The subsidy rate is an estimate, stated as a percentage, of the amount to be reserved against possible program losses. Congress sets the final appropriation. The required appropriation is calculated by multiplying the program level by the subsidy rate. After licensing, the private capital is always at risk first. A full credit and regulatory compliance review is performed each time leverage is sought.
Money drawn by SBICs is repaid in accordance with the terms of the securities.
SBA guarantees the payment by the Trust of all principal and interest due on the certificates sold to the public capital market.