‘‘(B) EFFECT
OF
REDEMPTION.—On re-
demption of a guarantee under subparagraph 
(A)— 
‘‘(i) the shares in the Fund of the au-
thorized private investor shall be redeemed; 
and 
‘‘(ii) the authorized private investor 
shall be prohibited from making any future 
investment in the Fund. 
‘‘(d) DEBENTURES.— 
‘‘(1) IN GENERAL.—The Fund may, at the dis-
cretion of the Board, raise additional capital through 
the issuance of debentures and through other means 
determined to be appropriate by the Board. 
‘‘(2) GUARANTEE OF DEBT BY SECRETARY.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
guarantee 100 percent of the principal of, and 
accrued interest on, debentures issued by the 
Fund that are approved by the Secretary. 
‘‘(B) MAXIMUM
DEBT
GUARANTEED
BY 
SECRETARY.—The outstanding value of deben-
tures issued by the Fund and guaranteed by 
the Secretary shall not exceed the lesser of— 
‘‘(i) the amount equal to twice the 
value of the assets held by the Fund; or 
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‘‘(ii) $500,000,000. 
‘‘(C) RECAPTURE
OF
GUARANTEE
PAY-
MENTS.—If the Secretary makes a payment on 
a debenture issued by the Fund as a result of 
a guarantee of the Secretary under this para-
graph, the Secretary shall have priority over 
other creditors for repayment of the debenture. 
‘‘(3) AUTHORIZED
PRIVATE
INVESTORS.—An 
authorized private investor may purchase debentures 
issued by the Fund. 
‘‘SEC. 383E. INVESTMENTS AND OTHER ACTIVITIES OF THE 
FUND. 
‘‘(a) INVESTMENTS.— 
‘‘(1) IN GENERAL.— 
‘‘(A) TYPES.—Subject to subparagraphs 
(B) and (C), the Fund may— 
‘‘(i) make equity investments in a 
rural business that meets the requirements 
of paragraph (6) and such other require-
ments as the Board may establish; and 
‘‘(ii) extend credit to such rural busi-
ness in— 
‘‘(I) the form of mezzanine debt, 
convertible debt, or subordinated debt; 
or 
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‘‘(II) any other form of near-eq-
uity debt. 
‘‘(B) LIMITATIONS
ON
EQUITY
INVEST-
MENTS.—After the initial equity investment in 
a rural business described in subparagraph 
(A)(i), the Fund may not make additional eq-
uity investments in such rural business if the 
additional equity investments would result in 
the Fund owning more than 30 percent of the 
equity of such rural business. 
‘‘(C) LIMITATION ON NONEQUITY INVEST-
MENTS.—Except in the case of a project to as-
sist a rural cooperative, the total amount of 
nonequity investments described in subpara-
graph (A)(ii) that may be provided by the Fund 
shall not exceed 20 percent of the total invest-
ments of the Fund in the project. 
‘‘(2) PROCEDURES.—The Fund shall implement 
procedures to ensure that— 
‘‘(A) the financing arrangements of the 
Fund meet the Fund’s primary focus of pro-
viding equity capital; and 
‘‘(B) the Fund does not compete with con-
ventional sources of credit. 
‘‘(3) DIVERSITY OF PROJECTS.—The Fund— 
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‘‘(A) shall seek to make equity investments 
in a variety of viable projects for rural busi-
nesses, with a significant share of invest-
ments— 
‘‘(i) in manufacturing or high-tech-
nology businesses of diverse sizes; 
‘‘(ii) in smaller projects in rural com-
munities of diverse sizes; and 
‘‘(iii) in cooperative and noncoopera-
tive businesses; and 
‘‘(B) shall be managed in a manner that 
diversifies the risks to the Fund among a vari-
ety of projects. 
‘‘(4) LIMITATION ON RURAL BUSINESSES AS-
SISTED.—The Fund shall not invest in any rural 
business that— 
‘‘(A) is primarily retail in nature (as deter-
mined by the Board), other than a purchasing 
cooperative, or 
‘‘(B) consists of the operation of any facil-
ity described in section 144(c)(6)(B). 
‘‘(5) INTEREST
RATE
LIMITATIONS.—Returns 
on investments in and by the Fund, and returns on 
the extension of credit by participants in projects as-
sisted by the Fund, shall not be subject to any State 
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or Federal law establishing a maximum allowable in-
terest rate. 
‘‘(6) REQUIREMENTS FOR RECIPIENTS.— 
‘‘(A) OTHER
INVESTMENTS.—Any recipi-
ent of amounts from the Fund shall make or 
obtain a significant investment from a source of 
capital other than the Fund. 
‘‘(B) SPONSORSHIP.—To be considered for 
an equity investment from the Fund, a rural 
business investment project shall be sponsored 
by a regional, State, or local sponsoring or en-
dorsing organization such as— 
‘‘(i) a financial institution; 
‘‘(ii) a development organization; or 
‘‘(iii) any other established entity en-
gaging or assisting in rural business devel-
opment, including a rural cooperative. 
‘‘(b) TECHNICAL ASSISTANCE.—The Board shall use 
not less than 2 percent of capital provided by the Federal 
Government to provide technical assistance to rural busi-
nesses seeking an equity investment from the Fund. 
‘‘(c) ANNUAL AUDIT.— 
‘‘(1) IN GENERAL.—The Board shall authorize 
an annual audit of the financial statements of the 
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Fund by a nationally recognized auditing firm using 
generally accepted accounting procedures. 
‘‘(2) AVAILABILITY OF AUDIT RESULTS.—The 
results of the audit required by paragraph (1) shall 
be made available to investors in the Fund. 
‘‘(d) ANNUAL REPORT.—The Board shall prepare 
and make available to the public an annual report that— 
‘‘(1) describes the projects funded with amounts 
from the Fund; 
‘‘(2) specifies the recipients of amounts from 
the Fund; 
‘‘(3) specifies the co-investors in all projects 
that receive amounts from the Fund; and 
‘‘(4) meets the reporting requirements, if any, 
of the State under the law of which the Fund is es-
tablished. 
‘‘(e) OTHER AUTHORITIES.— 
‘‘(1) IN
GENERAL.—The Board may exercise 
such other authorities as are necessary to carry out 
this subtitle. 
‘‘(2) OVERSIGHT.—The Secretary shall enter 
into a contract with the Administrator of the Small 
Business Administration under which the Adminis-
trator of the Small Business Administration shall be 
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responsible for the routine duties of the Secretary in 
regard to the Fund. 
‘‘SEC. 383F. GOVERNANCE OF THE FUND. 
‘‘(a) IN GENERAL.—The Fund shall be governed by 
a board of directors that represents all of the authorized 
private investors in the Fund and the Federal Government 
and that consists of— 
‘‘(1) a designee of the Secretary; 
‘‘(2) 2 members who are appointed by the Sec-
retary and are not Federal employees, including— 
‘‘(A) 1 member with expertise in venture 
capital investment; and 
‘‘(B) 1 member with expertise in coopera-
tive development; 
‘‘(3) 1 member who is appointed by the Sec-
retary and is a State government representative 
from among States with the highest rates of out-
migration from qualifying counties; and 
‘‘(4) 7 members who are elected by the author-
ized private investors with investments in the Fund, 
of whom not less than 1 member shall be a rural 
community banker from an insured depository insti-
tution with total assets equal to or less than 
$250,000,000 with an investment in the Fund. 
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‘‘(b) LIMITATION ON VOTING CONTROL.—No indi-
vidual investor or group of similar authorized private in-
vestors may control more than 25 percent of the votes on 
the Board. 
‘‘SEC. 383G. AUTHORIZATION OF APPROPRIATIONS. 
‘‘There are authorized to be appropriated such sums 
as are necessary to carry out this subtitle.’’. 
Æ 
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