387 
project, if the project involves neither of the conditions described 
in subparagraph (A). 
(3) THIRD-PARTY FUNDS.— 
(A) THIRD-PARTY SOURCES.—Third-party funds for a project of 
a small business concern financed under the program may be de-
rived, in whole or in part, from— 
(i) a State or local government; 
(ii) a bank or other financial institution; 
(iii) a foundation or other nonprofit institution; or 
(iv) the small business concern (or its owners, stockholders, 
or affiliates). 
(B) THIRD-PARTY FUNDING REQUIREMENT.—Not less than 50 
percent of the total financed cost of a project described in sub-
paragraph (A) of (B) of paragraph (2) shall come from one or 
more third-party sources described in clauses (i), (ii), and (iii) of 
subparagraph (A). 
(C) SELLER
FINANCING.—Financing provided by a seller of 
property to a small business concern for a project may be used 
to meet the requirements of this paragraph if the seller subordi-
nates the interest of the seller in the property to the debenture 
guaranteed by the Administrator. 
(4) COLLATERAL.— 
(A) IN GENERAL.—The collateral provided by a small business 
concern— 
(i) shall generally include a subordinate lien position on the 
property being financed under the program; and 
(ii) is only one of the factors to be evaluated in the credit 
determination. 
(B) ADDITIONAL COLLATERAL.—Additional collateral shall be 
required only if the Administrator determines, on a case-by-case 
basis, that additional security is necessary to protect the interest 
of the Government. 
(C) APPRAISALS.—With respect to commercial real property 
provided by a small business concern as collateral, an appraisal of 
the property by a State-licensed or State-certified appraiser— 
(i) shall be required by the Administrator before disburse-
ment of the loan if the estimated value of the property is 
more than $250,000; and 
(ii) may be required by the Administrator or the certified 
development company before disbursement of the loan, if— 
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388 
(I) the estimated value of the property is $250,000 or 
less; and 
(II) an appraisal is necessary for appropriate evalua-
tion of creditworthiness. 
(5) LEASING.— 
(A) IN GENERAL.—In the case of a project to construct a new 
facility for a small business concern, up to 33 percent of the total 
project may be leased, if reasonable projections of growth dem-
onstrate that the small business concern— 
(i) will need additional space within 3 years after the date 
of completion of the facility; and 
(ii) will fully utilize the additional space within 10 years 
after the date of completion of the facility. 
(B) LIMITATION ON LEASING.—In addition to any portion of a 
project of a small business concern permitted to be leased under 
subparagraph (A), not to exceed 20 percent of the project may be 
leased by the small business concern to one or more other tenants 
if the small business occupies permanently and uses not less than 
a total of 60 percent of the space in the project after the execution 
of any leases authorized under this section. 
(6) OWNERSHIP REQUIREMENTS.— 
(A) OWNERSHIP
BY
SPOUSE
UNDER
COMMUNITY
PROPERTY 
LAW.—Ownership requirements to determine the eligibility of a 
small business concern that applies for assistance under the pro-
gram shall be determined without regard to any ownership interest 
of a spouse arising solely from the application of the community 
property law of a State for purposes of determining marital inter-
ests. 
(B) OWNERSHIP BY RELATIVES.— 
(i) IN GENERAL.—The Administrator shall not decline to 
issue a debenture guarantee for a project of a small business 
concern on the ground that the ownership interests of the 
small business concern and the ownership interests of the 
property to be financed with the proceeds of a loan made with 
the proceeds of the guaranteed debenture are not identical be-
cause one or more of the classes of relatives described in 
clause (ii) have an ownership interest in the small business 
concern or the property if the Administrator determines, on 
a case-by-case basis, that the ownership interest, the guar-
antee, and the proceeds of the loan will substantially benefit 
the small business concern. 
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389 
(ii) CLASSES OF RELATIVES.—The classes of relatives re-
ferred to in clause (i) are father, mother, son, daughter, wife, 
husband, brother, or sister. 
(d) DEBENTURE AMOUNT AND INTEREST.— 
(1) MAXIMUM DEBENTURE AMOUNT.—The amount of a guaranteed 
debenture shall not exceed the aggregate amount of the loans to be 
made from the proceeds of the guaranteed debenture (other than any 
excess attributable to the administrative costs of the loans). 
(2) MINIMUM INTEREST RATE.—The interest rate on a guaranteed 
debenture shall be not less than the rate of interest determined by the 
Secretary of the Treasury for purposes of section 30304(b) of this title. 
(e) LOAN APPROVAL, AMOUNT, AND INTEREST RATE.— 
(1) APPROVAL BY THE ADMINISTRATOR.—The Administrator shall 
approve each loan made with the proceeds of a guaranteed debenture. 
(2) MAXIMUM LOAN AMOUNT.— 
(A) PERCENTAGE OF PROJECT COST.—The amount of a loan 
made with the proceeds of a guaranteed debenture shall not exceed 
the amount that is equal to 50 percent of the cost of the project 
with respect to which the loan is made. 
(B) DOLLAR AMOUNT.— 
(i) IN GENERAL.—Except as provided in clause (ii), the 
amount of a loan made with the proceeds of a guaranteed de-
benture shall not exceed $1,500,000. 
(ii) EXCEPTIONS.— 
(I) PUBLIC POLICY OBJECTIVES.—The amount of a 
loan for a project directed toward one or more of the 
public 
policy 
objectives 
described 
in 
subsection 
(b)(1)(B)(iii) shall not exceed $2,000,000. 
(II) SMALL MANUFACTURERS.—The amount of a loan 
to a small manufacturer shall not exceed $4,000,000. 
(III) REDUCTION
OF
ENERGY
CONSUMPTION.—The 
amount of a loan for a project that reduces the bor-
rower’s energy consumption by at least 10 percent shall 
not exceed $4,000,000. 
(IV) GENERATION OF RENEWABLE ENERGY OR RE-
NEWABLE FUEL.—The amount of a loan for a project 
that generates renewable energy or renewable fuel (such 
as biodiesel or ethanol production) shall not exceed 
$4,000,000. 
(f) COMMERCIAL LOAN INTEREST RATE.— 
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390 
(1) PURPOSE.—The purpose of this subsection is to facilitate the or-
derly and necessary flow of long-term loans from certified development 
companies to small business concerns. 
(2) MAXIMUM INTEREST RATE.—Notwithstanding the provisions of 
the constitution or laws of any State limiting the rate or amount of 
interest that may be charged, taken, received, or reserved, the max-
imum legal rate of interest on any commercial loan that funds any por-
tion of the cost of the project financed under the program that is not 
funded by a guaranteed debenture shall be a rate established by the 
Administrator under paragraph (3). 
(3) ESTABLISHMENT BY THE ADMINISTRATOR.—The Administrator 
shall establish and publish quarterly a maximum legal interest rate for 
any commercial loan that funds any portion of the cost of a project 
financed under the program that is not funded by a guaranteed deben-
ture. 
(g) FEES AND CHARGES.— 
(1) LOAN FEES.— 
(A) IN GENERAL.—With respect to each loan made with the 
proceeds of a guaranteed debenture, the Administrator shall assess 
and collect a fee, which shall be payable by the borrowing small 
business concern, in an amount established annually by the Ad-
ministrator. 
(B) AMOUNT.— 
(i) IN GENERAL.—Except as provided in clause (ii), the 
amount of a loan fee shall not exceed the lesser of— 
(I) 0.9375 percent per year of the outstanding balance 
of the loan; or 
(II) the minimum amount necessary to reduce to zero 
the cost (as defined in section 502 of the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661a)) to the Adminis-
trator of purchasing and guaranteeing debentures under 
the program. 
(ii) EXCEPTION.— 
(I) IN GENERAL.—In the case of a loan made during 
the 2-year period beginning on October 1, 2002, the 
amount of a loan fee shall be 50 percent of the amount 
established under clause (i), for the life of the loan. 
(II) LIMITATION.—Subclause (I) shall be effective only 
to the extent that funds are made available under appro-
priations Acts, which funds shall be used by the Admin-
istrator to offset the cost (as defined in section 502 of 
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