Title 7

SECTION 4290.830

4290.830 Minimum term of Financing.

§ 4290.830 Minimum term of Financing.

(a) General rule. The minimum term of each of your Financings is 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 Portfolio Concern, you must not require redemption by the Portfolio Concern within the first year of your acquisition except as permitted in § 4290.850.

(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 Portfolio Concern. You must obtain the Agency's prior written approval of any restrictions on the ability of the Portfolio Concern 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 the Agency determines that a prepayment is unreasonable, you must refund the entire penalty to the Portfolio Concern. A prepayment penalty equal to five 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 the maximum reasonable amount.