[Congressional Record Volume 140, Number 86 (Thursday, June 30, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          SMALL BUSINESS PREPAYMENT PENALTY RELIEF ACT OF 1994

                                 ______


                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Thursday, June 30, 1994

  Mr. LaFALCE. Mr. Speaker, I rise today as chairman of the House 
Committee on Small Business, to introduce the Small Business Prepayment 
Penalty Relief Act of 1994.
  This is one of two bills that I will introduce today that will become 
part of the pending legislation to reauthorize the Small Business 
Administration. That legislation is currently under consideration in my 
committee.
  Our Nation's small businesses are the essential component of the 
engine that is driving our economic growth. This bill will greatly help 
small business owners by providing some relief to those locked into 
high-interest rate loans.
  My proposal will allow the SBA to provide some relief to those 
borrowers currently paying the highest interest rates--some as much as 
15 percent. The bill authorizes $30 million dollars for relief to make 
up for lost penalties. The bill requires the SBA to start with 
borrowers who are paying the highest interest rates and work down. It 
is expected that the amount authorized by the bill will provide relief 
to borrowers with interest rates over 10.5 percent. Borrowers who are 
paying high interest rates will have their interest rates reduced upon 
request. Borrowers with nearly $300 million in loans will be helped 
under this proposal.
  A summary of the legislation is attached.

       H.R.    may be cited as the ``Small Business Prepayment 
     Penalty Relief Act of 1994.''
       Section 2 would authorize the SBA to reduce the interest 
     rate on debentures issued by certified development companies 
     under section 503 and sold to the Federal Financing Bank.
       Section 3 would authorize the SBA to reduce the interest 
     rate on debentures issued by Small Business Investment 
     Companies which have been sold to the Federal Financing Bank.
       Section 4 would authorize SBA to reduce the interest rate 
     on debentures issued by Specialized Small Business Investment 
     Companies which have been purchased by SBA.
       Section 5 would direct that SBA utilize the amount of the 
     appropriation to carry out this Act to reduce the highest 
     interest rate on the entire portfolio of these three types of 
     debentures to a uniform rate.
       Subsection (b) would authorize the appropriation of such 
     sums as may be necessary to carry out the Act.

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