I
103D CONGRESS
2D SESSION
H. R. 4298
To amend the Small Business Investment Act of 1958 to permit prepayment
of debentures issued by State and local development companies.
IN THE HOUSE OF REPRESENTATIVES
APRIL 25, 1994
Mr. LAFALCE (by request) introduced the following bill; which was referred
to the Committee on Small Business
A BILL
To amend the Small Business Investment Act of 1958 to
permit prepayment of debentures issued by State and
local development companies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PREPAYMENT OF DEVELOPMENT COMPANY
DEBENTURES.
(a) IN GENERAL.—Title V of the Small Business In-
vestment Act of 1958 (15 U.S.C. 695, et seq.), is amended
by adding at the end the following new section:
HR 4298 IH
‘‘SEC. 507. PREPAYMENT OF DEVELOPMENT COMPANY
DEBENTURES.
‘‘(a) IN GENERAL.—(1) If the requirements of sub-
section (b) are met and subject to the availability of appro-
priations, the issuer of a debenture purchased by the Fed-
eral Financing Bank and guaranteed by the Administra-
tion under section 503 may, at the election of the borrower
whose loan secures such debenture and with the approval
of the Administration, prepay such debenture by paying
to the Federal Financing Bank, the amount that is equal
to the sum of the unpaid principal balance due on the de-
benture on the date of the prepayment (plus accrued inter-
est at the coupon rate on the debenture) and the amount
of the repurchase premium described in paragraph (2)(A).
The Administration shall pay to the Federal Financing
Bank the difference between the repurchase premium paid
by the issuer of the debenture under this subsection and
the repurchase premium that the Federal Financing Bank
would otherwise have received.
‘‘(2)(A) The amount of the repurchase premium de-
scribed in this paragraph is the product of—
‘‘(i) the unpaid principal balance due on the de-
benture on the date of prepayment;
‘‘(ii) the interest rate of the debenture; and
‘‘(iii) the factor ‘P’, as determined under sub-
paragraph (B).
HR 4298 IH
‘‘(B) For purposes of subparagraph (A)(iii), the fac-
tor ‘P’ means the applicable percent determined in accord-
ance with the following table:
‘‘Year in which prepayment of debenture is
made (from date of original issuance)
Applicable percent
10-year
term loan
15-year
term loan
20-year
term loan
25-year
term loan
1 ......................................................
1.00
1.00
1.00
1.00
2 ......................................................
.80
.85
.90
.92
3 ......................................................
.60
.70
.80
.84
4 ......................................................
.40
.55
.70
.76
5 ......................................................
.20
.40
.60
.68
6 ......................................................
.25
.50
.60
7 ......................................................
.10
.40
.52
8 ......................................................
.30
.44
9 ......................................................
.20
.36
10 ....................................................
.10
.28
11 ....................................................
.20
12 ....................................................
.12
13 ....................................................
.04
14 through 25 .................................
.0
‘‘(b) REQUIREMENTS.—The requirements of this sub-
section are met if—
‘‘(1) the debenture is outstanding and neither
the loan that secures the debenture nor the deben-
ture is in default on the date the prepayment is
made;
‘‘(2) State or personal funds, which may include
refinancing under the programs authorized by sec-
tions 504 and 505 of this Act are used to prepay the
debenture; and
‘‘(3) the issuer certifies that the benefits, net of
fees and expenses authorized herein, associated with
HR 4298 IH
(b) Any new credit or spending authority provided for
in this Act is subject to amounts provided in advance in
appropriations Acts.
(c) There are authorized to be appropriated such
sums as may be necessary to carry out the provisions of
this Act.
(d) Within 30 days of the effective date of this Act,
the Administration shall promulgate such regulations as
are necessary, including establishing an order of priority
to accomplish the provisions of this Act.
(e) Subsection 504(b) of this Act is hereby repealed,
and subsection 504(a) is renumbered as section 504, and
paragraphs (1) through (3) of subsection 504(a) are re-
numbered as subsections 504 (a) through (c).
Æ