Small Business Lending Enhancement Act of 1995

Summary: Small Business Lending Enhancement Act of 1995 - Amends the Small Business Act to reduce the level of participation by the Small Business Administration (SBA) in loans guaranteed under the Act on a deferred basis to:  (1) 75 percent of the outstanding balance, if the balance exceeds $100,000; and (2) 80 percent of such balance, for balances less than or equal to $100,000.   Allows such percentages to be reduced upon request of the participating lender.  Prohibits the SBA from using the percentage requested as a criterion for establishing priorities in approving guarantee requests.  Limits the maximum interest rate under the Preferred Lenders Program to that charged for other loan guarantees under the Act. 
Increases the loan guarantee fees authorized to be charged by the SBA on all guaranteed loans payable over a period in excess of one year.  Establishes a fee of two percent of the total deferred participation share of loans of $80,000 or less.      Repeals provisions allowing participating lenders providing loans of less than $75,000 to retain a portion of the loan guarantee fee charged by the SBA. 
Directs the SBA to assess and collect an annual fee, to be payable by the participating lender and not charged to the borrower, in an aggregate amount equal to 0.5 percent of the outstanding balance of the deferred participation share of the loan. 
Directs the SBA to notify the congressional small business committees at least 15 days before making any significant policy or administrative change affecting the operation of the SBA loan program. 
Amends the Small Business Investment Act of 1958 to direct the SBA, with respect to each guaranteed loan made from the proceeds of development company debentures issued by qualified State or local development companies, to:  (1) assess and collect a fee for such loan, payable by the borrower; and (2) use the fee proceeds to offset the cost of making such loan guarantees. 
Amends the Small Business Administration Reauthorization and Amendment Act of 1988 to extend through FY 1997 the preferred surety bond guarantee pilot program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Lending Enhancement 
Act of 1995''.

SEC. 2. REDUCED LEVEL OF PARTICIPATION IN GUARANTEED LOANS.

    Section 7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2)) is 
amended to read as follows:
        ``(2) Level of participation in guaranteed loans.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        in an agreement to participate in a loan on a deferred basis 
        under this subsection (including a loan made under the 
        Preferred Lenders Program), such participation by the 
        Administration shall be equal to--
                ``(i) 75 percent of the balance of the financing 
            outstanding at the time of disbursement of the loan, if 
            such balance exceeds $100,000; or
                ``(ii) 80 percent of the balance of the financing 
            outstanding at the time of disbursement of the loan, if 
            such balance is less than or equal to $100,000.
            ``(B) Reduced participation upon request.--
                ``(i) In general.--The guarantee percentage specified 
            by subparagraph (A) for any loan under this subsection may 
            be reduced upon the request of the participating lender.
                ``(ii) Prohibition.--The Administration shall not use 
            the guarantee percentage requested by a participating 
            lender under clause (i) as a criterion for establishing 
            priorities in approving loan guarantee requests under this 
            subsection.
            ``(C) Interest rate under preferred lenders program.--
                ``(i) In general.--The maximum interest rate for a loan 
            guaranteed under the Preferred Lenders Program shall not 
            exceed the maximum interest rate, as determined by the 
            Administration, applicable to other loans guaranteed under 
            this subsection.
                ``(ii) Preferred lenders program defined.--For purposes 
            of this subparagraph, the term `Preferred Lenders Program' 
            means any program established by the Administrator, as 
            authorized under the proviso in section 5(b)(7), under 
            which a written agreement between the lender and the 
            Administration delegates to the lender--

                    ``(I) complete authority to make and close loans 
                with a guarantee from the Administration without 
                obtaining the prior specific approval of the 
                Administration; and
                    ``(II) authority to service and liquidate such 
                loans.''.

SEC. 3. GUARANTEE FEES.

    (a) Amount of Fees.--Section 7(a)(18) of the Small Business Act (15 
U.S.C. 636(a)(18)) is amended to read as follows:
        ``(18) Guarantee fees.--
            ``(A) In general.--With respect to each loan guaranteed 
        under this subsection (other than a loan that is repayable in 1 
        year or less), the Administration shall collect a guarantee 
        fee, which shall be payable by the participating lender and may 
        be charged to the borrower, in an amount equal to the sum of--
                ``(i) 3 percent of the amount of the deferred 
            participation share of the loan that is less than or equal 
            to $250,000;
                ``(ii) if the deferred participation share of the loan 
            exceeds $250,000, 3.5 percent of the difference between--

                    ``(I) $500,000 or the total deferred participation 
                share of the loan, whichever is less; and
                    ``(II) $250,000; and

                ``(iii) if the deferred participation share of the loan 
            exceeds $500,000, 3.875 percent of the difference between--

                    ``(I) the total deferred participation share of the 
                loan; and
                    ``(II) $500,000.

            ``(B) Exception for certain loans.--Notwithstanding 
        subparagraph (A), if the total deferred participation share of 
        a loan guaranteed under this subsection is less than or equal 
        to $80,000, the guarantee fee collected under subparagraph (A) 
        shall be in an amount equal to 2 percent of the total deferred 
        participation share of the loan.''.
    (b) Repeal of Provisions Allowing Retention of Fees by Lenders.--
Section 7(a)(19) of the Small Business Act (15 U.S.C. 636(a)(19)) is 
amended--
        (1) in subparagraph (B)--
            (A) by striking ``shall (i) develop'' and inserting ``shall 
        develop''; and
            (B) by striking ``, and (ii)'' and all that follows through 
        the end of the subparagraph and inserting a period; and
        (2) by striking subparagraph (C).

SEC. 4. ESTABLISHMENT OF ANNUAL FEE.

    (a) In General.--Section 7(a) of the Small Business Act (15 U.S.C. 
636(a)) is amended by adding at the end the following new paragraph:
        ``(23) Annual fee.--
            ``(A) In general.--With respect to each loan guaranteed 
        under this subsection, the Administration shall, in accordance 
        with such terms and procedures as the Administration shall 
        establish by regulation, assess and collect an annual fee in an 
        amount equal to 0.5 percent of the outstanding balance of the 
        deferred participation share of the loan.
            ``(B) Payer.--The annual fee assessed under subparagraph 
        (A) shall be payable by the participating lender and shall not 
        be charged to the borrower.''.
    (b) Conforming Amendment.--Section 5(g)(4)(A) of the Small Business 
Act (15 U.S.C. 634(g)(4)(A)) is amended--
        (1) by striking the first sentence and inserting the following: 
    ``The Administration may collect a fee for any loan guarantee sold 
    into the secondary market under subsection (f) in an amount equal 
    to not more than 50 percent of the portion of the sale price that 
    exceeds 110 percent of the outstanding principal amount of the 
    portion of the loan guaranteed by the Administration.''; and
        (2) by striking ``fees'' each place such term appears and 
    inserting ``fee''.

SEC. 5. NOTIFICATION REQUIREMENT.

    Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by adding at the end the following new paragraph:
        ``(24) Notification requirement.--The Administration shall 
    notify the Committees on Small Business of the Senate and the House 
    of Representatives not later than 15 days before making any 
    significant policy or administrative change affecting the operation 
    of the loan program under this subsection.''.

SEC. 6. DEVELOPMENT COMPANY DEBENTURES.

    Section 503(b) of the Small Business Investment Act of 1958 (15 
U.S.C. 697(b)) is amended--
        (1) in paragraph (5), by striking ``and'' at the end;
        (2) in paragraph (6), by striking the period at the end and 
    inserting ``; and''; and
        (3) by adding at the end the following new paragraph:
        ``(7) with respect to each loan made from the proceeds of such 
    debenture, the Administration--
            ``(A) assesses and collects a fee, which shall be payable 
        by the borrower, in an amount equal to 0.125 percent per year 
        of the outstanding balance of the loan; and
            ``(B) uses the proceeds of such fee to offset the cost (as 
        such term is defined in section 502 of the Federal Credit 
        Reform Act of 1990) to the Administration of making guarantees 
        under subsection (a).''.

SEC. 7. PILOT PREFERRED SURETY BOND GUARANTEE PROGRAM EXTENSION.

    Section 207 of the Small Business Administration Reauthorization 
and Amendment Act of 1988 (15 U.S.C. 694b note) is amended by striking 
``September 30, 1995'' and inserting ``September 30, 1997''.

SEC. 8. APPLICABILITY.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this Act do not apply with respect to any loan made 
or guaranteed under the Small Business Act or the Small Business 
Investment Act of 1958 before the date of enactment of this Act.
    (b) Exceptions.--The amendments made by this Act apply to a loan 
made or guaranteed under the Small Business Act or the Small Business 
Investment Act of 1958 before the date of enactment of this Act, if the 
loan is refinanced, extended, restructured, or renewed on or after the 
date of enactment of this Act.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.