A bill to amend the Small Business Investment Act of 1958 to permit prepayment of loans made to State and local development companies.

(Measure passed House, amended, roll call #386 (372-28))

Amends the Small Business Investment Act of 1958 (SBIA) to authorize the refinancing of certain small business debentures.

Requires the issuer of a debenture purchased by the Federal Financing Bank and guaranteed by the Small Business Administration (SBA) under the SBIA, at the election of the borrower, to repay such debenture by paying the Bank, prior to October 1, 1992, the unpaid principal balance and accrued interest due at the coupon rate on the debenture, provided that: (1) the debenture is outstanding on the date of enactment, and neither it nor the loan that secures it is in default; (2) State or personal funds, including refinancing under specified development company debenture programs, are used to repay the debenture; (3) the issuer certifies that the benefits associated with prepayment of the debenture are entirely passed through to the borrower; and (4) the issuer pays to the Bank at the time of prepayment a penalty according to a specified formula.

Prohibits imposition of prepayment fees or penalties not authorized under this Act. Specifies fees that the issuer may impose on a borrower if a debenture is prepaid or refinanced. Directs that any debenture refinanced pursuant to this Act have a term of years equal to the remaining term to maturity of the debenture being refinanced.

Limits to $75,000,000 per year debentures refinanced under the pilot program involving the sale of development company debentures to investors.

Subjects any new credit authority included in this Act to amounts provided in advance in appropriations Acts.