Guarantees; Administration authority; regulatory terms and conditions; full faith and credit; subordination of debentures
Except as provided in subsection (b), the Administration may guarantee the timely payment of all principal and interest as scheduled on any debenture issued by any qualified State or local development company.
Such guarantees may be made on such terms and conditions as the Administration may be regulation determine to be appropriate: Provided, That the Administration shall not decline to issue such guarantee when the ownership interests of the small business concern and the ownership interests of the property to be financed with the proceeds of a loan made pursuant to subsection (b)(1) are not identical because one or more of the following classes of relatives have an ownership interest in either the small business concern or the property: father, mother, son, daughter, wife, husband, brother, or sister: Provided further, That the Administrator or his designee has determined on a case-by-case basis that such ownership interest, such guarantee, and the proceeds of such loan, will substantially benefit the small business concern.
The full faith and credit of the United States in pledged to the payment of all amounts guaranteed under this subsection.
Any debenture issued by any State or local development company with respect to which a guarantee is made under this subsection, may be subordinated by the Administration to any other debenture, promissory note, or other debt or obligation of such company.
Statutory terms and conditions
No guarantee may be made with respect to any debenture under subsection (a) unless—
such debenture is issued for the purpose of making one or more loans to small business concerns, the proceeds of which shall be used by such concern for the purposes set forth in section 696 of this title
necessary funds for making such loans are not available to such company from private sources on reasonable terms;
the interest rate on such debenture is not less than the rate of interest determined by the Secretary of the Treasury for purposes of section 683(b) of this title
the aggregate amount of such debenture does not exceed the amount of loans to be made from the proceeds of such debenture (other than any excess attributable to the administrative costs of such loans);
the amount of any loan to be made from such proceeds does not exceed an amount equal to 50 percent of the cost of the project with respect to which such loan is made;
the Administration approves each loan to be made from such proceeds; and
with respect to each loan made from the proceeds of such debenture, the Administration—
assesses and collects a fee, which shall be payable by the borrower, in an amount established annually by the Administration, which amount shall not exceed—
the lesser of—
0.9375 percent per year of the outstanding balance of the loan; and
the minimum amount necessary to reduce the cost (as defined in section 661a of title 2
) to the Administration of purchasing and guaranteeing debentures under this chapter to zero; and
50 percent of the amount established under clause (i) in the case of a loan made during the 2-year period beginning on October 1, 2002, for the life of the loan; and
uses the proceeds of such fee to offset the cost (as such term is defined in section 661a of title 2
) to the Administration of making guarantees under subsection (a).
[Pub. L. 85–699, title V, § 503], as added [Pub. L. 96–302, title I, § 113(a)], July 2, 1980, [94 Stat. 837]; amended [Pub. L. 100–590, title I], §§ 112(c), 114, 117(a), Nov. 3, 1988, [102 Stat. 2996–2998]; [Pub. L. 101–515, title V, § 8], Nov. 5, 1990, [104 Stat. 2144]; [Pub. L. 103–403, title II, § 213(1)], Oct. 22, 1994, [108 Stat. 4184]; [Pub. L. 104–36, § 6], Oct. 12, 1995, [109 Stat. 297]; [Pub. L. 104–208, div. D, title II], §§ 202(b)–(e), 203, Sept. 30, 1996, [110 Stat. 3009–735], 3009–736; [Pub. L. 105–135, title II, § 222], Dec. 2, 1997, [111 Stat. 2604]; [Pub. L. 106–554, § 1(a)(9) [title III, § 304]], Dec. 21, 2000, [114 Stat. 2763], 2763A–684; [Pub. L. 107–100, § 6(b)], Dec. 21, 2001, [115 Stat. 971]; [Pub. L. 108–199, div. B, title VI, § 631], Jan. 23, 2004, [118 Stat. 100]; [Pub. L. 108–205, § 2], Mar. 15, 2004, [118 Stat. 553]; [Pub. L. 108–217, § 2], Apr. 5, 2004, [118 Stat. 591]; [Pub. L. 108–306, § 2], Sept. 24, 2004, [118 Stat. 1131]; [Pub. L. 108–447, div. B, title V, div. K, title II, § 204], Dec. 8, 2004, [118 Stat. 2911], 3466.)