subsidiary of such a company that is in good 
standing without the imposition of additional 
regulatory requirements, the maximum amount 
of outstanding leverage made available to such 
company shall be $250,000,000. 
‘‘(B) MULTIPLE LICENSEES UNDER COM-
MON CONTROL.—The maximum amount of out-
standing leverage made available to two or more 
companies licensed under section 301(c) of this 
Act that are commonly controlled (as deter-
mined by the Administrator) and not under 
capital 
impairment 
may 
not 
exceed 
$350,000,000.’’. 
(b) REGULATIONS.—Section 303(b)(2) of the Small 
Business Investment Act of 1958 (15 U.S.C. 683(b)(2)) 
is amended by adding a new subparagraph (E) at the end 
to read as follows: 
‘‘(E) REGULATIONS.—The Administrator 
shall promulgate regulations, after notice and 
opportunity for comment, establishing quantifi-
able objective criteria under which a licensee’s 
private capital in its entirety may be leveraged 
up to 300 percent. Such regulations shall be 
published in the Code of Federal Regulations.’’. 
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(c) INVESTMENTS
IN LOW-INCOME GEOGRAPHIC 
AREAS.—Section 303(b)(2)(C) of the Small Business In-
vestment Act of 1958 (15 U.S.C. 683(b)(2)(C)) is amend-
ed by striking ‘‘$250,000,000’’ in clause (ii)(II) and in-
serting ‘‘$400,000,000’’. 
SEC. 5. LONG-TERM LOANS TO SMALL BUSINESS CON-
CERNS. 
(a) MAXIMUM RATE OF INTEREST.—Section 305(c) 
of the Small Business Investment Act of 1958 (15 U.S.C. 
685(c)) is amended by adding the following at the end 
thereof: 
‘‘In addition to the foregoing, with respect to a loan 
made, or debt with equity features acquired, under this 
section, a company may not charge an interest rate that 
exceeds the yield of 10-year Treasury note plus 16 per-
centage points per annum on the date of initiating the 
loan or debt security except that a company may charge 
up to an additional 7 percent more than the interest rate 
set forth in the loan or debt security in the event of a 
default. For purposes of this subsection a default means 
the occurrence of any of the following: 
‘‘(1) Failure to pay an amount when due. 
‘‘(2) Failure to provide information required 
under the applicable financing documents. 
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‘‘(3) Failure to observe any material term, cov-
enant, or other agreement contained in the applica-
ble financing documents. 
‘‘(4) A representation, warranty, certification, 
or statement of fact made by or on behalf of a bor-
rower in any applicable financing document or in 
any document delivered in connection therewith, that 
was materially incorrect or misleading when made. 
‘‘(5) Any material event of default specified in 
the applicable financing documents.’’. 
SEC. 6. SMALL BUSINESS CONCERNS OWNED AND CON-
TROLLED BY VETERANS. 
Section 303(b)(2)(C) of the Small Business Invest-
ment Act of 1958 (15 U.S.C. 683(b)(2)(C)) is amended 
as follows: 
(1) In the heading, by inserting after ‘‘AREAS’’ 
the following: ‘‘AND VETERANS’’. 
(2) In clause (i), by inserting after ‘‘351)’’ the 
following: ‘‘or in a small business concern owned and 
controlled veterans (as such term is defined in sec-
tion 3(q)(3) of the Small Business Act)’’. 
(3) In clause (iii), by inserting after ‘‘351)’’ the 
following: ‘‘or in small business concerns owned and 
controlled by veterans (as such is defined in section 
3(q)(3) of the Small Business Act)’’. 
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SEC. 7. ADDITIONAL AUTHORITY. 
Section 305 of the Small Business Investment Act 
of 1958 (15 U.S.C. 685) is amended by adding at the end 
of the following: 
‘‘(g) A company may require a small business concern 
to accept reasonable and customary minimum prepayment 
amounts and notices of prepayment.’’. 
SEC. 8. INVESTMENT IN CERTAIN PASSIVE ENTITIES. 
Part A of title III of the Small Business Investment 
Act of 1958 (15 U.S.C. 661 and following) is amended 
by adding at the end the following: 
‘‘SEC. 321. INVESTMENT IN CERTAIN PASSIVE ENTITIES. 
‘‘A licensee may provide financing to a passive busi-
ness as defined at section 107.720(b)(1), Title 13 Code 
of Federal Regulations as in effect on January 1, 2009, 
which is a corporation or limited liability company wholly- 
owned by the licensee and the sole purpose of which is 
to provide financing by the licensee to such concerns would 
cause investors in the licensee to incur with respect to reg-
ulated investment companies, income not qualifying under 
section 851(b)(2)(A) of the Internal Revenue Code of 
1986, as amended. Nothing in this section shall affect the 
validity of regulations permitting financings of passive 
businesses previously duly promulgated by the Adminis-
trator.’’. 
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SEC. 9. INVESTMENT IN SMALLER ENTERPRISES. 
Section 303(d) of the Small Business Investment Act 
of 1958 (15 U.S.C. 683(d)) is amended by adding at the 
end of the following new paragraph: 
‘‘(3) EXCEPTION.—Notwithstanding paragraphs 
(1) and (2), a licensee shall not be required to 
achieve any percentage of such financings (at cost) 
which is higher than 25 percent which may result 
from the application of prior statutory or regulatory 
requirements to all or any portion of the licensee’s 
portfolio.’’. 
SEC. 10. CAPITAL IMPAIRMENT. 
Section 303(e) of the Small Business Investment Act 
of 1958 (15 U.S.C. 683(e)) is amended by adding at the 
end the following: 
‘‘A licensee with Earmarked Assets (as that term is de-
fined by the Administrator) will not be in capital impair-
ment during the first 72 months after its licensee, if its 
impairment does not exceed 85 percent’’. 
SEC. 11. TANGIBLE NET WORTH. 
Section 103 of the Small Business Investment Act 
of 1958 (15 U.S.C. 662) is amended by striking ‘‘and’’ 
at the end of paragraph (18), by striking the period at 
the end of paragraph (19) and inserting a semicolon, and 
by adding the new paragraph after paragraph (19): 
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