View all text of Subchapter V [§ 695 - § 697g]
§ 697f. Prepayment of development company debentures
(a) In general
(1) Prepayment authorized
(2) Procedure
(A) In generalIn making a prepayment under paragraph (1)—
(i) the borrower (in the case of a loan under section 697 of this title) or the issuer (in the case of a small business investment company) shall pay to the Federal Financing Bank an amount that is equal to the sum of the unpaid principal balance due on the debenture as of the date of the prepayment (plus accrued interest at the coupon rate on the debenture) and the amount of the repurchase premium described in subparagraph (B); and
(ii) the Administration shall pay to the Federal Financing Bank the difference between the repurchase premium paid by the borrower under this subsection and the repurchase premium that the Federal Financing Bank would otherwise have received.
(B) Repurchase premium
(i) In generalFor purposes of subparagraph (A)(i), the repurchase premium is the amount equal to the product of—(I) the unpaid principal balance due on the debenture on the date of prepayment; and(II) the applicable percentage rate, as determined in accordance with clauses (ii) and (iii).
(ii) Applicable percentage rateFor purposes of clause (i)(II), the applicable percentage rate means—(I) with respect to a 10-year term loan, 8.5 percent;(II) with respect to a 15-year term loan, 9.5 percent;(III) with respect to a 20-year term loan, 10.5 percent; and(IV) with respect to a 25-year term loan, 11.5 percent.
(iii) Adjustments to applicable percentage rate
(b) RequirementsFor purposes of subsection (a), the requirements of this subsection are that—
(1) the debenture is outstanding and neither the loan that secures the debenture, if any, nor the debenture is in default on the date on which the prepayment is made;
(2) State, local, or personal funds, or the proceeds of a refinancing in accordance with subsection (d) under the programs authorized by this subchapter, are used to prepay or roll over the debenture; and
(3) with respect to a debenture issued under section 697 of this title, 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 prepayment fees or penalties
(d) Refinancing limitations
(1) In generalThe refinancing of a debenture under sections 697a and 697b of this title, in accordance with subsection (b)(2)—
(A) shall not exceed the amount necessary to prepay existing debentures, including all costs associated with the refinancing and any applicable prepayment penalty or repurchase premium; and
(B) except as provided in paragraphs (2) and (3), shall be subject to the provisions of sections 697a and 697b of this title and the rules and regulations promulgated thereunder, including rules and regulations governing payment of authorized expenses, commissions, fees, and discounts to brokers and dealers in trust certificates issued pursuant to section 697b of this title.
(2) Job creation
(3) Loan processing fee
(4) New debentures
(5) Preliminary notice
(A) In general
(B) “Borrower” defined
(6) Final notice
(e) DefinitionsFor purposes of this section—
(1) the term “issuer” means—
(A) the qualified State or local development company that issued a debenture pursuant to section 697 of this title, which has been purchased by the Federal Financing Bank; and
(B) a small business investment company licensed pursuant to section 681 of this title; or
(2) the term “borrower” means a small business concern whose loan secures a debenture issued pursuant to section 697 of this title.
(f) Regulations
(g) Authorization
(Pub. L. 85–699, title V, § 509, as added Pub. L. 103–403, title V, § 503, Oct. 22, 1994, 108 Stat. 4199; amended Pub. L. 104–208, div. D, title II, § 208(h)(1)(H), Sept. 30, 1996, 110 Stat. 3009–747.)