An Act to amend the Small Business Investment Act of 1958, and for other purposes
PL 92-595 (S.3337), enacted 10/27/1972

1314 
PUBLIC LAW 92-595-OCT. 27, 1972 
[86 STAT. 
Public Law 92-595 
' 
' 
'•''' ' 
October 27, 1972 
^^ 
A C T 
[s. 3337] 
ij.y amend the Small Business Investment Act of 1958, and for other purposes. 
Small Business 
Investment Act 
Amendments of 
1972. 
75 Stat. 752. 
15 u s e 662. 
Investment com-
panies financing 
disadvantaged 
persons. 
72 Stat. 691; 
81 Stat. 269. 
15 u s e 681. 
Purchase of 
debentures. 
81 Stat. 270; 
85 Stat. 776. 
15 u s e 683. 
Supra. 
Be it enacted hy the Senate and House of Re-presentathnes of the 
United States of America in Congress assembled, That this Act may 
be cited as the "Small Business Investment Act Amendments of 1972". 
SEC. 2. The Small Business Investment Act of 1958, as amended, is 
further amended as follows: 
(a) Sections 103 (3) and (7) are amended by striking "(c)" after 
"Section 301" at the end thereof. 
(b) Section 301 is amended by adding the following new subsection: 
"(d) Notwithstanding any other provision of this Act, a small 
business investment company, the investment policy of which is that 
its investments will be made solely in small'business concerns which 
will contribute to a well-balanced national economy by facilitating 
ownership in such concerns by persons whose participation in the free 
enterprise system is hampered because of social or economic disad-
vantages may be organized and chartered under State business or non-
profit corporation statutes, and may be licensed by the Administration 
to operate under the provisions of this Act." 
(c) Section 303 is amended— 
(1) by inserting the word "private" in the first sentence of 
paragraph (1) of subsection (b), to read "combined private 
paid-in capital and paid-in surplus"; 
(2) by striking the figure "$7,500,000" in the last sentence of 
paragraph 
(1) of subsection (b), and inserting the 
figure 
"$15,000,000"; 
(3) by amending paragraph (2) of said subsection (b) to read 
as follows: 
"(2) The total amount of debentures which may be purchased or 
guaranteed and outstanding at any one time from a company not 
complying with section 301(d) of this Act, which has investments 
or legal commitments of 65 per centum or more of its total funds 
available for investment in small business concerns invested or com-
mitted in venture capital, and which has combined private paid-in 
capital and paid-in surplus of $500,000 or more shall not exceed 300 
per centum of its combined private paid-in capital and paid-in sur-
plus. In no event shall the debentures of any such company 
purchased or guaranteed and outstanding under this paragraph exceed 
$20,000,000. Such additional purchases or guarantees which the 
Administration makes under this paragraph shall contain conditions 
to insure appropriate maintenance by the company receiving such 
assistance of the described ratio during the period in which debentures 
under this paragraph are outstanding." 
(d) Section 303 is amended by adding the following new subsection: 
"(c) Subject to the following conditions, the Administration is 
authorized to purchase preferred securities, and to purchase, or to 
guarantee the timely payment of all principal and interest payments 
as scheduled, on debentures issued by small business investment com-
panies operating under authority of section 301(d) of this Act. The 
full faith and credit of the United States is pledged to the payment 
of all amounts which may be required to be paid under any guarantee 
under this subsection. 
, 
Kj BiliiSkil 
. . - - > .,../ 
86 STAT. ] 
PUBLIC LAW 92-595-OCT. 27, 1972 
1315 
"The Administration may purchase— 
^^Nonvotingpre-
"(1) shares of nonvoting stock (or other securities having purThase!^""'^^' 
similar characteristics), provided— 
"(i) dividends are preferred and cumulative to the extent 
of 3 per centum of par value per annum; 
"(ii) on liquidation or redemption, the Administration is 
entitled to the preferred payment of the par value of such 
securities; and prior to any distribution (other than to the 
Administration) the Administration may require the pre-
ferred payment of the difference between dividends paid 
thereon and cumulative dividends payable at a late equal to 
the interest rate determined pursuant to section 303(b) for 
debentures with a term of fifteen years, without interest on 
such difference; 
"(iii) the purchase price shall be at par value and, in any 
one sale, $50,000 or more; and 
"(iv) the amount of such securities purchased and out-
standing at any one time shall not exceed (A) from a com-
pany having combined private paid-in capital and paid-in 
surplus of less than $300,000 and licensed on or before Octo-
ber 13, 1971, the amount of combined private paid-in capital 
and paid-in surplus invested after such date, nor (B) from 
any company having combined private paid-in capital and 
paid-in surplus of $300,000 or more but less than $500,000, 
the amount of its combined private paid-in capital and paid-in 
surplus in excess of $300,000, nor (C) from any company 
having combined private paid-in capital and paid-in surplus 
of $500,000 or more, the amount of its combined private 
paid-in capital and paid-in surplus. 
"The Administration may purchase or guarantee— 
subordinated 
"(2) debentures subordinated pursuant to subsection (b) of chase*orgua^an". 
this section (other than securities purchased under paragraph tee. 
(1) of this subsection (c)), provided— 
"(i) such debentures are issued for a term of not to exceed 
fifteen years; 
"(ii) the interest rate is determined pursuant to sections 
303(b) and 317; and 
Ante, p. i3i4. 
"(iii) the amount of debentures purchased or guaranteed 
^°sf, p. laie. 
and outstanding at any one time pursuant to this paragraph 
(2) from a company having combined private paid-in capital 
and paid-in surplus of less than $500,000 shall not exceed 200 
'' * 
per centum of its combined private paid-in capital and 
paid-in surplus less the amount of preferred securities out-
standing under paragraph (1) of this subsection, nor from 
a company having combined private paid-in capital and 
paid-in surplus of $500,000 or more, 300 per centum of its 
combined private paid-in capital and paid-in surplus less the 
amount of such preferred securities. 
"(3) debentures purchased and outstanding pursuant to section 
303(b) of this section may be retired simultaneously with the 
issuance of preferred securities to meet the requirements of sub-
paragraph (2) (iii) of this subsection (c). 
"(4) the Administration may require, as a condition of the 
purchase or guarantee of any securities in excess of- 200 per 
centum of the combined private paid-in capital and paid-in sur-
plus of a company, that the company maintains a percentage of 
its total funds available for investment in small business concerns 
invested or legally committed in venture capital (as defined in 
subsection (b) of this section) determined by the Administration 
to be reasonable and appropriate." 
1316 
PUBLIC LAW 92-595-OCT. 27,1972 
[86 STAT. 
74 Stat. 196. 
15 use 684. 
81 Stat. 271. 
15 use 686. 
Repeal. 
72 Stat. 691; 
80 Stat. 1360. 
15 u s e 681. 
Interest sub-
sidy. 
Ante, p. 1314. 
Joint ownership 
companies, bene-
fits. 
Preferred stock 
asset coverage 
requirement, ex-
emption. 
54 Stat. 817; 
72 Stat. 694. 
15 use 661 
note. 
80 Stat. 132. 
Handicapped 
persons, loans. 
Ante, p. 898. 
(e) Subsection 304(a) of the Small Business Investment Act 
of 
1958 is amended by inserting "and unincorporated" 
after 
"incorporated". 
(f) Section 306 is amended (1) by inserting the word "private" in 
subsection (a) thereof to read "combined private paid-in capital and 
paid-in surplus" and (2) by repealing subsection (b) thereof. 
(g) Title I I I is further amended by adding thereto new sections 
to read as follows: 
"SEC. 317. Notwithstanding section 303(b), the effective rate of 
interest after October 13, 1971, during the first five years thereafter 
of the term of any debenture purchased by the Administration from 
a small business investment company under authority of section 
303(c), shall be the greater of 3 per centum or 3 percentage points 
below the interest rate determined pursuant to section 303(b). The 
Administration is authorized to apply interest paid to it by such 
company for the period from October 13,1971, to the effective date of 
this section, without interest thereon, to interest payable after such 
effective date. No company which has received the benefit of this 
section may make a distribution (other than to the Administration) 
unless it has first paid to the Administration an amount e(j[ual to the 
difference between the rate of interest payable to the Administration 
pursuant to the previous sentence, and the rate of interest which 
would have been payable pursuant to section 303(b). 
"SEC. 318. The Administration is authorized to extend the benefits 
of sections 303(c) and 317 to any small business investment company 
operating under authority of section 301(d) of this Act, and which is 
owned, in whole or in part, by one or more small business investment 
companies, in accordance with regulations promulgated by the 
Administration. 
"SEC. 319. Section 18 of the Investment Company Act of 1940, as 
amended (15 U.S.C. 80a-18), is further amended by amending sub-
section (k) to read as follows: 
" '(k) The provisions of subparagraphs (A) and (B) of paragraph 
(1) of subsection (a) of this section shall not apply to investment com-
panies operating under the Small Business Investment Act of 1958, 
and the provisions of paragraph (2) of said subsection shall not apply 
to such companies so long as such class of senior security shall be held 
or guaranteed by the Small Business Administration.' " 
SEC. 3. The Small Business Act is amended as follows: 
(a) Subsection (c) of section 4 of the Small Business Act (15 U.S.C. 
633(c)) is amended by inserting "7(g)," immediately after "7(e)," in 
each of paragraphs (1), (2), and (4) thereof. 
(b) Section 7 of the Small Business Act (15 U.S.C. 636) is amended 
by adding at the end thereof the following new subsection: 
"(g) (1) The Administration also is empowered, where other finan-
cial assistance is not available on reasonable terms, to make such loans 
(either directly or in cooperation with Banks or other lending institu-
tions through agreements to participate on an immediate or deferred 
basis) as the Administration may determine to be necessary or 
appropriate— 
"(A) to assist any public or private organization— 
"(i) which is organized under the laws of the United 
States or of any State, operated in the interest of handi-
capped individuals, the net income of which does not inure 
in whole or in part to the benefit of any shareholder or other 
individual; 
"(ii) which complies with any applicable occupational 
health and safety standard prescribed by the Secretary of 
Labor; and 
86 STAT.] 
PUBLIC LAW 92-596-OCT. 27, 1972 
1317 
"(iii) which, in the production of commodities and in 
the provision of services during any fiscal year in which it 
receives financial assistance under this subsection, employs 
handicapped individuals for not less than 75 per centum of 
the man-hours required for the production or provision of the 
commodities or services; or 
"(B) to assist any handicapped individual in establishing, 
acquiring, or operating a small business concern. 
"(2) The Administration's share of any loan made under this sub-
section shall not exceed $350,000, nor may any such loan be made if the 
total amount outstanding and committed (by participation or other-
wise) to the borrower from the business loan and investment fund 
established by section 4(c) (1) (B) of this Act would exceed $350,000. 
In agreements to participate in loans on a deferred basis under this 
subsection, the Administration's participation may total 100 per cen-
tum of the balance of the loan at the time of disbursement. Any loan 
made under this subsection shall bear interest at the rate of 3 per 
centum per annum. The maximum term of any such loan, including 
extensions and renewals thereof, may not exceed fifteen years. All loans 
made under this subsection shall be of such sound value or so secured 
as reasonably to assure repayment: Provided^ howecer^ That any 
reasonable doubt shall be resolved in favor of the applicant. 
"(3) For purposes of this subsection, the term 'handicapped indi-
vidual' means a pereon who has a physical, mental, or emotional 
impairment, defect, ailment, disease, or disability of a permanent 
nature which in any way limits the selection of any type of employ-
ment for which the person Avould otherwise be qualified or qualifiable." 
Approved October 27, 1972. 
Limitation. 
80 Stat. 132. 
15 u s e 633. 
' 'Handicapped 
individual." 
Public Law 92-596 
AN ACT 
To amend titles 10 and 37, United States Code, to authorize members of the 
armed forces wlio are in a missing status to accumulate leave without limita-
tion, to amend title 10, United States Code, to authorize an additional Deputy 
Secretary of Defense, and for other purposes. 
October 27, 1972 
[H. R. 14911] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled, That section 701 
of title 10, United States Code, is amended— 
(1) by inserting "and subsection (g)" after "subsection (f)" 
in subsection (b); and 
(2) by adding the following new subsection: 
"(g) A member who is in a missing status, as defined in section 
551(2) of title 37, accumulates leave without regard to the sixty-day 
limitation in subsection (b) and the ninety-day limitation in sub-
section (f). Notwithstanding the death of a member while in a miss-
ing status, he continues to earn leave through the date— 
" (1) the Secretary concerned receives evidence that the member 
is dead; or 
"(2) that his death is prescribed or determined under section 
555 of title 37. 
Leave accumulated while in missing status shall be accounted for 
separately. It may not be taken, but shall be paid for under section 
501(h) of title 37. However, a member whose death is prescribed or 
determined under section 555 or 556 of title 37 may, in addition to 
Armed Forces. 
Members in 
missing status, 
leave accumula-
tion. 
76 Stat. 492; 
81 Stat. 782. 
80 Stat. 625. 
80 Stat. 628. 
Post, p. 1318.