[Comments on SBA Ruling Concerning Minority Enterprise Small Business Investment Companies]

GAO commented on the legality of the Small Business Administration's (SBA) ruling not to allow minority enterprise small business investment companies (MESBIC) to prepay high-interest SBA-held debentures in order to refinance them with new debentures which SBA would agree to purchase at current lower interest rates. GAO noted that SBA had no authority to agree to either the proposed refinancing or an alternative proposal under which MESBIC would pay a prepayment penalty to SBA to obtain a reduction in the debentures' interest rate.