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SBA increases licensing and examination fees
Kirill Abbakumov   on Tuesday, January 23, 2018 at 12:00:00 am

On December 13, 2017, the U.S. Small Business Administration (SBA) has implemented a rule that revised its regulations to increase the Small Business Investment Company (SBIC) licensing and examination fees. SBA last increased fees for SBIC in 1996.

The Small Business Investment Act of 1958, as amended, allows SBA to collect licensing and examination fees to offset SBA's costs associated with the administration of these two activities. Current fees offset less than 40% of SBA's administrative expenses related to these activities. This final rule increases SBIC licensing and examination fees in annual steps through October 2020, at which time SBA estimates that the annual fees will recoup approximately 80% of SBA's annual expenses directly related to these activities. Beginning in October 2021, this rule increases licensing and examination fees annually based on inflation.

The rationale for this rule is based on the fact that SBA's major expenses are related to licensing and examination (e.g., personnel compensation and benefits associated with licensing and examinations, technology, subscription services, travel, and other associated costs), and excludes SBA's overhead costs (e.g., office space, utilities, and other supporting offices within SBA). In FY 2016, licensing and examination fees reimbursed approximately 35% of SBA's direct licensing and examination expenses, and less than a quarter of SBA's licensing and examination expenses when including overhead.