---
kind: "section"
citation: "13 C.F.R. § 108.230"
title: "13"
number: "108.230"
heading: "Private Capital for NMVC Companies."
url: "https://uscodex.org/cfr/13/108.230"
---

# §108.230. Private Capital for NMVC Companies.

- (a) **General.** Private Capital means the contributed capital of a NMVC Company, plus unfunded binding commitments by Institutional Investors (including commitments evidenced by a promissory note) to contribute capital to a NMVC Company.
- (b) **Contributed capital.** For purposes of this section, contributed capital means the paid-in capital and paid-in surplus of a Corporate NMVC Company, the members' paid-in capital of a LLC NMVC Company, or the partners' paid-in capital of a Partnership NMVC Company, in each case subject to the limitations in [paragraph (c)](#c) of this section.
- (c) **Exclusions from Private Capital.** Private Capital does not include:
  - (1) **Funds borrowed by a NMVC Company from any source.**
  - (2) **Funds obtained through the issuance of Leverage.**
  - (3) **Funds obtained directly from any Federal agency or department.**
  - (4) Any portion of a commitment from an Institutional Investor with a net worth of less than $10 million that exceeds 10 percent of such Institutional Investor's net worth.
  - (5) A commitment from an investor if SBA determines that the collectability of the commitment is questionable.
- (d) **Limitations on including non-cash capital contributions in Private Capital.** Private Capital does not include capital contributions in a form other than cash, except as provided in this [paragraph (d)](#d). Subject to SBA's prior approval, Private Capital may include payments made on behalf of an Applicant or Conditionally Approved NMVC Company before the Applicant or Conditionally Approved NMVC Company becomes a NMVC Company for organizational expenses and Management Expenses incurred by the Applicant or the Conditionally Approved NMVC Company prior to its becoming a NMVC Company.
- (e) **Contributions with borrowed funds.** You may not accept any capital contribution made with funds borrowed by a Person seeking to own an equity interest (whether direct or indirect, beneficial or of record) of at least 10 percent of your Private Capital. This exclusion does not apply if:
  - (1) Such Person's net worth is at least twice the amount borrowed; or
  - (2) **SBA gives its prior written approval of the capital contribution.**

## Notes

### Amendments

[66 FR 28609, May 23, 2001, as amended at 67 FR 68502, Nov. 12, 2002]

### Authority

Authority: 15 U.S.C. 689-689q.

### Source

Source: 66 FR 28609, May 23, 2001, unless otherwise noted.

### Amendments

[66 FR 28609, May 23, 2001, as amended at 67 FR 68502, Nov. 12, 2002]