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

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 Administration's approval, to repay 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.