMENTS VALUE
(Line 4d + Line 9d + Line 10d)
12 Less Current Maturities
13 Loans and Investments Net of Current
Maturities
CURRENT ASSETS
14 Cash and Cash Equivalents
15 Invested Idle Funds
16 Interest and Dividends Receivable
17 Notes and Accounts Receivable
18 Receivables from Parent or Other Associates
19 Less: Allowance for Losses (lines 16, 17,
and 18)
20 Current Maturities of Portfolio Securities
21 Current Maturities of Assets Acquired
22 Current Maturities of Operating Concerns
Acquired
23 Current Maturities of Other Securities
24a Other (specify)
24b Other (specify)
25 Total Current Assets
Description
•
Column F: Calculated fields based on Cost at End of
Period, Appreciation and Depreciation for
Reinvestor or permitted Disadvantaged Relender
investments in Schedule 1, using columns Q (Cost),
R (appreciation) and S (depreciation). Line 10d is
calculated based on the sum of 10a and 10b minus
depreciation identified in 10c.
•
Column H: Line 10a is based on Cost at Beginning
of Period in Schedule 1, using column M. You must
enter the appreciation and depreciation for
Reinvestor investments at the end of the prior
reporting period based on your SBA approved
valuation policy. Line 10d is calculated based on the
sum of 10a and 10b minus depreciation identified in
10c.
•
Column J: Line 10a is the same as in Column F.
You must enter the depreciation for Reinvestor
investments as of the end of the current reporting
period based on your GAAP compliant valuation
policy. Line 10d, he total value for these securities,
is retrieved from Schedule 1, column X. The
appreciation is calculated based on the depreciation
you entered and the total value.
•
Column L: Line 10a is the same as in Column H.
You must enter the appreciation and depreciation
for Reinvestor investments at the end of the prior
reporting period based on your GAAP compliant
valuation policy. Line 10d is calculated based on the
sum of 10a and 10b minus depreciation identified in
10c.
These calculated fields total all loan and investment
costs as indicated in the respective labels.
This is a calculated field which totals the current
maturities from Lines 20, 21, 22, and 23.
This is a calculated field which subtracts Line 12 from
Line 11b.
Enter your cash and cash equivalents and invested idle
funds as of the end of each period. The total should
match the total in Schedule 7.
Enter your receivables as of the end of each period.
Enter any allowance for losses related to the
receivables identified in Lines 16 through 18.
Enter the current maturities associated with your loans
and investments.
If you have any other current assets, describe the asset
in Column B and provide the corresponding values as of
the end of each reporting period.
This is a calculated field which sums Lines 14 through
18 and Lines 20 through 24b minus the allowance for
losses identified in Line 19.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Other Assets
26 Net Furniture and Equipment
27 Net Leverage Fees
28a Other (specify)
28b Other (specify)
29 Total Other Assets (Sum of lines 26
through 28b)
30 TOTAL ASSETS
LIABILITIES AND CAPITAL
LIABILITIES
Long-Term Debt
31 Notes and Debentures payable to or
guaranteed by SBA.
32 Notes and Debentures Payable to Others
33 Total Long-Term Liabilities (Line 31 +
Line 32)
Current Liabilities
34 Accounts Payable
35 Due to Parent or Other Associates
a. Management Expenses Due to Associates
b. Other Due to Associates
36 Accrued Interest Payable
37 Accrued Taxes Payable
38 Distributions Payable
39 Short-term notes Payable/Lines of Credit
40a Other (specify)
40b Other (specify)
41 Total Current Liabilities (Sum of Lines
35 through 40)
Other Liabilities
42 Deferred Credits
43 Deferred Fee Income
44 Other (specify)
45 Total Other Liabilities
46 TOTAL LIABILITIES (Lines 33, 41, and 45)
PARTNERS' CAPITAL
47 Private Partners' Contributed Capital
a. General Partners'
b. Limited Partners'
c. Total Private Partners' Contributed Capital
48 Other (specify)
49 Unrealized Gains (Loss) on Securities Held
(Sum of Lines 4b, 4c, 9b, 9c, 10b, 10c)
Description
Enter the value of other assets as of the end of each
reporting period. For Lines 28a and b, describe the
other asset in Column B.
Line 29 is a calculated field which sums lines 26
through 28b.
This is a calculated field which sums Loans and
Investments Net of Current Maturities (Line 13), Total
Current Assets (Line25), and Total Other Assets (Line
29).
Line 31: Enter the value of any notes and Debentures
payable to or guaranteed by SBA as of the end of each
reporting period. For Accrual Debentures, this should
include any unpaid accrued interest.
Line 32: Enter the value of any other notes and
Debentures payable to others as of the end of each
reporting period.
Line 33: This is a calculated field which sums
Line 31 and 32.
Enter any payables and short-term notes. For other
current liabilities not specified in Lines 34 through 39,
describe the liability in Column B of lines 40a and 40b.
Line 41 is a calculated field which sums Lines 34
through 40.
Enter the balances of any other liabilities as of the end
of each reporting period. If you have another liability
that is not a deferred credit or deferred fee income,
describe the liability in Column B of Line 44 and provide
the appropriate values.
Line 45 is a calculated field that sums Lines 42
through 44.
This is a calculated field which totals Long term
liabilities (Line 33), Current Liabilities (Line 41) and
Other Liabilities (Line 45).
Information is auto-populated from Schedule 7 –
Statement of Partners’ Capital.
Line 47c is a calculated field that adds Lines and b.
Figures should match your Statement of Partner’s
Capital on page 7.
If you have any other capital associated with Private
Capital, such as syndication costs, specify in Column B.
This is a calculated number based on the unrealized
gains (losses) on your loans and investments based on
39 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
50 Non-Cash Gains/Income (Schedule 3,
Column G and D)
51 Undistributed Net Realized Earnings
52 Undistributed Realized Earnings (line 50 plus
line 51)
53 TOTAL PARTNERS' CAPITAL (Sum of Lines
47c, 48, 49, and 52)
54 TOTAL LIABILITIES AND PARTNERS'
CAPITAL (Line 46 plus Line 52)
Description
the appreciation and depreciation identified in Lines 4b,
4c, 9b, 9c,10b, and 10c.
This is a calculated number based on the data you
entered in the Non-Cash Gain Schedule 3 where the
beginning balance in Column D corresponds to the end
of the prior FY reporting period and the ending balance
in Column G corresponds to the end of the current
reporting period. Note the numbers should also
correspond to those in the Statement of Partner’s
Capital Part II, Line 9.
Enter the Undistributed Net Realized Earnings as of the
end of each period.
This is a calculated field which totals Non-Cash
Gains/Income from Line 50 with Undistributed Net
Realized Earnings from Line 51.
This is a calculated field which sums Total Private
Partners’ Contributed Capital (Line 47c), Other (Line
48), Unrealized Gains (Loss) on Securities Held (Line
49) and Undistributed Realized Earnings (Line 52) to
represent the Total Partners’ Capital.
This is the sum of Total Liabilities (Line 46) and
Partners’ Capital (Line 53). Totals should be equal to
the Total Assets on Line 30. If you expand row 109,
you will see the Total Assets figure you reported and
any difference between that number and the totals on
Line 54. If this does not match, you should review your
inputs to identify any errors. SBA may reject your
Form 468 if these numbers do not match.
N. Statement of Operations / Income Statement
The “Statement of Operations Realized” (also known as the Income Statement) is located on the
tab named “4-NI” and identifies the income and expenses for the fund for the most recent quarter, year
to date through the reporting period, and since fund’s inception. If you do not have access to all numbers
since the fund’s inception, you may request a waiver from SBA.
The table below provides field descriptions.
Exhibit V-16: Statement of Operations Realized
Field/Label
Reporting Period
INVESTMENT INCOME
1 Interest Income
2 Dividend Income
3 Income (Loss) from Investments in
Partnerships / Flow-through Entities
4 Fees for Management Services
5 Application, Closing and Other Fees
Description
This is a calculated field based on the report date you
entered on the Cover page.
Enter all interest income earned.
Enter all dividend income earned.
Enter the net income as a positive number or net losses
as a negative number in all partnerships/flow-through
entities.
Enter total fees for Management Services earned on
behalf of the SBIC. If your management company
earned fees due to your investment in the portfolio
concern, you should report the fees here. It is not
sufficient to just reduce your management fees as a
result.
Enter any application, closing and other fees earned.
40 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
6 Interest on Cash Equivalents and Invested
Idle Funds
7 Income from Assets Acquired in Liquidation of
Loans and Investments (net of Expenses)
8 Other Income
9 GROSS INVESTMENT INCOME
EXPENSES
10 Interest Expense
a. Interest Expense -- SBA Debentures
b. Other Interest Expense
c. Total Interest Expense
11 Commitment Fees & Other Financial Costs
12 Compensation and Benefits (Officer and
Employee)
13 Investment Advisory and Management
Services
14 Partners' Meetings
15 Appraisal and Investigation
16 Advertising, Communication and Travel
17 Cost of Space Occupied
18 Depreciation and Amortization
a. Amortization of Leverage Fees
b. Other Depreciation and Amortization
c. Total Depreciation and Amortization
19 Insurance
20 Payroll and Other Taxes
21 Provision for Losses on Receivables
(excluding loans receivable)
22 Legal Fees
23 Audit and Examination Fees
24 Miscellaneous Expenses
Description
Enter the total interest you received based on cash and
idle funds accounts.
Enter any income from assets acquired in the
liquidation of your loans and investments.
Enter any other income you received.
This is a calculated field which totals Lines 1 through 8.
a. Identify the interest expense associated with SBA
Debentures for the period. This includes any accrued
interest through the reporting period.
b. Identify any interest expense associated with all
other debt for the period.
c. This is a calculated field which totals 10a and 10b.
Identify all commitment fee expenses and other
financial costs.
If you directly charge the SBIC for employees, provide
the compensation and benefits for the period. (Note:
Most Licensees use a Management Company and
charge a Management Fee under Line 13.)
If you pay your Management Fee to your Management
Company, provide the associated Management Fee
expense for the periods identified. Note: SBA expects
that all expenses identified under 13 CFR 107.520 are
paid for by the Management Fee versus separately
expensed. See the SBIC Standard Operating
Procedures regarding Management Expenses for further
guidance.
Identify the expenses associated with Partner Meetings.
Identify the expenses associated with the appraisal and
investigation of Loans and Investments for the stated
periods.
Identify any advertising, communications, and travel
expenses.
Identify the cost of space occupied for the stated
periods.
a. SBA Leverage Fees should be amortized over the life
of the instrument (generally ten years). You should
identify the amortization for the specified time periods.
b. Identify any other depreciations and amortization in
Line 18b.
c. This is a calculated field which sums Lines 18a and
18b.
Identify any insurance expenses you incurred for the
stated period.
Identify any payroll and other tax expenses you
incurred for the stated period.
Identify any provisions for losses on receivables for the
stated periods.
Identify any legal expenses for the stated periods.
Identify any audit and examination expenses (including
SBIC examinations) for the stated periods.
In Lines 24a through 24f, identify any other expenses
incurred for the stated periods, specifying in Column B
the nature of the expense.
Line 24g is a calculated field that totals the
miscellaneous expenses in Lines 24a through 24f.
41 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
25 TOTAL EXPENSES
NET INCOME TOTALS
26 NET INVESTMENT INCOME (LOSS)
27 NET REALIZED GAIN (LOSS) ON
INVESTMENTS (1)
28 NET INCOME (LOSS) BEFORE
NONRECURRING ITEMS
29 Extraordinary Item
30 Cumulative Effect of Change in Accounting
31 NET INCOME (LOSS)
Description
This is a calculated field that totals the expenses in
Lines 10 through 24.
This is a calculated field which subtracts Total Expenses
(Line 25) from Gross Investment Income (Line 9).
This represents the realized gains (losses) on
investments for the stated period. For the current
quarter (Column F) and the year to date (Column H),
this is calculated based on your inputs in your Realized
Gain Schedule 2.
You will need to enter this figure for the period
representing “Since Inception” (Column J).
This is a calculated field which adds Net Investment
Income (Loss) in Line 26 and Net Realized Gain (Loss)
on Investments in Line 27.
Identify any extraordinary item gains or (losses) for the
stated periods.
Identify any cumulative effect of change in accounting
for the stated periods.
This is a calculated field which totals Lines 28, 29, and
30 to identify the Net Income (Loss) for the stated
periods.
O. Cash Flow Statement
The “Statement of Cash Flows” is located on the tab named “5&6-CF” and identifies the cash flows
for the fund for the most recent quarter, year to date through the reporting period, and since fund’s
inception. If you do not have access to all numbers since the fund’s inception, you may request a waiver
from SBA.
The table below provides field descriptions.
Exhibit V-17: Statement of Cash Flows Fields
Field/Label
Reporting Period
OPERATING ACTIVITIES
Cash Inflows
1 Interest Received from Portfolio Concerns
2 Dividend Received from Portfolio Concerns
3 Other Income Received from Portfolio
Concerns
4 Management Services and Other Fees
Received
5 Interest on Cash Equivalents and Invested
Idle Funds
6 Cash Received from Assets Acquired in
Liquidation
7 Other Operating Cash Receipts
Cash Outflows
8 Interest Paid
9 Commitment Fees and Other Financial Costs
10 Investment Advisory and Management Fees
11 Partners' and Employees' Compensation and
Benefits
Description
This is a calculated field based on the report date you
entered on the Cover page.
Identify the cash inflows for each of the categories for
the stated periods.
Identify the cash outflows for each of the categories for
the stated periods.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
12 Operating Expenditures (Excluding
Compensation and Benefits)
13 Other Operating Cash Disbursements
14 NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
INVESTING ACTIVITIES
Cash Inflows
15 Loan Principal Payments Received from
Portfolio Concerns
16 Returns of Capital Received from Portfolio
Concerns
17 Net Proceeds from Disposition of Portfolio
Securities
18 Liquidation of Idle Funds Investments
19 Other (Specify)
Cash Outflows
20 Purchase of Portfolio Securities
21 Loans to Portfolio concerns
22 Idle Funds Investment
23 Other (Specify)
24 NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Cash Inflows
25 Proceeds from Issuance of SBA-Guaranteed
Debentures
26 Proceeds from Non-SBA Borrowing
27 Proceeds from Sale of Stock or Other Capital
Contribution
28 Other (Specify)
Cash Outflows
29 SBA Leverage Fees
30 Principal Payments on SBA-Guaranteed
Debentures
31 Principal Payments on Non-SBA Borrowing
32 Redemption of Private Partnership Interests
33 Other Distributions Paid
34 Other (Specify)
Description
This is a calculated field which totals the Cash Inflows
(Lines 1 through 7) and subtracts all Cash outflows
(Lines 8 through 13) to represent the net cash flow
associated with operating the SBIC.
Identify cash inflows associated with your investment
activities for each of the categories listed. If you use
Line 19, specify in Column B the nature of the cash
inflow.
Identify cash outflows associated with your investment
activities for each of the categories listed. If you use
Line 23, specify in Column B the nature of the cash
outflow.
This is a calculated field which totals the Cash inflows
(Lines 15 through 19) and subtracts all cash outflows
(Lines 20 through 23) to represent the net cashflows
associated with investing activities.
These fields represent the cash inflows associated with
financing or capitalizing the SBIC, including gross
proceeds from the issuance of SBA-Guaranteed
Debentures (Lines 25), Non-SBA borrowing (Line 26),
private investors from the sale of stock or capital
contributions (Line 27), and other cash contributions
(such as adjustments). Note: These figures should
reflect the gross proceeds with any fees or other
expenses reflected as cash outflows.
These fields represent the cash outflows associated
with SBIC financing or capitalization, including
•
•
•
•
•
•
35 NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
RECONCILIATION TO CASH AND CASH
EQUIVALENTS
SBA Leverage Fees (Line 29);
*Principal payments on SBA-Guaranteed Leverage
(Line 30);
*Principal payments on Non-SBA Borrowing (Line
31);
Redemption of Private Partnership Interests (Line
32);
Other Distributions Paid (Line 33); and
Other (Line 34).
* Note: Interest with regards to such borrowing should
be identified in the Operating Cash Outflows in Line 8.
This is a calculated field which totals the Cash Inflows
in Lines 25 through 28 and subtracts the Cash Outflows
in Lines 29 through 34.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
36 INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
37 CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
38 CASH AND CASH EQUIVALENTS AT END OF
PERIOD
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
39 Net Income (Loss) (Line 31, page 4P)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (used in) Operating
Activities:
40 Depreciation and Amortization (line 18, page
4P)
41 Provision for Losses on Accounts Receivable
(line 21, page 4P)
42 Realized (Gains) Losses on Investments
(line 27, page 4P)
43 Other (Specify)
Changes in Operating Assets and Liabilities Net
of Noncash Items
44 (Increase) Decrease in Interest and
Dividends Receivable
45 (Increase) Decrease in Other Current Assets
46 Increase (Decrease) in Accounts Payable
47 Increase (Decrease) in Accrued Interest
Payable
48 Increase (Decrease) in Accrued Taxes
Payable
49 Increase (Decrease) in Distributions Payable
50 Increase (Decrease) in Other Current
Liabilities
51 Other (Specify)
52 Other (Specify)
53 NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Description
This is a calculated field which represents the net
increase (decrease) in cash and cash equivalents and
idle funds. This is calculated by adding the net cash
provided by operating activities (Line 14); investing
activities (Line 24); and financing activities (Line 35).
This represents the cash and cash equivalents and idle
funds balance at the beginning of the period. You must
enter the number for the beginning balance for the
current quarter in Column G. The spreadsheet will
automatically pull the ending balance from the prior
period (Column H) you entered in lines 14 and 15 on
the Balance Sheet/Statement of Financial Position.
This is a calculated field which represents the cash and
cash equivalents and idle funds at the end of the
reporting period. It calculates by adding Lines 36 and
37. These totals should match the sum of Lines 14 and
15 on your Balance Sheet. If you expand Excel row 69,
the worksheet calculates this sum for comparison. If
this does not match, you should check your work to
determine any adjustments that should be made.
Lines 39 through 53 reconcile the Net Income
(Loss) from your Statement of Operations
Realized (or Net Income Statement).
This is a calculated field which populates using the Net
Income (Loss) from Line 31 on your Net Income
Statement.
Lines 40 through 43 identify adjustments due to
depreciation and amortization (Line 40), provisions for
losses on Accounts Receivable (Line 41) and realized
(Gains) Losses on Investments. These figures are
pulled from your Net Income Statement.
You may also specify other adjustments in Lines 43a, b,
and c.
Lines 44 through 52 identifies adjustments due to
receivables, payables, other current assets and
liabilities, and any other adjustments to the SBIC
operating assets and liabilities (excluding noncash
items).
For the current quarter in Column G, you must enter
the numbers.
For the year to date, the spreadsheet will use the
difference based on the difference of the current period
ending date and prior year ending date balances.
In Lines 51 and 52 you may identify any other
adjustments not accounted for by Lines 44 through 50.
This is a calculated field which totals Lines 39 through
52. It should reconcile to your previous Operating cash
flow identified in Line 14. For your convenience, you
may expand Excel row 97, which pulls the number
identified in Line 14. If your numbers do not match,
44 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Description
you should review and identify any necessary
adjustments.
P. Statement of Partners' Capital
The “Statement of Partner’s Capital” is located on the tab named “7-PCap” and includes in Part I
changes to Private Partners’ contributed capital and in Part II changes to Undistributed Realized Earnings
during the reporting period.
The table below provides field descriptions for Part I – Private Partners’ Contributed Capital. The
three columns reflect the capital for the General Partner in Column H, the Limited Partner(s) in Column
J, and the total in Column L. The totals are calculated fields that add the numbers from the General
Partner and Limited Partner(s).
Exhibit V-18: Statement of Partners’ Capital Part I – Private Partners’ Contributed
Capital Fields
Field/Label
1 Balance at Beginning of Period
2 Additions
a. Partnership interests issued for cash
b. Partnership interests issued for services
rendered
c. Partnership interests issued for contributed
Non-Cash assets
d. Capitalization of Retained Earnings Available
for Distribution
e. Other credits (specify)
3 Total additions
4 Subtotal
5 Deductions
a. Liquidation of Partnership Interests
b. Other debits (specify)
6 Total deductions
7 Balance at End of Period
Description
This is a calculated field that pulls from the Statement
of Financial Position/Balance Sheet, the previous year’s
balance for General Partner and Limited Partner
contributions from Lines 46a and 46b, respectively.
Lines 2a through 2e identify additions to Private
Partners’ Contributed Capital. Enter any changes during
the reporting period.
This is a calculated field that adds Lines a through e.
This is a calculated field that adds Line 1 and Line 3.
These identify deductions to Private Partners’
Contributed Capital. Enter any changes during the
reporting period.
This is a calculated field that adds Lines 5a and 5b.
This is a calculated field that subtracts Line 6 from Line
4 to compute the balance at the end of the reporting
period. These numbers much match lines 46a through
46c on your Statement of Financial Position/Balance
Sheet for the current reporting period. If you expand
Excel row 26, these numbers have been pulled for your
convenience. If these numbers do not match, you
should review your entries and make any necessary
adjustments.
The table below provides field descriptions for Part II – Undistributed Realized Earnings. The three
columns reflect the Noncash Gain/Income (Column H), Undistributed Net Realized Earnings (Column J),
and Undistributed Realized Earnings (Column L). The figures in Column L are calculated fields that
represent the sum of Column H and Column J).
45 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-19: Statement of Partners’ Capital Part II – Undistributed Realized Earnings
Fields
Field/Label
1 Balance at Beginning of Period
2 Additions
a. Net investment income
b. Realized gain (loss) on investments
c. Gain on appreciation of securities distributed
in kind
d. Other (specify)
3 Total additions
4 Subtotal
5 Deductions
a. Cash Distributions
b. Distributions allocated but not paid
c. In-Kind Distributions (at fair value)
d. Capitalization of Retained Earnings
available for Distribution
e. Other (specify)
6 Total deductions
7 Total before collection of Non-Cash
gains/income(line 4 minus line 6)
8 Collection of Non-Cash gains/income
9 Balance at End of Period
Description
This is a calculated field that pulls from the Statement
of Financial Position/Balance Sheet, the previous year’s
ending balance for Noncash Gain/Income (Line 50),
Undistributed Net Realized Earnings (Line 51) and
Undistributed Realized Earnings (Line 52).
Lines 2a through 2e identify additions. Enter any
changes during the reporting period.
This is a calculated field that adds Lines 2a through d.
This is a calculated field that adds Line 1 and Line 3.
These identify deductions to Private Partners’
Contributed Capital. Enter any changes during the
reporting period.
This is a calculated field that adds Lines 5a through 5e.
This is a calculated field that subtracts Line 6 from Line
4.
Enter the collection of Non-Cash gains/income.
This is a calculated field that adds Line 7 and Line 8
from Line 4 to compute the balance at the end of the
reporting period. These numbers much match lines 50
through 52 on your Statement of Financial
Position/Balance Sheet for the current reporting period.
If you expand Excel row 55, these numbers have been
pulled for your convenience. If these numbers do not
match, you should review your entries and make any
necessary adjustments.
Q. Retained Earnings Available for Distribution and Regulatory and Leverageable
Capital
This page is located on the tab named “8-READ_Cap” and includes two parts that help SBA assess
your Retained Earnings Available for Distribution (“READ”) in Part I and Regulatory and Leverageable
Capital in Part II.
The following table provides field descriptions for Part I – READ. As set forth in 13 CFR § 107.50,
READ means “Undistributed Net Realized Earnings less any Unrealized Depreciation on Loans and
Investments (as reported on SBA Form 468), and represents the amount that a Licensee may distribute
to investors (including SBA) as a profit Distribution, or transfer to Private Capital.” Although all fields in
Part I are automatically calculated, Licensees should ensure prior to any distribution that they
appropriately assessed their portfolios to identify any unrealized depreciation, since that is a critical
component in determining READ.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-20: Part I – Retained Earnings Available for Distribution Fields
Field/Label
1. Undistributed net Realized Earnings
2. LESS: Unrealized Depreciation (Schedule 1 Total Unrealized Depreciation)
3. RETAINED EARNINGS AVAILABLE FOR
DISTRIBUTION OR CAPITALIZATION
Description
This is a calculated field that pulls the value identified
in Line 51 on your Statement of Financial Position or
Balance Sheet.
This is a calculated field that totals the sum of all
unrealized depreciation from Schedule 1 – Schedule of
Loans and Investments.
This is a calculated field that subtracts Line 2 from Line
1 to determine READ.
The following table provides field descriptions for Part II – Schedule of Regulatory and Leverageable
Capital. Although SBA also collects a capital certificate in a separate form (SBA Form 2183), this
schedule includes a summary to help reconcile the capital as of the end of each reporting period.
Regulatory and Leverageable Capital are critical components in determining SBA key financial metrics,
including Capital Impairment Percentage.
Exhibit V-21: Part II – Regulatory and Leverageable Capital Fields
Field/Label
1. Private Partners’ Contributed Capital
2. ADD
a. Unfunded binding commitments from
Institutional Investors
b. Waived management fees credited as capital
contributions
c. Total Additions
3. LESS: Regulatory Distributions
a. Organization Expenses Not Approved by SBA
b. Partnership interests Issued for Services
c. Partnership interests Issued for Non-Cash
Assets (unless approved by SBA for inclusion in
Regulatory Capital or converted to cash)
d. Other credits (specify)
4. Total Regulatory Deductions
5. Other Adjustments to Regulatory Capital
(specify)
6. REGULATORY CAPITAL (sum of lines 1, 2, 4,
and 5)
7. LESS: Unfunded binding commitments from
Institutional Investors
8. LESS: Non-Cash assets included in
Regulatory Capital, other than eligible
investments in Small Concerns
9. LESS: Other deductions (specify)
10. LEVERAGEABLE CAPITAL
Description
This is a calculated field that pulls the value identified
in Line 47c on your Statement of Financial Position or
Balance Sheet.
Since Regulatory Capital includes both unfunded
commitments from Institutional Investors and waived
management fees which SBA has approved for credit
towards capital contributions, you must provide these
two values in Lines 2a and 2b, respectively.
Line 2c is a calculated field that totals Lines 2a and 2b.
SBA does not accept certain items that may be part of
a private Partners’ contributed capital. Lines 3a through
3c identify typical items that SBA does not accept as
Regulatory Capital. Line 3d identifies any other items
not acceptable as Regulatory Capital, such as waived
management fees not approved for credit by SBA or
other expenses which do not count towards Regulatory
Capital.
This is a calculated field that totals Lines 3a through
3d.
This field provides any other needed adjustments, such
as fundraising costs.
This is a calculated field that totals Lines 1, 2, 4, and 5.
To determine your Leverageable Capital, you need to
back out the unfunded binding commitments (which the
spreadsheet pulls from Line 2a), as well as an NonCash assets (other than eligible investments) and any
other adjustments.
Line 10 computes Leverage Capital by subtracting Lines
7 through 9 from Line 6.
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Instructions for Form 468
Small Business Investment Company Financial Statements
R. Schedule 8: SBIC Distribution Schedule
The SBIC Distributions Schedule (“Schedule 8”) is located on the tab named “S8Dist” and only
applies to SBICs subject to 13 CFR 107.585(c) (i.e., Accrual and Reinvestor SBICs). SBICs subject to
13 CFR 107.585 (c) must distribute as follows:
(1) Payment of Annual Charges and Accrued Interest. Prior to any distributions to your private
investors, you must pay to SBA any Annual Charges and all accrued interest on outstanding Leverage
at the next available repayment window but no later than 6 months following a distribution to your
private investors. Within 6 months of any non-tax distribution to your private investors, you must pay
any Annual Charges owed to SBA and all accrued interest on your outstanding Leverage.
(2) Calculate SBA’s share of Distribution. Within six months of any non-tax distribution to your
private investors, you must make payments to SBA on a pro rata basis with any distributions to your
private investors based on your SBA Total Intended Leverage Commitment relative to your Total Private
Capital Commitments, inclusive of Qualified Non-Private Funds, determined within 12 months of
Licensure calculated as follows: SBA’s Share = Total Distributions x [Total Intended Leverage
Commitment / (Total Intended Leverage Commitment + Total Private Capital Commitments)].
(3) Apply SBA Share. You must repay SBA outstanding Leverage in an amount no less than
SBA’s Share to the extent of Outstanding Leverage and report the SBA calculation to SBA. If SBA’s
Share is greater than Outstanding Leverage and you have unfunded Leverage commitments, you must
submit a Leverage commitment cancellation equal to SBA’s Share minus the SBA Leverage redemption
up to the unfunded Leverage commitments.
(4) Distribute to Private Investors. After repaying all accrued interest, Annual Charges, and
outstanding Leverage calculated as SBA’s Share, you may distribute READ to your private investors
without SBA approval only after considering any adverse changes to your portfolio. You must obtain
SBA's prior written approval to reduce your Regulatory Capital by more than two percent in any fiscal
year.
(5) Report distribution to SBA. You must report to SBA the distribution, the calculations, and
the amounts distributed to each party as part of your annual and quarterly Form 468. Schedule 8
provides the mechanism for required reporting.
Schedule 8 should contain all distributions for the reporting period. Typically, most SBICs do not
distribute more frequently than quarterly. Columns F through J provide up to 5 distributions. If you
require more, you may expand columns K through P by clicking the “+” above column K. The following
table provides field descriptions for Schedule 8.
Exhibit V-22: Schedule 8 - Distribution Schedule Fields
Field/Label
A. SBA SHARE PERCENTAGE
1. SBA’s Share Percentage
B.
1.
2.
3.
DISTRIBUTIONS
Distribution Date
Accrued Interest Paid
Annual Charges Paid
Description
This is a calculated field that divides your SBA Total
Intended Leverage Commitment by the sum of SBA
Total Intended Leverage Commitment plus your Total
Private Capital Commitment. This percentage will
remain fixed for the life of your fund.
Identify the date you make the distribution.
You must first repay all accrued interest and all Annual
Charges to the bond holders and SBA, respectively
before any further distributions. For example: if you
have $500,000 in accrued interest and $50,000 in
Annual Charges, you must pay those amounts to the
bond holder and SBA, respectively before you can make
any distributions. If you choose, you may only pay
accrued interest and annual charges with no further
distributions.
48 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
4. Total Distributions after Accrued Interest &
Annual Charges
5. SBA Share
a. SBA Calculated Share
b. Beginning SBA Leverage Balance
c. Minimum Amount to SBA Leverage
Redemption
d. Amount to SBA Leverage
e. Ending SBA Leverage Balance
f. Beginning SBA Outstanding Commitments
g. Minimum Amount of SBA Commitments to
Cancel
h. Amount of Commitments Being Cancelled
i. Ending SBA Outstanding Commitments
6. Distributions to Private Investors
a. Amount to Private Investors
1) Amount Distributed to Private Investors & GP
2) Amount to Carried Interest
3) Amount to Investors After Carried Interest
b. Return of Capital Distributions
1) Beginning Leverageable Capital
2) Beginning Regulatory Capital
3) Amount of 6.a.1 Distributed as Return of
Capital
4) Ending Leverageable Capital
5) Ending Regulatory Capital
Description
Enter the amount you wish to distribute after
repayment of accrued interest and annual charges.
Lines 5a through 5i represent SBA’s share of the
distribution.
Line 5a is calculated as Line 4 in Part B times Line 3 in
Part A.
You should enter your SBA Leverage Balance prior to
the distribution.
Line 5c: This is a calculated as the lesser of Line 5a and
5b. This represents the minimum amount you must
repay in SBA Leverage.
Line 5d. Although Line 5c identifies the minimum
amount you must repay in SBA Leverage, you may
choose to repay a higher amount.
Line 5e. This is a calculated field that subtracts Line 5d
from Line 5b.
Line 5f. Enter the amount of outstanding SBA Leverage
Commitments prior to the distribution.
Line 5g. This is a calculated field that identifies how
much in Leverage Commitments you need to cancel. If
Line 5a is higher than Line 5d, you will need to cancel
the difference between the two numbers, up to your
total outstanding commitments in Line 5f.
Line 5h. You may choose to cancel a higher amount
than in Line 5g. Enter the amount you are cancelling in
concert with this distribution. Note: Your Commitment
Fee is non-refundable, even if you cancel the Leverage
Commitment.
Line 5i. This is a calculated field that subtracts Line 5h
from Line 5f.
Lines 6a through 6c provide detail on distributions to
Private Investors.
Line 6a is a calculated field that subtracts Line 5d from
Line 4. It represents the amount available to distribute
to Private Investors. You will enter the amount you
actually distribute to private investors and the general
partner in Line 6a1. Of that amount in Line 6a1,
identify how much is being distributed as carried
interest in Line 6a2.
Line 6a3 will automatically identify the remaining
amount to investors after carried interest by
subtracting Line 6a2 from 6a1.
This section helps identify changes to Leverageable and
Regulatory Capital as a result of this distribution.
In Line 6b1 and 6b2, enter your Leverageable Capital
and Regulatory Capital prior to your distribution,
respectively.
In Line 6b3, enter the amount of distribution identified
in 6a1 was distributed as a return of capital. Note: If
you distribute more than 2% of your Regulatory Capital
in any fiscal year, you must obtain SBA prior approval.
Lines 6b4 and 6b5 are calculated fields that subtract
Line 6b3 from Lines 6b1 and 6b2, respectively. These
represent the Leverageable and Regulatory Capital
balances after the distribution.
49 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Example 1 to [§107.585(c)]: Your Total Intended Leverage Commitment is $50 million, and your
Total Private Capital Commitments are $25 million. You currently have $25 million in Outstanding
Leverage, $25 million in unfunded Leverage commitments, and $15 million in Leverageable Capital. You
owe $1 million in accrued interest and Annual Charges. You have $61 million to distribute.
Step 1: Payment of Annual Charges and all accrued interest. You would first pay the $1 million in
accrued interest and Annual Charges.
Step 2: Calculate SBA’s Share of Distribution. SBA’s share is calculated as: $60 million x [$50 million
/ ($50 million + $25 million)] = $40 million.
Step 3: Apply SBA Share. You would repay $25 million in Outstanding Leverage and cancel $15
million of your unfunded Leverage commitments.
Step 4: Distribute to Private Investors. You would distribute $35 million to Private Investors.
Step 5: Report Distribution to SBA. You would then report the distribution to SBA, detailing the
amounts and calculations from each of the above steps.
S. Schedule 9: Schedule of Activity
The Schedule of Activity (“Schedule 9”) is located on the tab named “S9Activity” and helps SBA
assess whether you are active as required under 13 CFR 107.590 based on your annual Form 468 if you
have not yet filed a Wind-down Plan. If you have filed a Wind-down Plan, you are not required to submit
Schedule 9. Based on how you responded to whether SBA has approved a Wind-down plan on the Cover
Page, cell A3 will identify whether you need to complete Schedule 9.
Part I first assesses whether your cash and idle funds exceed 20 percent of your total assets (at
cost) at your most recent fiscal year end. If they do not exceed 20 percent, you will be considered
compliant with 13 CFR 107.590. Otherwise, you will need to complete Part II in order to determine
whether during the eighteen months preceding your most recent fiscal year end, you made Financings
totaling at least 20 percent of your Regulatory Capital.
The following table provides field descriptions for Schedule 9.
Exhibit V-23: Schedule 9 – Schedule of Activity Fields
Field/Label
PART I. FIRST ACTIVITY TEST
1. Cash and Cash Equivalents (line 14, page 2)
$0
2. Invested Idle Funds (line 15, line 2)
3. Total Cash and Idle Funds
4. Total Assets at Cost:
a. Total Assets (line 30, page 2)
b. ADD: Unrealized Depreciation (line 4c, 9c,
and 10c Current Period, page 2)
c. LESS: Unrealized Appreciation (lines 4b, 9b,
and 10b Current Period, page 2)
d. Total Assets at Cost
5. Line 3 Divided by Line 4d (expressed as a
percentage)
Part I Status
Description
This section determines whether your cash and idle
funds exceed 20 percent of your total assets at cost.
Lines 1 and 2 pull the cash and cash equivalents and
invested idle funds from Lines 14 and 15 on your
Statement of Financial Position / Balance Sheet. Line 3
totals the two figures.
Lines 4a through 4d compute Total Assets at Cost by
pulling the identified lines from your Statement of
Financial Position / Balance Sheet into Lines 4a through
4c. Line 4d compute Total Assets at Cost by adding
Lines 4a and 4b and subtracting Line 4c.
Line 5 computes cash and idle funds in Line 3 and
divides it by total assets at cost in Line 4d. Based on
this percentage, the Part I Status field will indicate
whether you pass Part I and have met 13 CFR 107.590
or if you need to complete Part II.
50 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
PART II. SECOND ACTIVITY TEST
6. Financings during the Past 18 Months:
a. Loans
b. Debt
c. Equity
d. Guarantees
7. Total (lines 6a through 6d)
8. Regulatory Capital
9. Line 7 divided by Line 8 (expressed as a
percentage)
*Part II Status:
Description
This section determines whether during the eighteen
months preceding your most recent fiscal year end, you
made Financings totaling at least 20 percent of your
Regulatory Capital.
Provide the amount of Financings during the past 18
months prior to the end of your Fiscal Year by type into
the corresponding Lines 6a through 6d.
Line 7 will total Lines 6a through 6d.
This is a calculated field which pulls the Regulatory
Capital from Line 6 in Part II of page 8 which captures
your Regulatory and Leverageable Capital.
Line 9 computes the percentage of Financings to your
Regulatory Capital. If the percentage is greater than or
equal to 20%, you will be considered compliant with 13
CFR 107.590. Otherwise, you may be inactive. The Part
II Status will inform you as to whether you passed.
If you did not pass the Part I or II Activity Test, you should review 13 CFR 107.590(b) to determine
if you meet any exceptions to the requirements set forth in 13 CFR § 107.590 to maintain active
operations. You should attach an explanation and any planned corrective action.
T. Schedule 10: SBIC Customer Relationship Management Information
The SBIC Customer Relationship Management Information (“Schedule 10”) is located on the tab
named “S10crm” must be provided as part of the annual Form 468 only. Columns A through J are
mandatory, unless otherwise noted, and must include as a minimum all SBIC Investment Committee
members, the Chief Financial Officer, and any personnel that should be used as contacts for reporting.
The purpose of this Schedule 10 is to identify the names, positions, and contact information for the
managers and/or general partners of the SBIC. SBA requires this information to assess current members
of management, their role with respect to the Licensee, and to help identify who should be contacted
and emailed regarding key changes and/or events in the SBIC program. SBA may also use this to
understand common team members across SBICs and will populate and update its Customer
Relationship Management (CRM) system with this information. Although only required on an annual
basis, if a Licensee wants to update its personnel list due to changes, it may submit as part of its
quarterly Form 468.
Columns M through AA request on a voluntary basis only demographic information regarding the
personnel. SBA is asked by Congress to provide general demographic of its SBIC managers. SBA will
only provide this information in aggregate. No decisions or preferences will be made based on the
information provided on Schedule 10 or whether the Licensee chooses not to provide the demographic
information.
The following table provides field descriptions for Schedule 10.
Exhibit V-24: Schedule 10 – SBIC Customer Relationship Management Information
Fields
Field/Label
Columns A through L:
Mandatory Data
Last Name, First Name
Title, Role Type
Description
These columns are mandatory.
Provide the last and first names of the individual.
Identify their title and select one of the general roles as follows:
•
Finance and Operations
•
Investor Relations
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Phone, Email
% GP Ownership
Investment Committee
Member
Primary SBA Contact
SBA Mailing List?
Columns M through Y:
Voluntary Demographic
Information
Veteran
Sex
Race/Ethnicity
Description
•
Compliance and Legal
•
Advisory
•
Other
If they have multiple roles, choose the activity where they spend the
most time.
Provide the phone number (including area code) and email address
where they are most likely to be reached.
Identify their percentage of ownership in the GP.
Select “Y” if they are a member of the SBIC Investment Committee.
Select “Y” if they should be considered as the primary SBA Contact.
(Note: SBICs may have more than one primary contacts.)
Select “Y” if the person would like to be on the SBA email list for news,
events, announcements and updates to policies or regulations.
These columns are requested on a voluntary basis only.
Select “X” if a Veteran, otherwise leave blank.
Select “X” for either Male or Female
“X” all race categories with which the CEO (or equivalent) identifies. A
person may identify with more than one race. These categories are as
taken from OMB Statistical Policy Directive No. 15 and shown below:
Race:
•
American Indian or Alaska Native. A person having origins in any of
the original peoples of North and South America (including Central
America), and who maintains tribal affiliation or community
attachment.
•
Asian. A person having origins in any of the original peoples of the
Far East, Southeast Asia, or the Indian subcontinent including, for
example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan,
the Philippine Islands, Thailand, and Vietnam.
•
Black or African American. A person having origins in any of the black
racial groups of Africa.
•
Native Hawaiian or Other Pacific Islander. A person having origins in
any of the original peoples of Hawaii, Guam, Samoa, or other Pacific
Islands.
•
White. A person having origins in any of the original peoples of
Europe, the Middle East, or North Africa.
Ethnicity: (Select “X” if Hispanic or Latino.)
•
Hispanic or Latino. A person of Cuban, Mexican, Puerto Rican, Cuban,
South or Central American, or other Spanish culture or origin,
regardless of race. The term, ‘‘Spanish origin,’’ can be used in
addition to ‘‘Hispanic or Latino.’’
U. Executive Summary
The executive summary is located on the tab named “ExecSum” and is derived from industry best
practices and describes key fund-level investment performance metrics for the SBIC so that SBA may
quickly identify the status of the fund. SBA will also use the information provided in the Executive
Summary to provide aggregate, not Licensee or fund manager specific, performance metrics to
Congress, SBIC stakeholders, and the general public.
The following table provides a description of each of these fields.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-25: Executive Summary Fields
Field/Label
a. Firm Data
1. Assets under Management (including
unfunded commitments)
2.
Number of active funds
3. Number of active portfolio companies
b. Fund Level Data
1. Total commitments
2. Total drawdowns since inception
3. Remaining commitments
4. Total number of portfolio companies
since inception (from Schedule 11)
5. Total amount of investments since
inception (from Schedule 11)
6. Gross receipts/proceeds from
investments since inception (from Schedule
9)
7. Gross distributions including carried
interest
8. Amount of carried interest paid
9. Distributions to private investors net of
carried interest and expenses
Description
This includes data at the firm level (typically the management
company).
Enter as the total SBA value of investments and capital (including
SBA Leverage) your management company oversees as of the
reporting period.
Identify the total number of active funds managed by your
management company.
Identify the total number of active portfolio companies, excluding
those that have been fully realized.
This includes data at the fund/SBIC level.
Identify the total Private and SBA Intended Leverage Commitments
Identify the total drawdowns of Private Capital and Leverage since
inception.
This field will be calculated by subtracting the total drawdowns in
Line 2 from the total commitments in Line 1.
This field will be calculated from Schedule 11 – Column B, which
should include all portfolio companies since fund inception.
This field will be calculated from Schedule 11 – Column D, which
should include the amount of investment since fund inception.
This field will be calculated from Schedule 11 – Column G, which
should include the gross receipts/proceeds from investments since
inception.
Identify the gross distributions to private investors and general
partners, including carried interest, but net of any expenses.
Identify the amount of carried interest paid from the gross
distributions identified on Line 7.
Identify the amount of all distributions to private investors net of
carried interest and expenses.
10. SBA Leverage Repayment
Identify cumulative SBA Leverage repaid as of the reporting date.
11. GAAP Value of Remaining Loans and
Investments (from Schedule 11)
This is pulled from Schedule 11 Column I, which should include the
remaining value of your Loans and Investments, based on GAAP
valuations.
c. Key Investment Performance
Metrics
This should reflect the metrics based on GAAP valuations and
(with the exception of MOIC and Gross IRR) net of any
expenses, fees, and carried interest.
MOIC
This stands for Multiple on Invested Capital. It is a gross investment
multiple calculated based on the realized and unrealized values
presented and divided by Invested Capital, as presented in Schedule
11.
Net DPI
This reflects the net cumulative distributions to paid in capital and is
calculated by dividing Line 2b (Total drawdowns of private capital)
by Line 9 (Distributions to private investors net of carried interest
and expenses.)
Net RVPI
This reflects the Net Residential Value to Paid in Capital and is
calculated by dividing Net Asset Value by current year Total Private
Partners’ Contributed Capital.
Net TVPI
This represents the total value to paid in capital, which is calculated
by adding DPI and RVPI.
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Instructions for Form 468
Small Business Investment Company Financial Statements
c. Key Investment Performance Metrics
This should reflect the metrics based on GAAP valuations and (with
the exception of MOIC and Gross IRR) net of any expenses, fees, and
carried interest.
Net IRR
Identify the net IRR for your fund, where drawdowns are negative
cashflows, distributions are positive cashflows and the terminal value
is based on your residual value.
Gross IRR
Identify the gross IRR for your fund, where drawdowns are negative
cashflows, distributions are positive cashflows, and the terminal
value is based on your residual value.
d. Historical Fund Performance
Net DPI
Net TVPI
e. Portfolio breakdown of total
invested capital
Industry Table
This should include your DPI and TVPI for each fiscal year
since inception through the reporting period.
Cumulative distributions to paid in capital as of the end of each fiscal
year, net of fees, expenses, and carried interest.
Total Value to Paid in Capital as of the end of each fiscal year, net of
fees, expenses, and carried interest.
This provides a summary of your invested capital by industry,
location, stage, and asset type.
Select the top 5 industries where you invested your capital from the
list provided. Identify the total Invested dollars for each of the
industries. The percentage will be calculated.
State Table
Select the top 5 states where you invested your capital from the list
provided. Identify the total invested dollars for each of the states.
The percentage will be calculated.
Stage Table
Select the stage at initial financing where you invested your capital
from the list provided. Identify the total invested dollars for each of
the stages. The percentage will be calculated.
Asset Type Table
Select the asset type where you invested your capital from the list
provided. Identify the total invested dollars for each of the asset
types. The percentage will be calculated.
V. Certifications
The certification page is located on the tab named “Certifications” and is automatically generated
based on information you entered in the Form 468. The Partnership Certification is in columns A through
L. If these columns are hidden, you can expand the Partnership Certification by clicking on the [+] above
column A.
If you are filing a corporate Form 468, the associated certification is located in columns N through
Y. You can collapse the Partnership Certification by clicking the [-] above column A and expand the
Corporate Certification by clicking [+] above column N.
You should review the page in its entirety to ensure it accurately reflects your Form 468 submission.
If you omitted any statements and schedules, you should identify them in the field provided. You should
complete the date, name, and title information accordingly on each page. You will need to print the
associated certification page, sign, and scan it and attach to your Form 468 submission.
W. Wind-Down Plan Supplement
If you are submitting a Wind-down plan for SBA approval or have an SBA approved Wind-down plan
and are required to submit an updated Wind-down plan, you should include the Wind-Down Plan
Supplement included in this form under the following tabs: WDSup, WDSupA, and WDSupB. The WindDown Plan Supplement identifies your pro forma cash flows so that SBA can assess how you intend to
wind-down your fund and repay any outstanding SBA Leverage.
54 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
1.
Wind-Down Plan Supplement Main Spreadsheet
The Wind-Down Plan Supplement Main Spreadsheet (WDSup) is the main part of the supplement,
in which you should identify projected cash inflows and outflows of the fund and projected year-by-year
balances for both Private Capital and SBA Leverage. It pulls Loan and Investment Income/Proceeds from
Wind-Down Plan Supplement Schedule A (WDSupA) and Follow-on Investments from Wind-Down Plan
Supplement Schedule B (WDSup B).
The Wind-Down Plan Supplement Main has three parts:
•
•
•
Capital and Beginning Balances: This identifies balances as of the reporting date, primarily
pulling data from the Executive Summary, the Balance Sheet/Statement of Financial Position,
and the Regulatory and Leverageable Capital sections of the Form 468. You will need to provide
the total cumulative Regulatory Capital distributions and total Non-Regulatory Capital
Distributions through the reporting date.
Pro Forma Cash Flows: This includes year by year cash flows for the next 3 years and then post
the third year. For example, if you are reporting your annual Form 468 as of the end of
12/31/2021, you will report year by year pro forma cash flows for 2022, 2023, and 2024. You
will also report as a single-entry post 2024 pro forma cash flows. The worksheet will
automatically create the appropriate timeframes based on your reporting date. Note: If you are
reporting mid-year, the first year will represent the remainder of the year you are reporting.
Ending Balances: This will automatically calculate based on your beginning balance and your
entries in the Pro Forma Cash Flows, ending balances.
The table below describes the fields in each of these sections.
Exhibit V-26: SBA Form 468 Wind-Down Plan Supplement Main (WDSup) Fields
Field/Label
i. Capital & Beginning Balances
A. Cash and Cash Equivalents
and Idle Funds Balance
B. Private Capital
Total Private Capital Committed to
Fund
Total Private Capital Paid In
Total Return of Capital Distributions
Total READ Distributions
Leverageable Capital Balance
Unfunded Regulatory Commitments
Regulatory Capital
C. SBA Leverage
Total SBA Leverage Drawn
Total SBA Redemptions
SBA Leverage Balance
Unfunded SBA Leverage
Commitments
II. Pro Forma Cash Flows
A. Cash Inflows
1. Private Capital Calls (Paid in)
2. SBA Leverage/Loan Draws
Description
This figure is pulled from your Balance Sheet/Statement of
Financial Position.
This figure is pulled from your Executive Summary. It identifies
the total private capital committed to the fund since inception.
This figure is pulled from your Executive Summary. It identifies
the total private capital paid into the fund since inception.
Identify the cumulative distributions that were non-READ, and
thereby reduced your Regulatory Capital since fund inception.
Identify the cumulative distributions that were classified as READ,
since fund inception.
This figure is pulled from your Regulatory and Leverageable
Capital section.
This figure is pulled from your Regulatory and Leverageable
Capital section.
This figure is pulled from your Regulatory and Leverageable
Capital section.
This figure is pulled
This figure is pulled
This figure is pulled
Financial Position.
This figure is pulled
from your Executive Summary.
from your Executive Summary.
from your Balance Sheet/Statement of
from your Executive Summary.
Provide any comments in last column.
In this section enter your pro forma cash inflows for Private
Capital calls/invested private capital, SBA Leverage draws, and
non-loan and investment income. Although the income statement
55 | P a g e
Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
3. Idle Interest & Other Income
4. Loan & Investment Income and
Proceeds (Sched A)
5. Other Cash Inflows
Total Cash Inflows
B. Cash Outflows
1. Expenses
a. Management Fees
b. SBA Interest, Leverage
Fees, & Annual Charges
c. Other Expenses
d. Total Expenses
2. Investment Follow-ons
3. Private Investor Distributions
a. READ
b. Return of Capital
c. Total Distributions to Private
Investors
4. SBA Leverage Redemptions
5. Other Cash Outflows
Total Cash Outflows
C. NET CASH FLOW
III. Ending Balances
Regulatory Capital
Leverageable Capital
SBA Leverage Balance
Cash & Cash Equivalents & Idle
Unfunded Private Commitments
Unfunded SBA Commitments
Description
captures income from the portfolio company as operating income,
SBA is seeking cash inflow information with all portfolio company
income and proceeds identified on Schedule A for further detail on
a portfolio company basis. This allows SBA to assess all expected
proceeds for each portfolio company.
You should use Wind-Down Plan Supplement Schedule A to
provide detail on your loan and investment income and proceeds.
You can click on the row title to go to the schedule. The
spreadsheet will automatically provide the totals from Schedule A.
Identify any other cash inflows that are not identified above and
provide an explanation in the Comments field.
The spreadsheet will total all of the above cash Inflows.
Provide the projected expense cash outflows for management
fees, SBA interest, leverage fees, and annual charges, and other
expenses.
This row will total the above expenses.
You should use Wind-Down Plan Supplement Schedule B to
provide detail on any follow-on investments you intend to make.
You can click on the row title to go to the schedule. The
spreadsheet will calculate totals from Schedule B.
Enter forecast READ and Return of Capital (or Non-READ)
distributions.
This will automatically total the READ and Return of Capital
distributions.
Identify redemptions of SBA Leverage that you forecast.
If you are forecasting other cash outflows not contained in the
above, identify them on this line and provide an explanation under
the Comments column.
This totals the cash outflows entered in Lines 1 through 5 in Part
B.
This subtracts the Total Cash Outflows from the Total Cash
Inflows.
Provide any comments in last column.
The first column shows the balances as of the ending period,
pulling from Part I. The remaining columns calculate running
balances based on the forecast cash flows you entered in Part II.
If you have outstanding Leverage, you should demonstrate
through this plan how you will repay all Leverage.
2. Wind-Down Plan Supplement Schedule A
Schedule A provides anticipated income and other proceeds from repayment and exit of portfolio
securities for each portfolio company remaining in your portfolio. The total income and proceeds will be
calculated and added to the Wind-Down Plan Supplement Main Spreadsheet. The fields are described
below.
Exhibit V-27: SBA Form 468 Wind-Down Plan Supplement A (WDSupA) Fields
Field/Label
Portfolio Company Name
Description
Select the name of the portfolio company for which you are
identifying income and proceeds. You should include all remaining
operating portfolio companies in your portfolio.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Field/Label
Year First Invested
Cost of Invest.
468 SBA Approved Reported
Value
Anticipated Exit Type
Anticipated Income/Exit Proceeds
• Minimum
• Maximum
• Likely
Timing of Likely Exit
Income/Proceeds
Comments
Description
This figure is automatically pulled from Schedule 11. It
represents the first year you invested in the portfolio
company.
This figure is calculated from your Schedule 1. It
represents the current cost of all investments in this
portfolio company.
This figure is calculated from your Schedule 1. It
represents the current Reported Value based on your SBAapproved valuation policy of all investments in this
portfolio company.
SBA recognizes that since you may have several different
securities in a portfolio company, that each may be handled
differently. Select the exit type that best describes the eventual
exit from the portfolio as follows:
•
Sale: Sale of the company or your security.
•
Distribution of Securities: Distribution of your marketable
securities to your private investors.
•
Exchange: Exchange of your current security for a different
security. This could include conversions or other exchanges
based on mergers or other events.
•
Charge-off: Charge-off of any security.
•
Repayment: Repayment of loan or debt security.
•
Other: If none of the above adequately describe the
transaction, select “Other” and provide an explanation in the
Comments field. This might be appropriate if you have a debt
security that will be repaid, but also an equity security when
the company is sold.
SBA recognizes that forecast proceeds are difficult to assess and
subject to change. These columns are provided so that you can
identify a reasonable range by entering a minimum and maximum
and a likely figure.
Example: You believe you will likely receive $3 million in income,
$5 million in loan repayment, and another $4 million from
warrants when the company is sold. However, depending on the
sale, this could only be another $1 million but could be reasonably
up to $8 million. You believe that income and loan repayments are
unlikely to be less, based on the company’s financial performance.
Your Likely number would be $12 million; your Minimum would be
$9 million; and your Maximum would be $16 million.
For the likely figure entered above, identify the timing of the
income/proceeds, by identify how much you anticipate over the
next three years. The spreadsheet will automatically calculate how
much will be expected post the third year,
Example: Based on the above example, your Likely figure was $12
million. You believe that you will receive $1 million in the first
year, $1 million in the second year, $6 million in the third year,
and $4 million post the third year.
Enter any comments that might be helpful, including an
explanation if you chose “Other” in the anticipated exit type.
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Instructions for Form 468
Small Business Investment Company Financial Statements
3. Wind-Down Plan Supplement Schedule B
Schedule B provides anticipated income and other proceeds from repayment and exit of portfolio
securities for each portfolio company remaining in your portfolio. The total income and proceeds will be
calculated and added to the Wind-Down Plan Supplement Main Spreadsheet. The fields are described
below.
Exhibit V-28: SBA Form 468 Wind-Down Plan Supplement B (WDSupB) Fields
Field/Label
Portfolio Company Name
Investment Type
Small Business Total Round/Deal
Size
SBIC’s Pro-Rata Investment
SBIC Follow-on Participation
Timing of SBIC Follow-ons
Comments
Description
Select the name of the portfolio company for which you are
identifying follow on financings.
Select the type of financing you anticipate from the list shown
below.
• Loan: A Loan is defined as set forth in 13 CFR 107.810.
• Debt: Debt Securities are defined as set forth in 13 CFR
107.815
• Equity: Equity Securities are defined as set forth in 13 CFR
107.800. For the avoidance of doubt, and for purposes of this
Investment Type, SAFE Notes shall be deemed Equity
Securities. If you financed a relender or reinvestor pursuant to
13 CFR 107.720(a)(2), do not select “Equity” – instead, you
should select “Equity in Reinvestor/Relender Exception”.
• Equity in Reinvestor/Relender: An equity investment in a
Reinvestor or permitted Disadvantaged Relender, pursuant to
13 CFR 107.720(a)(2).
• Assets Acquired: Assets acquired in liquidation of portfolio
securities.
• Notes and Other: Notes and other securities received in the
sale of portfolio securities.
• Operating Concerns Acquired: Per the SBIC Chart of
Accounts in the Operating SBIC SOP, A licensee may take action
to protect its investment in a portfolio concern and as a result
may acquire a controlling interest in an operating concern. In
such cases, the Licensee will reclassify the aggregate amount
due from the portfolio.
• Receivables from Sale of Assets Acquired: Receivables due
to a sale of assets acquired.
Identify how much you anticipate the small business will need
from all financing sources in the deal.
Identify how much of the financing deal you would take if you
were trying to maintain your pro rata share of your holdings in the
portfolio company.
Identify how much of the financing you are anticipating taking.
Identify the timing of SBIC Follow-on Participation by entering the
amounts over the next three years. The spreadsheet will
automatically calculate follow-on amounts post the third year
based on your other entries.
Identify any helpful comments that might help explain these
financings.
Example: You anticipate Company B will require additional equity financings totaling $25 million.
Based on your current holdings, to maintain your pro rata ownership, you would need to provide $10
million. You are only planning on providing $15 million with $5 million in the next year, $10 million the
following year. Your Schedule B entries might appear as the following:
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Instructions for Form 468
Small Business Investment Company Financial Statements
Exhibit V-29: Example Wind-down Plan Supplement B
Anticipated Follow-on Financings
Company Name
Company B
Investment Type
Equity
Timing of SBIC Follow-On
Small Business
Total Round/ SBIC's Pro-Rata
Deal Size
Investment
$ 20,000,000
$
10,000,000
SBIC Follow-on
Participation
$
15,000,000
01/01/2022 to
12/31/2022
2023
2024
$ 5,000,000
$ 10,000,000
Post 2024
$
X. Additional Tools
These tools are not part of the Form 468 and require no entry.
1. Key SBA Leverage Metrics
Although the SBA Leverage Metrics are not an official part of the Form 468, your inputs are used to
compute key financial metrics for Leveraged Licensees, including Leverage Coverage Ratio (LCR) and
Capital Impairment Percentage (CIP). This is contained on the tab “KeyLeverageMetrics”. It is provided
to help you assess key metrics used by SBA to evaluate your performance. No further entries are
required on this form. The form indicates where information is being pulled from across the Form 468.
2. NAICS Search Tool
As part of your Portfolio Company Update (Schedule 12), you must provide the NAICS code for each
portfolio company. The “NAICS Search” tab provides a tool for searching 2022 NAICS Codes.
59 | P a g e
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Instructions for Form 468
Small Business Investment Company Financial Statements
Y. Reinvestor SBIC Appendix
Instead of entering portfolio company information from underlying fund investments into the
portfolio company fields in Schedule 11 and other related Schedules of the Form 468, Reinvestor SBICs
are to enter information regarding the portfolio companies and corresponding underlying funds the
Reinvestor SBIC commits capital to in the Form 468 Reinvestor Appendix. This appendix is designed to
streamline reporting for Reinvestor SBICs while capturing key data measures necessary to manage and
monitor risk to the overall portfolio.
Reinvestor SBICs are expected to report in the Schedules of the Form 468 any direct portfolio
company investments which can be executed in addition to primary underlying fund investments.
Additionally, Reinvestor SBICs must list the underlying fund investments in the portfolio company fields
in the Schedules of the Form 468 to ensure full visibility of the portfolio is made available to the SBA for
investment monitoring, risk management and regulatory compliance. Due to the simple and streamlined
nature of reporting on the overall underlying fund LP commitments and investments, reporting on the
Schedules of the Form 468 is significantly reduced compared to reporting on direct portfolio company
investments.
As Reinvestor SBICs are dependent upon receipt of data from underlying funds, the appendix file is
due within 90 days of the end of each quarter and within 120 days of the end of the fiscal year and
therefore may be submitted separately from the Quarterly Short Form 468 and Annual Long Form 468.
VI.
Appendix A – Differences in Corporate Form 468 Reporting
The corporate Form 468 reporting mirrors the partnership, with differences based solely on the
corporate structure. Key differences are related to private capital and income taxes (since partnerships
are flow-through entities). These differences are identified in the table below. A Licensee using the
corporate Form 468 should reference the below for differences in reporting.
Exhibit VI-1: Differences Between Corporate and Partnership Form 468
Form Section
Cover
Differences from Partnership Form 468
Identifies that this applies to Corporate SBICs.
Balance Sheet
•
•
•
Statement of
Operations /
Income Statement
•
Cash Flow
Statement
•
•
Line 47 Capital Stock and Surplus: Licensee provides capital stock,
paid-in surplus and restricted contributed capital surplus instead of
partner’s capital.
Line 51 Undistributed Net Realized Earnings: Licensee provides
breakdown between restricted (equal to cost of Treasury Stock) and
unrestricted.
Line 53 Total Capital: Capital broken down with and without cost of
treasury stock.
Line 14 Director’s and Stockholder’s Meeting: This is in place of
Partnership Meetings in Partnership Form 468.
Line 28 Net Income Before Nonrecurring Items: Corporate form
incorporates income taxes, which Partnership Form does not include
since entity is partnership and taxes flow through.
Line 13: Breaks out income taxes paid, which is not included in
Partnership Form.
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Instructions for Form 468
Small Business Investment Company Financial Statements
Form Section
Statement of
Partners' Capital
READ & Regulatory
& Leverageable
Capital
Certifications
Differences from Partnership Form 468
PART I. CAPITAL STOCK AND PAID-IN SURPLUS
•
Line 2 Additions: Modifies additions to include capital stock issued for
cash, services rendered, Non-Cash assets, and gain on sale of
Treasury Stock.
•
Line 5 Deductions: Modifies deductions to include retirement of capital
stock, return of capital distributions, and loss on sale of treasury
stock.
PART II. UNDISTRIBUTED REALIZED EARNINGS
•
Line 2 Deductions: Changes distributions to dividends, based on
corporate structure.
•
Line 9 Balance at end of Period: Same as partnership, but the
matching totals from the balance sheet are changed to reflect
corporate structure.
PART I. RETAINED EARNINGS AVAILABLE FOR DISTRIBUTION OR
CAPITALIZATION
•
Line 1 Undistributed Net Realized Earnings: Changed to reflect Line
51C reference, per the Corporate Form 468.
PART II. SCHEDULE OF REGULATORY AND LEVERAGEABLE CAPITAL
•
Line 1 Capital Stock and Paid-in Surplus: Changed from Private
Partners’ Contributed Capital to reflect corporate terminology.
•
Line 2 Additions: Corporate form does not include waived
management fees.
•
Line 3 Regulatory Distributions: Changed wording to reflect capital
stock versus partnership interests.
Modified certifications and titles based on corporate structure.
61 | P a g e
| File Type | application/pdf |
| File Title | SBA Form 468 Instructions Version 4.0 |
| Subject | Form 468 |
| Author | SBA |
| File Modified | 2025-02-25 |
| File Created | 2024-06-26 |