stantial qualified services to the qualified small busi-
ness concern in connection with such loan, except
that such small business concern may waive the re-
quirements of this paragraph, and
‘‘(4) the interest on such loan does not ex-
ceed—
‘‘(A) in the case of a secured loan, the
prime rate plus 3 percentage points, or
‘‘(B) in the case of any other loan, the
prime rate plus 8 percentage points.
‘‘(d) QUALIFIED SMALL BUSINESS CONCERN.—For
purposes of this subpart, the term ‘qualified small busi-
ness concern’ means any person if—
‘‘(1) such person is a small business concern
within the meaning of section 3 of the Small Busi-
ness Act (15 U.S.C. 632), and
‘‘(2) substantially all of the activities of such
person are within an urban enterprise zone.
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—
‘‘(1) URBAN ENTERPRISE ZONE.—For purposes
of this subpart, the term ‘urban enterprise zone’
means—
‘‘(A) any urban area designated as an en-
terprise zone under any State law program, and
‘‘(B) any urban area designated as an en-
terprise zone under Federal law.
‘‘(2) SUBSTANTIAL QUALIFIED SERVICES.—For
purposes of this subpart, the term ‘substantial quali-
fied services’ means, with respect to any loan made
by an urban entrepreneurial opportunity financing
subsidiary, any management, administrative, con-
sulting, or other support services provided to the
borrower under such loan, but only if the amount of
such services, to be provided during the first year
such loan is outstanding involve at least 1,000 man-
hours for each $100,000 principal amount of such
loan.
‘‘(3) PRIME RATE.—For purposes of this sub-
part—
‘‘(A) IN GENERAL.—The term ‘prime rate’
means the average predominant prime rate
quoted by commercial banks to large busi-
nesses, as determined by the Board of Gov-
ernors of the Federal Reserve System.
‘‘(B) WHEN DETERMINATION MADE.—
‘‘(i) Except as provided in clause (ii),
the determination of the prime rate shall
be made as of the time the loan is made.
‘‘(ii) If the loan is a variable rate
loan, the prime rate taken into account
with respect to any change in rate shall be
determined as of the time such change
takes effect.
‘‘(4) TREATMENT OF CONTROLLED GROUPS.—
Any group of corporations treated as a single em-
ployer under section 51(a) or (b) shall be treated as
one corporation for purposes of this subpart.
‘‘(f) EMPLOYEES OF BORROWER MAY BE TAKEN
INTO ACCOUNT FOR CERTAIN PURPOSES.—If—
‘‘(1) a qualified contributing corporation has
provided financing through an urban entrepreneurial
opportunity financing subsidiary to any qualified
small business concern, and
‘‘(2) such qualified small business concern des-
ignates such subsidiary as its primary lender,
such qualified contributing corporation may treat the em-
ployees of such qualified small business concern as its own
employees for purposes of determining which such quali-
fied contributing corporation is in compliance with the re-
quirements of any Federal law. A qualified small business
concern may designate only 1 urban entrepreneurial op-
portunity financing subsidiary is its primary lender for
any period.’’
(b) CLERICAL AMENDMENT.—Part VIII of sub-
chapter B of chapter 1 of such Code is amended by insert-
ing after the part heading the following:
‘‘Subpart A—General provisions.
‘‘Subpart B—Tax incentives for urban entrepreneurial oppor-
tunity financing subsidiaries.
‘‘Subpart A—General Provisions’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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