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15 U.S.C. § 697a — Private debenture sales
Federal law — U.S. Code and appendices · legal_authorities
**(a)** Notwithstanding any other law, rule, or regulation, the Administration shall sell to investors, either publicly or by private placement, debentures pursuant to [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim) as follows:
(1) Of the program levels otherwise authorized by law for fiscal year 1986, an amount not to exceed $200,000,000.
(2) Of the program levels otherwise authorized by law for each of fiscal years 1987 and 1988, an amount not to exceed $425,000,000.
(3) All of the program levels authorized for fiscal year 1989 and subsequent fiscal years.
**(b)** Nothing in any provision of law shall be construed to authorize the Federal Financing Bank to acquire—
(1) any obligation the payment of principal or interest on which at any time has been guaranteed in whole or in part under [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim) and which is being sold pursuant to the provisions of the program authorized in this section;
(2) any obligation which is an interest in any obligation described in paragraph (1); or
(3) any obligation which is secured by, or substantially all of the value of which is attributable to, any obligation described in paragraph (1) or (2).
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Source file: Laws/federal/codes/united-states-code/title-15/section-697a-private-debenture-sales--47d4b91d01.md
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Source location: Title 15, Chapter 14B, § 697a; chapter-14b-small-business-investment-program.md
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**(a)** Notwithstanding any other law, rule, or regulation, the Administration shall sell to investors, either publicly or by private placement, debentures pursuant to [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim) as follows:
(1) Of the program levels otherwise authorized by law for fiscal year 1986, an amount not to exceed $200,000,000.
(2) Of the program levels otherwise authorized by law for each of fiscal years 1987 and 1988, an amount not to exceed $425,000,000.
(3) All of the program levels authorized for fiscal year 1989 and subsequent fiscal years.
**(b)** Nothing in any provision of law shall be construed to authorize the Federal Financing Bank to acquire—
(1) any obligation the payment of principal or interest on which at any time has been guaranteed in whole or in part under [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim) and which is being sold pursuant to the provisions of the program authorized in this section;
(2) any obligation which is an interest in any obligation described in paragraph (1); or
(3) any obligation which is secured by, or substantially all of the value of which is attributable to, any obligation described in paragraph (1) or (2).
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Guarantees; Administration authority; regulatory terms and conditions; full faith and credit; subordination of debentures**
(1) 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.
(2) 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.
(3) The full faith and credit of the United States in pledged to the payment of all amounts guaranteed under this subsection.
(4) 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.
**(b) Statutory terms and conditions** No guarantee may be made with respect to any debenture under subsection (a) unless—
(1) such debenture is issued for the purpose of making one or more loans to small business concerns, th
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Issuance; debentures composing trust or pool** The Administration is authorized to issue trust certificates representing ownership of all or a fractional part of debentures issued by State or local development companies and guaranteed by the Administration under this chapter: Provided, That such trust certificates shall be based on and backed by a trust or pool approved by the Administration and composed solely of guaranteed debentures.
**(b) Terms and conditions of guarantee; payment of principal and interest** The Administration is authorized, upon such terms and conditions as are deemed appropriate, to guarantee the timely payment of the principal of and interest on trust certificates issued by the Administration or its agent for purposes of this section. Such guarantee shall be limited to the extent of principal and interest on the guaranteed debentures which compose the trust or pool. In the event that a debenture in such trust or pool is prepaid, either voluntarily or in the event of default, the guarantee of timely payment of principal and interest on the trust certificates shall be reduced in proportion to the amount of principal and interest such prepaid debenture represents in the trust or pool. Interest on prepaid or defaulted debentures shall accrue and be guaranteed by the Administration only through the date of payment on the guarantee. During the term of the trust certificate, it may be called for redemption due to prepayment or default of all debentures constituting the pool.
**(c) Full faith and credit of United States** The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under any guarantee of such trust certificates issued by the Administration or its agent pursuant to this s
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Aid, counsel, assistance, etc., to small business concerns** The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured. The preservation and expansion of such competition is basic not only to the economic well-being but to the security of this Nation. Such security and well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.
**(b) Assistance to compete in international markets**
(1) It is the declared policy of the Congress that the Federal Government, through the Administrator of the Small Business Administration, acting through the Associate Administrator for International Trade, and in cooperation with the Department of Commerce and other relevant State and Federal agencies, should aid and assist small businesses, as defined under this chapter, to increase their ability to compete in international markets by—
(A) enhancing their abil
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Loans to small business concerns; allowable purposes; qualified business; restrictions and limitations** The Administration is empowered to the extent and in such amounts as provided in advance in appropriation Acts to make loans for plant acquisition, construction, conversion, or expansion, including the acquisition of land, material, supplies, equipment, and working capital, and to make loans to any qualified small business concern, including those owned by qualified Indian tribes, for purposes of this chapter. Such financings may be made either directly or in cooperation with banks or other financial institutions through agreements to participate on an immediate or deferred (guaranteed) basis. These powers shall be subject, however, to the following restrictions, limitations, and provisions:
(1) **In general.—**
(A) *Credit elsewhere.—*
(i) *In general.—* — The Administrator has the authority to direct, and conduct oversight for, the methods by which lenders determine whether a borrower is able to obtain credit elsewhere. No financial assistance shall be extended pursuant to this subsection if the applicant can obtain credit elsewhere. No immediate participation may be purchased unless it is shown that a deferred participation is not available; and no direct financing may be made unless it is shown that a participation is not available.
(ii) *Liquidity.—* — On and after October 1, 2015, the Administrator may not guarantee a loan under this subsection if the lender determines that the borrower is unable to obtain credit elsewhere solely because the liquidity of the lender depends upon the guaranteed portion of the loan being sold on the secondary market.
(B) *Background checks.—* — Prior to the approval of any loan made pursuant to this subsecti
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Federal law — U.S. Code and appendices · legal_authorities
The Administration may, in addition to its authority under [section 695 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section695&num=0&edition=prelim), make loans for plant acquisition, construction, conversion or expansion, including the acquisition of land, to State and local development companies, and such loans may be made or effected either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis: Provided, however, That the foregoing powers shall be subject to the following restrictions and limitations:
(1) **Use of proceeds.—** — The proceeds of any such loan shall be used solely by the borrower to assist 1 or more identifiable small business concerns and for a sound business purpose approved by the Administration.
(2) **Maximum amount.—**
(A) *In general.—* — Loans made by the Administration under this section shall be limited to—
(i) $5,000,000 for each small business concern if the loan proceeds will not be directed toward a goal or project described in clause (ii), (iii), (iv), or (v);
(ii) $5,000,000 for each small business concern if the loan proceeds will be directed toward 1 or more of the public policy goals described under [section 695(d)(3) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section695/d/3&num=0&edition=prelim);
(iii) $5,500,000 for each project of a small manufacturer;
(iv) $5,500,000 for each project that reduces the borrower’s energy consumption by at least 10 percent; and
(v) $5,500,000 for each project that generates renewable energy or renewable fuels, such as biodiesel or ethanol production.
(B) *Definition.—* — As used in this paragraph, the term “s
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Establishment** The Administration may establish a Premier Certified Lenders Program for certified development companies that meet the requirements of subsection (b).
**(b) Requirements**
(1) **Application** — To be eligible to participate in the Premier Certified Lenders Program established under subsection (a), a certified development company shall prepare and submit to the Administration an application at such time, in such manner, and containing such information as the Administration may require.
(2) **Designation** — The Administration may designate a certified development company as a premier certified lender—
(A) if the company is an active certified development company in good standing and has been an active participant in the accredited lenders program during the entire 12-month period preceding the date on which the company submits an application under paragraph (1), except that the Administration may waive this requirement if the company is qualified to participate in the accredited lenders program;
(B) if the company has a history of—
(i) submitting to the Administration adequately analyzed debenture guarantee application packages; and
(ii) of properly closing section 504 [[15 U.S.C. 697a](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697a&num=0&edition=prelim)] loans and servicing its loan portfolio;
(C) if the company agrees to assume and to reimburse the Administration for 10 percent of any loss sustained by the Administration as a result of default by the company in the payment of principal or interest on a debenture issued by such company and guaranteed by the Administration under this section (15 percent in the case of any such loss attributable to a debenture issued by the company during any pe
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general**
(1) **Prepayment authorized** — Subject to the requirements set forth in subsection (b), an issuer of a debenture purchased by the Federal Financing Bank and guaranteed by the Administration under this chapter may, at the election of the borrower (in the case of a loan under [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim)) or the issuer (in the case of a small business investment company) and with the approval of the Administration, prepay such debenture in accordance with the provisions of this section.
(2) **Procedure**
(A) *In general* — In making a prepayment under paragraph (1)—
(i) the borrower (in the case of a loan under [section 697 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section697&num=0&edition=prelim)) 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 general* — For 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 accor
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Federal law — U.S. Code and appendices · legal_authorities
Page 1143
TITLE 15—COMMERCE AND TRADE
§ 697a
‘‘(e) EFFECTIVE DATE.—The amendments made by this
section [amending this section and section 636 of this
title] shall become effective on October 1, 2002.’’
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105–135 effective Oct. 1, 1997,
see section 3 of Pub. L. 105–135, set out as a note under
section 631 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–208 effective Oct. 1, 1996,
see section 3 of Pub. L. 104–208, set out as a note under
section 633 of this title.
EFFECTIVE DATE OF 1995 AMENDMENT
Amendment by Pub. L. 104–36 inapplicable to loans
made or guaranteed under Small Business Act or Small
Business Investment Act of 1958 before Oct. 12, 1995, un-
less such loans are refinanced, extended, restructured,
or renewed on or after Oct. 12, 1995, see section 8 of Pub.
L. 104–36, set out as a note under section 634 of this
title.
TERMINATION DATE OF 1988 AMENDMENT
Pub. L. 100–590, title I, § 112(c), Nov. 3, 1988, 102 Stat.
2996, as amended by Pub. L. 101–515, title V, § 3, Nov. 5,
1990, 104 Stat. 2140; Pub. L. 103–317, title IV, Aug. 26,
1994, 108 Stat. 1755, which provided that the amendment
made by paragraph (1), amending this section, was to
be repealed on Oct. 1, 1997, was repealed by Pub. L.
103–403, title II, § 213(2), Oct. 22, 1994, 108 Stat. 4184.
EFFECTIVE DATE
Section effective Oct. 1, 1980, see section 507 of Pub.
L. 96–302, set out as an Effective Date of 1980 Amend-
ment note under section 631 of this title.
TEMPORARY FEE ELIMINATION FOR THE 504 LOAN
PROGRAM
Pub. L. 116–260, div. N, title III, § 327(b), Dec. 27, 2020,
134 Stat. 2037, provided that:
‘‘(1) IN GENERAL.—During the period beginning on the
date of enactment of this Act [Dec. 27, 2020] and e
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