SECTION 1. SHORT TITLE.

    This Act may be cited as ``The Small Business 503 Loan Refinancing 
Assistance Act of 1993''.

SEC. 2. PAYMENT AND PREPAYMENT OF DEVELOPMENT COMPANY DEBENTURES.

    (a) In General.--Title V of the Small Business Investment Act of 
1958 (15 U.S.C. 695 et seq.) is amended by adding at the end the 
following new section:

``SEC. 507. PAYMENT AND PREPAYMENT OF DEVELOPMENT COMPANY DEBENTURES.

    ``(a) In General.--The issuer of a debenture purchased by the 
Federal Financing Bank and guaranteed by the Administration under 
section 503 may, at the election of the borrower whose loan secures the 
debenture--
            ``(1) continue to make payments on the debenture in 
        accordance with the original terms of the debenture;
            ``(2) if the requirements of subsection (b) are met, make 
        payments on the debenture at an adjusted rate of interest; or
            ``(3) if the requirements of subsection (c) are met, prepay 
        the debenture.
    ``(b) Adjustment of Interest Rates.--
            ``(1) In general.--The issuer of a debenture described in 
        subsection (a) may, at the election of the borrower whose loan 
        secures the debenture, submit to the Federal Financing Bank a 
        request for an adjustment in the rate of interest charged on 
        the debenture.
            ``(2) Approval.--The Federal Financing Bank shall approve a 
        request submitted by the issuer of a debenture under paragraph 
        (1) if--
                    ``(A) the request is submitted on or before the 
                date which is 5 years after the date of the enactment 
                of this section;
                    ``(B) no other request under this subsection has 
                been approved with respect to the debenture;
                    ``(C) the debenture is outstanding and neither the 
                debenture nor the borrower's loan that secures the 
                debenture is in default on the date of the request; and
                    ``(D) the issuer agrees to make an equivalent 
                adjustment in the rate of interest charged on the loan 
                which secures the debenture.
            ``(3) Determination of interest rate.--Upon approving a 
        request submitted by the issuer of a debenture under paragraph 
        (1), the Federal Financing Bank shall adjust the rate of 
        interest charged on the debenture. The adjusted rate shall be 
        the rate determined by the Secretary of the Treasury (as of the 
        close of the calendar month preceding the month in which the 
        adjustment is made) to be equal to the current average market 
        yield on outstanding marketable obligations of the United 
        States with remaining periods of maturity comparable to the 
        remaining term of the debenture plus 4\1/2\ percentage points, 
        except that such rate shall be at least 8 percent and shall not 
        exceed 12 percent.
            ``(4) Other terms and conditions.--An adjustment under this 
        subsection in the rate of interest charged on a debenture shall 
        not affect other terms and conditions applicable to the 
        debenture.
    ``(c) Prepayment.--
            ``(1) In general.--If the requirements of paragraph (3) are 
        met, the issuer of a debenture described in subsection (a) may, 
        at the election of the borrower whose loan secures such 
        debenture, prepay the debenture by paying to the Federal 
        Financing Bank, the amount that is equal to the sum of the 
        unpaid principal balance (adjusted for funds in the borrower's 
        escrow reserve account) due on the debenture on the date of 
        prepayment (plus accrued interest at the coupon rate on the 
        debenture) and the amount of the repurchase premium described 
        in paragraph (2)(A).
            ``(2) Repurchase premium.--
                    ``(A) Amount.--The amount of the repurchase premium 
                described in this paragraph is the product of--
                            ``(i) the unpaid principal balance 
                        (adjusted for funds in the borrower's escrow 
                        reserve account) due on the debenture on the 
                        date of prepayment;
                            ``(ii) the interest rate of the debenture; 
                        and
                            ``(iii) the factor `P', as determined under 
                        subparagraph (B).
                    ``(B) Applicable percent.--For purposes of 
                subparagraph (A)(iii), the factor `P' means the 
                applicable percent determined in accordance with the 
                following table:
      

------------------------------------------------------------------------
                                              Applicable percent        
     Year in which prepayment of     -----------------------------------
   debenture is made (from date of                             20 or 25-
         original issuance):            10-year     15-year    year term
                                       term loan   term loan     loan   
------------------------------------------------------------------------
1...................................        1.00        1.00        1.00
2...................................         .80         .85         .90
3...................................         .60         .70         .80
4...................................         .40         .55         .70
5...................................         .20         .40         .60
6...................................           0         .25         .50
7...................................           0         .10         .40
8...................................           0           0         .30
9...................................           0           0         .20
10..................................           0           0         .10
11 through 25.......................                       0           0
------------------------------------------------------------------------

            ``(3) Requirements.--The requirements of this paragraph are 
        met if--
                    ``(A) the debenture referred to in subsection (a) 
                is outstanding and neither the debenture nor the 
                borrower's loan that secures the debenture is in 
                default on the date of prepayment;
                    ``(B) only non-Federal funds are used to prepay the 
                debenture;
                    ``(C) the debenture is prepaid on or before the 
                date which is 5 years after the date of the enactment 
                of this section; and
                    ``(D) the issuer extinguishes the borrower's loan 
                which secured such debenture.
    ``(d) Prohibition of Other Fees and Penalties.--Notwithstanding any 
other law, no fees or penalties other than those specified in this 
section may be imposed against the issuer, the borrower, or the 
Administration as a condition for adjusting a rate of interest under 
subsection (b) or as a condition of prepayment under subsection (c).
    ``(e) Regulations.--The Administrator shall issue regulations to 
carry out this section not later than 30 days after the date of the 
enactment of this section.
    ``(f) Definitions.--For purposes of this section, the following 
definitions apply:
            ``(1) Borrower.--The term `borrower' means a small business 
        concern.
            ``(2) Issuer.--The term `issuer' means a qualified State or 
        local development company.
            ``(3) Qualified state or local development company.--The 
        term `qualified State or local development company' has the 
        meaning given such term in section 503(e).''.
    (b) Clerical Amendment.--The table of contents of title V of the 
Small Business Investment Act of 1958 is amended by adding at the end 
the following new item:

``Sec. 507. Payment and prepayment of development company 
                            debentures.''.
Small Business 503 Loan Refinancing Assistance Act of 1993 - Amends the Small Business Investment Act of 1958 to permit a qualified State or local development company that issues a debenture purchased by the Federal Financing Bank (Bank) and guaranteed by the Small Business Administration (SBA), at the election of the small business borrower whose loan secures such debenture, to: (1) continue to make payments under the original debenture terms; (2) make payments at an adjusted interest rate; or (3) prepay the debenture to the Bank by paying the unpaid principal balance and the amount of the repurchase premium (determined under this Act). 
Prohibits any fees or penalties other than those specified in this Act from being imposed against the issuer, borrower, or the SBA as a condition for adjusting the interest rate or prepayment.
Small Business 503 Loan Refinancing Assistance Act of 1993