[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 737 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 737

To amend the Small Business Investment Act of 1958 to permit prepayment 
     of debentures issued by State and local development companies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 1 (legislative day, March 3), 1993

Mr. Hatfield (for himself, Mr. Gorton, Mr. Packwood, and Mr. Grassley) 
introduced the following bill; which was read twice and 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 Representatives 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 Investment Act of 
1958 (15 U.S.C. 695 et seq.) is amended by adding at the end the 
following new section:

``SEC. 507. PREPAYMENT OF DEVELOPMENT COMPANY DEBENTURES.

    ``(a) Prepayment Terms.--
            ``(1) In general.--If the requirements of subsection (b) 
        are met, the issuer of a debenture purchased by the Federal 
        Financing Bank and guaranteed by the Administration under 
        section 503 may, at the election of the borrower whose loan 
        secures such debenture, prepay such debenture by paying to the 
        Federal Financing Bank, the amount that is equal to the sum 
        of--
                    ``(A) the unpaid principal balance (adjusted for 
                funds in the borrower's escrow reserve account) due on 
                the debenture on the date of prepayment (plus accrued 
                interest at the coupon rate on the debenture); and
                    ``(B) the amount of the repurchase premium 
                described in paragraph (2)(A).
            ``(2) Repurchase premium.--
                    ``(A) Amount.--The amount of the repurchase premium 
                described in this paragraph is the product of--
                            ``(i) the unpaid principal balance 
                        (adjusted for funds in the borrower's escrow 
                        reserve account) due on the debenture on the 
                        date of prepayment;
                            ``(ii) the interest rate of the debenture; 
                        and
                            ``(iii) the factor `P', as determined under 
                        subparagraph (B).
                    ``(B) Factor `p'.--For purposes of subparagraph 
                (A)(iii), the factor `P' means the applicable percent 
                determined in accordance with the following table:
      

------------------------------------------------------------------------
                                              Applicable percent        
     Year in which prepayment of     -----------------------------------
   debenture is made (from date of                            20- or 25-
         original issuance):            10-year     15-year    year term
                                       term loan   term loan     loan   
------------------------------------------------------------------------
1...................................        1.00        1.00        1.00
2...................................         .80         .85         .90
3...................................         .60         .70         .80
4...................................         .40         .55         .70
5...................................         .20         .40         .60
6...................................           0         .25         .50
7...................................           0         .10         .40
8...................................           0           0         .30
9...................................           0           0         .20
10..................................           0           0         .10
11 through 25.......................                       0           0
------------------------------------------------------------------------

    ``(b) Requirements.--The requirements of this subsection are met 
if--
            ``(1) the debenture referred to in subsection (a) is 
        outstanding and neither the debenture nor the borrower's loan 
        that secures the debenture is in default on the date of 
        prepayment;
            ``(2) only non-Federal funds are used to prepay the 
        debenture; and
            ``(3) the issuer extinguishes the borrower's loan which 
        secured such debenture upon prepayment.
    ``(c) Prohibition of Other Fees and Penalties.--Notwithstanding any 
other provision of law, no fees or penalties, other than those 
specified in this section, may be imposed as a condition of prepayment 
under subsection (a) against the issuer, the borrower, or the 
Administration.
    ``(d) Definitions.--For purposes of this section, the following 
definitions apply:
            ``(1) Borrower.--The term `borrower' means a small business 
        concern whose loan secures a debenture purchased by the Federal 
        Financing Bank under section 503.
            ``(2) Issuer.--The term `issuer' means a qualified State or 
        local development company.
            ``(3) Qualified state or local development company.--The 
        term `qualified State or local development company' has the 
        same meaning as in section 503(e).''.
    (b) Clerical Amendment.--The table of contents for the Small 
Business Investment Act of 1958 is amended by adding at the end of 
title V the following new item:

``Sec. 507. Prepayment of development company debentures.''.

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