---
kind: "section"
citation: "13 C.F.R. § 107.1505"
title: "13"
number: "107.1505"
heading: "Liquidity requirements for Licensees issuing Participating Securities."
url: "https://uscodex.org/cfr/13/107.1505"
---

# §107.1505. Liquidity requirements for Licensees issuing Participating Securities.


If you have outstanding Participating Securities, you must maintain sufficient liquidity to avoid a condition of Liquidity Impairment. Such a condition will constitute noncompliance with the terms of your Leverage under [§ 107.1820(e)](/cfr/13/107.1820.md?p=e).

- (a) **Definition of Liquidity Impairment.** A condition of Liquidity Impairment exists when your Liquidity Ratio, as determined in [paragraph (b)](#b) of this section, is less than 1.20. You are responsible for calculating whether you have a condition of Liquidity Impairment:
  - (1) As of the close of your fiscal year;
  - (2) At the time you apply for Leverage, unless SBA permits otherwise; and
  - (3) **At such time as you contemplate making any Distribution.**
- (b) **Computation of Liquidity Ratio.** Your Liquidity Ratio equals your Total Current Funds Available (A) divided by your Total Current Funds Required (B), as determined in the following table:

## Notes

### Amendments

[61 FR 3189, Jan. 31, 1996, as amended at 63 FR 5869, Feb. 5, 1998]

### Authority

Authority: 15 U.S.C. 662, 681-687, 687b-h, 687k-m.

### Source

Source: 61 FR 3189, Jan. 31, 1996, unless otherwise noted.

### Amendments

[61 FR 3189, Jan. 31, 1996, as amended at 63 FR 5869, Feb. 5, 1998]