A bill to authorize the refinancing of certain small business debentures, and for other purposes.

Amends the Small Business Investment Act of 1958 (SBIA) to authorize the refinancing of certain small business debentures.

Requires the issuer of a debenture purchased by the Federal Financing Bank and guaranteed by the Small Business Administration (SBA) under the SBIA, at the election of the borrower, to repay such debenture by paying the Bank, prior to October 1, 1988, the unpaid principal balance and accrued interest due at the coupon rate on the debenture, provided that: (1) the debenture is outstanding on the date of enactment, and neither it nor the loan that secures it is in default; (2) private capital is used to repay the debenture; (3) the issuer certifies that the benefits associated with prepayment of the debenture are entirely passed through to the borrower; and (4) the issuer pays to the Bank at the time of prepayment a penalty according to a specified formula.

Prohibits imposition of prepayment fees or penalties not authorized under this Act. Specifies fees that the issuer may impose on a borrower if a debenture is refinanced. Directs that any debenture refinanced pursuant to this Act have a term of years equal to the remaining term to maturity of the debenture being refinanced. Requires that the SBA guarantee of existing debentures purchased by the Bank which are refinanced be automatically transferred to new debentures, and that the amount of such refinancing not be treated as new budget authority or new credit authority.

Amends the SBIA by allowing any small business investment company which is the issuer of a debenture purchased by the SBA under such Act to elect to have the interest rate adjusted during FY 1988, provided that: (1) the interest rate shall be the rate then in effect for new debentures approved on such date, subject to the reductions authorized for the remainder of the first five years of the original issue if such time has not already elapsed; (2) the debenture is outstanding and not in default; and (3) the issuer pays to the SBA at the time of the adjustment a penalty according to a specified formula.

Prohibits the imposition of fees or penalties other than those specified in this Act as a condition of such adjustment. Directs that the original debenture otherwise remain in full force and effect, and the face amount of such debenture, with an adjusted interest rate, not be treated as new budget authority or new credit authority.

Makes the provisions of this Act exercisable at the option of the borrower, with respect to the refunding of existing obligations, or at the option of the small business investment company, with respect to the adjustment of existing obligations, in addition to any repayment options otherwise authorized by law.