15 U.S.C. § 682 — Capital requirements

(a) Amount. (1) Unless paragraph (2) applies, each licensee^* must have at least $5,000,000 in private capital^*, or $10,000,000 if it is authorized or seeking authority to issue participating securities bought or guaranteed by the Administration^*. (2) For special circumstances and good cause, the Administrator^* may allow such a licensee to have less than $10,000,000 but at least $5,000,000 if doing so would not create or add to an unreasonable risk of Federal Government default or loss. (3) The Administrator must also decide whether each licensee’s capital gives a reasonable prospect of sound, profitable operation and active, prudent management under its articles^*. The Administrator must decide, both before licensing and before approving financing, that the licensee can make periodic interest-bearing debt payments, considering expected investment income, owners’ and managers’ experience, company^* history, and financial resources. (4) The Administrator may approve leverage^* for a licensee licensed under section 681(c) or (d) before September 30, 1996, even if it does not meet paragraph (1), if: (A) the licensee certifies in writing that at least 50% of the total dollar amount of its financings after September 30, 1996, will be provided to smaller enterprises; and (B) the Administrator determines that approving the leverage would not create or otherwise contribute to an unreasonable risk of default or loss to the United States Government. (b) Financial institution investments. (1) Despite 12 U.S.C. § 1845(a)(1), a national bank, Federal Reserve member^* bank, or nonmember insured bank to the extent State^* law permits may invest in one or more small business investment companies or an entity investing only in them. Total investments may not exceed 5% of that bank’s capital and surplus. (2) Despite other law, a Federal savings association may make the same kinds of investments, but total investments may not exceed 5% of its capital and surplus. (c) Diversification. For each licensee licensed after September 30, 1996, the Administrator must ensure management is sufficiently diversified from and unaffiliated with ownership to ensure independent, objective financial management and oversight of investments and operations.