upon any recipient of assistance under this title 
unless the department or agency also provides 
all of the financial assistance to be delivered by 
the development company to the small business 
and such conditions, priorities or restrictions 
are limited solely to the financial assistance so 
provided.’’. 
SEC. 204. DEFINITION OF RURAL AREAS. 
Section 501 of the Small Business Investment Act 
of 1958 (15 U.S.C. 695) is amended by adding at the end 
the following new subsection: 
‘‘(f) As used in subsection (d)(3)(D), the term ‘rural’ 
shall include any area other than— 
‘‘(1) a city or town that has a population great-
er than 50,000 inhabitants; and 
‘‘(2) the urbanized area contiguous and adja-
cent to such a city or town.’’. 
SEC. 205. BUSINESSES IN LOW-INCOME AREAS. 
Section 501(d)(3) of the Small Business Investment 
Act of 1958 (15 U.S.C. 695(d)(3)) is amended by insert-
ing after ‘‘business district revitalization’’ the following: 
‘‘or expansion of businesses in low-income communities 
that would be eligible for new market tax credit invest-
ments under section 45D of the Internal Revenue Code 
of 1986 (26 U.S.C. 45D)’’. 
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SEC. 206. COMBINATIONS OF CERTAIN GOALS. 
Section 501(e) of the Small Business Investment Act 
of 1958 (15 U.S.C. 695(e)) is amended by adding at the 
end the following: 
‘‘(7) A small business concern that is uncondi-
tionally owned by more than one individual, or a cor-
poration whose stock is owned by more than one in-
dividual, is deemed to achieve a public policy goal 
under subsection (d)(3) if a combined ownership 
share of at least 51 percent is held by individuals 
who are in one of the groups listed as public policy 
goals 
specified 
in 
subsection 
(d)(3)(C) 
or 
(d)(3)(E).’’. 
SEC. 207. REFINANCING. 
Section 502 of the Small Business Investment Act 
of 1958 (15 U.S.C. 696) is amended by adding at the end 
the following: 
‘‘(7) PERMISSIBLE DEBT REFINANCING.—Any 
financing approved under this title may also include 
a limited amount of debt refinancing for debt that 
was not previously guaranteed by the Administra-
tion. If the project involves expansion of a small 
business 
which 
has 
existing 
indebtedness 
collateralized by fixed assets, any amount of existing 
indebtedness that does not exceed one-half of the 
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project cost of the expansion may be refinanced and 
added to the expansion cost, providing— 
‘‘(A) the proceeds of the indebtedness were 
used to acquire land, including a building situ-
ated thereon, to construct a building thereon or 
to purchase equipment; 
‘‘(B) the borrower has been current on all 
payments due on the existing debt for at least 
the past year; and 
‘‘(C) the 504 financing will provide better 
terms or rate of interest than now exists on the 
debt.’’. 
SEC. 208. ADDITIONAL EQUITY INJECTIONS. 
Clause (ii) of section 502(3)(B) of the Small Business 
Investment Act of 1958 (15 U.S.C. 696(3)(B)) is amend-
ed to read as follows: 
‘‘(ii) 
FUNDING
FROM
INSTITU-
TIONS.— 
‘‘(I) If a small business concern 
provides the minimum contribution re-
quired under paragraph (C), not less 
than 50 percent of the total cost of 
any project financed pursuant to 
clauses (i), (ii), or (iii) of subpara-
graph (C) shall come from the institu-
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tions described in subclauses (I), (II), 
and (III) of clause (i). 
‘‘(II) If a small business concern 
provides more than the minimum con-
tribution required under paragraph 
(C), any excess contribution may be 
used to reduce the amount required 
from the institutions described in sub-
clauses (I), (II), and (III) of clause (i) 
except that the amount from such in-
stitutions may not be reduced to an 
amount less than the amount of the 
loan made by the Administration.’’. 
SEC. 209. LOAN LIQUIDATIONS. 
Section 510 of the Small Business Investment Act 
of 1958 (15 U.S.C. 697g) is amended— 
(1) by redesignating subsection (e) as sub-
section (g); and 
(2) by inserting after subsection (d) the fol-
lowing: 
‘‘(e) PARTICIPATION.— 
‘‘(1) MANDATORY.—Any certified development 
company which elects not to apply for authority to 
foreclose and liquidate defaulted loans under this 
section or which the Administration determines to be 
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ineligible for such authority shall contract with a 
qualified third-party to perform foreclosure and liq-
uidation of defaulted loans in its portfolio. The con-
tract shall be contingent upon approval by the Ad-
ministration with respect to the qualifications of the 
contractor and the terms and conditions of liquida-
tion activities. 
‘‘(2) COMMENCEMENT.—The provisions of this 
subsection shall not require any development com-
pany to liquidate defaulted loans until the Adminis-
tration has adopted and implemented a program to 
compensate and reimburse development companies 
as provided under subsection (f). 
‘‘(f) COMPENSATION AND REIMBURSEMENT.— 
‘‘(1) REIMBURSEMENT
OF
EXPENSES.—The 
Administration shall reimburse each certified devel-
opment company for all expenses paid by such com-
pany as part of the foreclosure and liquidation ac-
tivities if the expenses— 
‘‘(A) were approved in advance by the Ad-
ministration either specifically or generally; or 
‘‘(B) were incurred by the company on an 
emergency basis without Administration prior 
approval but which were reasonable and appro-
priate. 
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‘‘(2) COMPENSATION FOR RESULTS.—The Ad-
ministration shall develop a schedule to compensate 
and provide an incentive to qualified State or local 
development companies which foreclose and liquidate 
defaulted loans. The schedule shall be based on a 
percentage of the net amount recovered but shall not 
exceed a maximum amount. The schedule shall not 
apply to any foreclosure which is conducted pursu-
ant to a contract between a development company 
and a qualified third-party to perform the fore-
closure and liquidation.’’. 
SEC. 210. CLOSING COSTS. 
Paragraph (4) of section 503(b) of the Small Busi-
ness Investment Act of 1958 (15 U.S.C. 697(b)) is amend-
ed to read as follows: 
‘‘(4) the aggregate amount of such debenture 
does not exceed the amount of loans to be made 
from the proceeds of such debenture plus, at the 
election of the 504 borrower, other amounts attrib-
utable to the administrative and closing costs of 
such loans, except for the borrower’s attorney fees;’’. 
SEC. 211. MAXIMUM 504 AND 7(A) LOAN ELIGIBILITY. 
Section 502(2) of the Small Business Investment Act 
of 1958 (15 U.S.C. 696(2)) is amended by adding at the 
end the following: 
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