On the investor side, we represent banks and other institutional investors in SBIC fund capital commitments, tailoring each review to the investor’s own regulatory profile, including regulatory constraints faced by banks. Because we also draft and negotiate these same side letters for SBIC fund sponsors, we have a deep understanding of which provisions are market and likely to be accepted by SBIC fund managers, and which are likely to be rejected. That perspective lets us focus a bank’s negotiation on the terms that matter and close efficiently. We also draw on the firm’s tax, employee benefits, finance, and other lawyers as each investment so requires. Important notice. This white paper is for general informational and marketing purposes only and does not constitute legal, tax, accounting, regulatory or investment advice. Bank investment authority and regulatory treatment vary by charter, state law, facts, and supervisory expectations. Institutions should consult their own advisers and regulators as appropriate.
Authors
Bryan Bylica 615-742-7863 bryan.bylica@bassberry.com
Philip Kassel 615-742-6217 phil.kassel@bassberry.com
Appendix 1
Office of the Comptroller of the Currency, Community Developments Insights: Small Business Investment Companies: Investment Option for Banks (Sept. 2015), https://www.occ.treas.gov/publications-and-resources/publications/community-affairs/community-developments-insights/ca-insights- sep-2015.html; see also 15 U.S.C. § 661 et seq .; 13 C.F.R. pt. 107. 2 U.S. Small Business Administration, Small Business Investment Companies (last updated Oct. 1, 2026), https://www.sba.gov/partners/sbics (Standard Debenture and Accrual Debenture terms). 3 Investing in All of America Act of 2025, Pub. L. No. 119-92, § 2(b), 140 Stat. 825 (May 19, 2026) (amending 15 U.S.C. § 683(b)(2)); U.S. Small Business Administration, News Release 26-53, Administrator Loeffler Applauds Signature of Investing in All of America Act (May 21, 2026); see also Bass, Berry & Sims PLC, SBA Issues Supplemental Notice on Increased SBIC Leverage Under the Investing in All of America Act (July 2026) (increased leverage available to standard debenture licensees). 4 13 C.F.R. § 121.301(c)(1)–(2). 5 The 5% cap applies to national banks, Federal Reserve member banks, nonmember insured banks to the extent state law permits, and federal savings associations. See 15 U.S.C. § 682(b)(1)-(2); 12 C.F.R. § 7.1015(a)-(b). Bank holding companies may invest in SBIC funds under Section 4(c)(5) of the Bank Holding Company Act, and the Federal Reserve’s longstanding Regulation Y interpretation applies a comparable limit of 5% of capital and surplus. See 12 U.S.C. § 1843(c)(5); 12 C.F.R. § 225.111(b)(1). A national bank may also rely on its public welfare investment authority, which carries a separate limit of 5% of capital and surplus absent OCC approval. See 12 U.S.C. § 24 (Eleventh); 12 C.F.R. § 24.4(a); OCC, Community Developments Insights: Small Business Investment Companies: Investment Option for Banks , supra note 1, at 13-14. 6 U.S. Small Business Administration, Trust Certificate Rates: SBIC Debenture Pools (last updated Sept. 22, 2026) (Sept. 2026 pool priced Sept. 15, 2026). 7 A “green light” letter from the SBA invites an applicant to submit a final license application once sufficient capital has been raised for the SBIC fund to hold an initial closing. The letter is issued after SBA's Investment Committee, its Agency Licensing Committee and the SBA Administrator each approve the application. 8 12 C.F.R. § 44.10(c)(11)(i); Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Pri- vate Equity Funds, 85 Fed. Reg. 46,422 (July 31, 2020); 12 C.F.R. § 7.1015(d); see also 12 C.F.R. §§ 248.10(c)(11)(i) (Federal Reserve), 351.10(c)(11)(i) (FDIC). 9 12 C.F.R. § 25.12(g)(3), (t) (OCC, 1995 framework); see also 12 C.F.R. §§ 228.12(g)(3), (t) (Federal Reserve), 345.12(g)(3), (t) (FDIC) (parallel 1995-frame- work provisions). 10 Community Reinvestment Act Regulations, 91 Fed. Reg. 52,114 (proposed Aug. 12, 2026) (OCC and FDIC); OCC Bulletin 2026-35, Community Reinvest- ment Act: Interagency Notice of Proposed Rulemaking (July 31, 2026). 11 Interagency Questions and Answers Regarding Community Reinvestment, 81 Fed. Reg. 48,506, 48,508 (July 25, 2016) (Q&A § __.12(g)(3)-1, presump- tion that investments in SBIC funds promote economic development); Interagency Questions and Answers Regarding Community Reinvestment, 75 Fed. Reg. 11,642, 11,652 (Mar. 11, 2010) (Q&A § __.12(t)-4, listing SBIC funds among examples of qualified investments). 12 Interagency Questions and Answers Regarding Community Reinvestment, 78 Fed. Reg. 69,671 (Nov. 20, 2013) (Q&A §§ __.12(h)-6 and __.23(a)-2, ad- dressing broader statewide or regional areas and investments in funds). 13 OCC, Community Developments Insights: Small Business Investment Companies: Investment Option for Banks , supra note 1. 14 OCC, Community Developments Insights, supra note 1, at 5.
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