article: SECTION 1. PREPAYMENT OF DEVELOPMENT COMPANY 0DEBENTURES. (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) In General.--(1) If the requirements of subsection (b) are met and subject to the availability of appropriations, 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 and with the approval of the Administration, prepay such debenture by paying to the Federal Financing Bank the amount that is equal to the sum of the unpaid principal balance due on the debenture on the date of the prepayment (plus accrued interest at the coupon rate on the debenture) and the amount of the repurchase premium described in paragraph (2)(A). The Administration shall pay to the Federal Financing Bank the difference between the repurchase premium paid by the issuer of the debenture under this subsection and the repurchase premium that the Federal Financing Bank would otherwise have received. ``(2)(A) The amount of the repurchase premium described in this paragraph is the product of-- ``(i) the unpaid principal balance 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) 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 10-year 15-year 20-year 25-year original issuance) term term term term loan loan loan loan ------------------------------------------------------------------------ 1............................... 1.00 1.00 1.00 1.00 2............................... .80 .85 .90 .92 3............................... .60 .70 .80 .84 4............................... .40 .55 .70 .76 5............................... .20 .40 .60 .68 6............................... 0 .25 .50 .60 7............................... 0 .10 .40 .52 8............................... 0 0 .30 .44 9............................... 0 0 .20 .36 10.............................. 0 0 .10 .28 11.............................. 0 0 0 .20 12.............................. 0 0 0 .12 13.............................. 0 0 0 .04 14 through 25................... 0 0 0 0 ------------------------------------------------------------------------ ``(b) Requirements.--The requirements of this subsection are met if-- ``(1) the debenture is outstanding and neither the loan that secures the debenture nor the debenture is in default on the date the prepayment is made; ``(2) State or personal funds, which may include refinancing under the programs authorized by sections 504 and 505 of this Act, are used to prepay the debenture; and ``(3) the issuer certifies that the benefits, net of fees and expenses authorized herein, associated with prepayment of the debenture are entirely passed through to the borrower. ``(c) No fees or penalties other than those specified in this section may be imposed as a condition of such prepayment against the issuer or the borrower, or the Administration or any fund or account administered by the Administration, except as provided in this Act. ``(d) The refinancing of debentures authorized by paragraph (b)(2) of this section under section 504 of this Act shall be limited to only such amounts as are needed to prepay existing debentures and shall be subject to all of the other provisions of sections 504 and 505 of this Act and the rules and regulations of the Administration promulgated thereunder, including, but not limited to, rules and regulations governing payment of authorized expenses and commissions, fees and discounts to brokers and dealers in trust certificates issued pursuant to section 505: Provided, however, That no applicant for refinancing under section 504 of this Act need demonstrate that a requisite number of jobs will be created with the proceeds of such refinancing.'' Sec. 2. (a) The provisions of this Act are exercisable at the option of the borrower. (b) Any new credit or spending authority provided for in this Act is subject to amounts provided in advance in appropriations Acts. (c) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act. (d) Within 30 days of the effective date of this Act, the Administration shall promulgate such regulations as are necessary, including establishing an order of priority to accomplish the provisions of this Act. (e) Subsection 504(b) of this Act is hereby repealed, subsection 504(a) is renumbered as section 504, and paragraphs (1) through (3) of subsection 504(a) are renumbered as subsections 504 (a) through (c).
summary: Amends the Small Business Investment Act of 1958 to permit a qualified State or local development company that issues a debenture purchased by the Federal Financing Bank and guaranteed by the Small Business Administration, at the election of the small business borrower whose loan secures such debenture and with the Administrators approval, to prepay the debenture by payment to the Bank of the unpaid principal balance, accrued interest, and repurchase premium amount (as determined under this Act). Prohibits any fees or penalties from being imposed against the issuer, borrower, or the Administration as a condition of prepayment under this Act. Authorizes appropriations.