[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR107.503]

[Page 49-50]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 107_SMALL BUSINESS INVESTMENT COMPANIES--Table of Contents
 
             Subpart E_Managing the Operations of a Licensee
 
Sec.  107.503  Licensee's adoption of an approved valuation policy.

    (a) Valuation guidelines. You must prepare, document and report the 
valuations of your Loans and Investments in accordance with the 
Valuation Guidelines for SBICs issued by SBA. These guidelines may be 
obtained from SBA's Investment Division.

[[Page 50]]

    (b) SBA approval of valuation policy. You must have a written 
valuation policy approved by SBA for use in determining the value of 
your Loans and Investments. You must either:
    (1) Adopt without change the model valuation policy set forth in 
section III of the Valuation Guidelines for SBICs; or
    (2) Obtain SBA's prior written approval of an alternative valuation 
policy.
    (c) Responsibility for valuations. Your board of directors or 
general partner(s) will be solely responsible for adopting your 
valuation policy and for using it to prepare valuations of your Loans 
and Investments for submission to SBA. If SBA reasonably believes that 
your valuations, individually or in the aggregate, are materially 
misstated, it reserves the right to require you to engage, at your 
expense, an independent third party, acceptable to SBA, to substantiate 
the valuations.
    (d) Frequency of valuations. (1) If you have outstanding Leverage or 
Earmarked Assets, you must value your Loans and Investments at the end 
of the second quarter of your fiscal year, and at the end of your fiscal 
year.
    (2) Otherwise, you must value your Loans and Investments only at 
your fiscal year end.
    (3) On a case-by-case basis, SBA may require you to perform 
valuations more frequently.
    (4) You must report material adverse changes in valuations at least 
quarterly, within thirty days following the close of the quarter.
    (e) Review of valuations by independent public accountant. (1) For 
valuations performed as of the end of your fiscal year, your independent 
public accountant must review your valuation procedures and the 
implementation of such procedures, including adequacy of documentation.
    (2) The independent public accountant's report on your audited 
annual financial statements (SBA Form 468) must include a statement that 
your valuations were prepared in accordance with your approved valuation 
policy established in accordance with section 310(d)(2) of the Act.

[61 FR 3189, Jan. 31, 1996, as amended at 63 FR 5866, Feb. 5, 1998]