13 CFR 107.830 - Minimum duration/term of financing.

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§ 107.830 Minimum duration/term of financing.

(a)General rule. The duration/term of all your Financings must be for a minimum period of one year.

(b)Restrictions on mandatory redemption of Equity Securities. If you have acquired Equity Securities, options or warrants on terms that include redemption by the Small Business, you must not require redemption by the Small Business within the first year of your acquisition except as permitted in § 107.850.

(c)Special rules for Loans and Debt Securities -

(1)Term. The minimum term for Loans and Debt Securities starts with the first disbursement of the Financing.

(2)Prepayment. You must permit voluntary prepayment of Loans and Debt Securities by the Small Business. You must obtain SBA's prior written approval of any restrictions on the ability of the Small Business to prepay other than the imposition of a reasonable prepayment penalty under paragraph (c)(3) of this section.

(3)Prepayment penalties. You may charge a reasonable prepayment penalty which must be agreed upon at the time of the Financing. If SBA determines that a prepayment penalty is unreasonable, you must refund the entire penalty to the Small Business. A prepayment penalty equal to 5 percent of the outstanding balance during the first year of any Financing, declining by one percentage point per year through the fifth year, is considered reasonable.

[ 61 FR 3189, Jan. 31, 1996, as amended at 69 FR 8098, Feb. 23, 2004]

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United States Code
Statutes at Large

Title 13 published on 09-May-2018 03:49

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 13 CFR Part 107 after this date.

  • 2018-02-21; vol. 83 # 35 - Wednesday, February 21, 2018
    1. 83 FR 7361 - Civil Monetary Penalties Inflation Adjustments
      GPO FDSys XML | Text
      Final rule.
      Effective Date: This rule is effective February 21, 2018.
      13 CFR Parts 107, 120, 142, and 146