Small Business Capital Formation Act of 1983

Small Business Capital Formation Act of 1983 - Amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code to permit the making of certain loans by an employee benefit plan. Exempts from prohibited transaction provisions loans made by a defined contribution plan to a party in interest, or for the direct or indirect benefit of a party in interest, if such loans: (1) bear a reasonable rate of interest consistent with fiduciary duties and not less than the rate which would be borne by a comparable loan made to an unrelated third party in an arm's-length transaction; (2) are adequately secured; and (3) are limited to a term of not more than 120 months. Provides that the determination of what is a comparable loan may not include consideration of the tax consequences of the loan. Makes such an exemption inapplicable if immediately after the transaction the aggregate fair market value of the loans exceeds 50 percent of the aggregate fair market value of all assets of the plan.