Impact Of The Revised 'Passive Business Rule' On SBICs

Law360, New York (December 5, 2014, 10:07 AM EST) -- On Oct. 21, 2014, the U.S. Small Business Administration announced its revisions to the regulations governing small business investment company (SBIC) investments in "passive businesses" (the "Passive Business Rule"). After years of debate among SBICs, professionals and lawmakers regarding the practical impact of the Passive Business Rule, the revised regulations address a number of the issues discussed over the years, while leaving certain others open for future debate.

So, what are the revisions and what impact do they have on SBICs?

For starters, under specific circumstances, SBICs are now permitted to structure an investment utilizing two levels of passive small businesses...

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