Locke Lord QuickStudy: September 2016 Pooling Results in All-Time Record Low SBIC Debenture Rate

September 14, 2016

The September 2016 pooling of Small Business Investment Company (“SBIC”) debentures resulted in an annual interest rate pricing of 2.051%, which sets a new all-time record low rate for SBIC debentures. The previous record low rate was 2.245%.

This rate is reduced from the previous semi-annual pricing of 2.507% for SBIC debentures priced in the March 2016 pooling. The pricing for the SBIC debentures reflects a spread of 0.338% over the 10 year T-bill. 

The U.S. Small Business Administration provides financing to SBICs in the form of debenture leverage. SBICs that drew down debenture leverage between the March 2016 and September 2016 poolings locked in this fixed 2.051% interest rate for the ten-year term of such debentures.

SBIC debenture interest payments are due semi-annually. The debentures are non-amortizing, with a balloon payment of the entire principal amount of the debentures due in ten years. SBIC debentures may be prepaid without premium or penalty.

If you have questions regarding the new debenture pricing or the SBIC program in general, please contact any of the attorneys listed on this page.