To amend the Small Business Investment Act of 1958 to establish a participating debenture program.

Amends the Small Business Investment Act of 1958 to authorize the Administrator of the Small Business Administration (SBA) to guarantee the payment of the redemption price and interest on a participating debenture issued by a small business investment company (SBIC). Prohibits the Administrator from guaranteeing such a debenture if the aggregate unpaid principal balance of the participating debentures would exceed 200% of the leverageable capital of the SBIC. Requires participating debentures to be redeemed within ten years after issuance. Outlines requirements of SBIC participants, including after default on debenture payment.

Allows an SBIC which has no unpaid interest and no past due principal outstanding on any issued participating debenture the right of special distributions to private investors without a corresponding distribution to the SBA, under specified conditions.