SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Intermediary Lending 
Pilot Program Act of 2005''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Small and emerging businesses, particularly startups 
        and businesses that lack sufficient or conventional collateral, 
        continue to face barriers accessing midsized loans in amounts 
        between $35,000 and $200,000, with affordable terms and 
        conditions.
            (2) Consolidation in the banking industry has resulted in a 
        decrease in the number of small, locally controlled banks with 
        not more than $100,000,000 in assets and has changed the method 
        by which banks make small business credit decisions with--
                    (A) credit scoring techniques replacing 
                relationship-based lending, which often works to the 
                disadvantage of small or startup businesses that do not 
                conform with a bank's standardized credit formulas; and
                    (B) less flexible terms and conditions, which are 
                often necessary for small and emerging businesses.
            (3) In the environment described in paragraphs (1) and (2), 
        nonprofit intermediary lenders, including community development 
        corporations, provide financial resources that supplement the 
        small business lending and investments of a bank by--
                    (A) providing riskier, up front, or subordinated 
                capital;
                    (B) offering flexible terms and underwriting 
                procedures; and
                    (C) providing technical assistance to businesses in 
                order to reduce the transaction costs and risk exposure 
                of banks.
            (4) Several Federal programs, including the Microloan 
        Program under section 7(m) of the Small Business Act (15 U.S.C. 
        636(m)) and the Intermediary Relending Program of the 
        Department of Agriculture, have demonstrated the effectiveness 
        of working through nonprofit intermediaries to address the 
        needs of small business concerns that are unable to access 
        capital through conventional sources.
            (5) More than 1,000 nonprofit intermediary lenders in the 
        United States are--
                    (A) successfully providing financial and technical 
                assistance to small and emerging businesses;
                    (B) working with banks and other lenders to 
                leverage additional capital for their business 
                borrowers; and
                    (C) creating employment opportunities for low 
                income individuals through their lending and business 
                development activities.

SEC. 3. SMALL BUSINESS INTERMEDIARY LENDING PILOT PROGRAM.

    (a) In General.--Section 7 of the Small Business Act (15 U.S.C. 
636) is amended by inserting after subsection (k) the following:
    ``(l) Small Business Intermediary Lending Program.--
            ``(1) Definitions.--For purposes of this subsection--
                    ``(A) the term `intermediary' means a private, 
                nonprofit entity that seeks to borrow, or has borrowed, 
                funds from the Administration to provide midsize loans 
                to small business concerns under this subsection, 
                including--
                            ``(i) a private, nonprofit community 
                        development corporation;
                            ``(ii) a consortium of private, nonprofit 
                        organizations or nonprofit community 
                        development corporations;
                            ``(iii) a quasi-governmental economic 
                        development entity (such as a planning and 
                        development district), other than a State, 
                        county, or municipal government; and
                            ``(iv) an agency of or nonprofit entity 
                        established by a Native American Tribal 
                        Government; and
                    ``(B) the term `midsize loan' means a fixed rate 
                loan of not less than $35,000 and not more than 
                $200,000, made by an intermediary to a startup, newly 
                established, or growing small business concern.
            ``(2) Establishment.--There is established a 3-year small 
        business intermediary lending pilot program (referred to in 
        this section as the `Program'), under which the Administration 
        may provide direct loans to eligible intermediaries, for the 
        purpose of making fixed interest rate midsize loans to startup, 
        newly established, and growing small business concerns.
            ``(3) Purposes.--The purposes of the small business 
        intermediary lender pilot program are--
                    ``(A) to assist small business concerns in those 
                areas suffering from a lack of credit due to poor 
                economic conditions;
                    ``(B) to create employment opportunities for low 
                income individuals;
                    ``(C) to establish a midsize loan program to be 
                administered by the Administration to provide loans to 
                eligible intermediaries to enable such intermediaries 
                to provide small scale loans, particularly loans in 
                amounts averaging not more than $150,000, to startup, 
                newly established, or growing small business concerns 
                for working capital or the acquisition of materials, 
                supplies, or equipment;
                    ``(D) to test the effectiveness of nonprofit 
                intermediaries--
                            ``(i) as a delivery system for a midsize 
                        loan program; and
                            ``(ii) in addressing the credit needs of 
                        small businesses and leveraging other sources 
                        of credit; and
                    ``(E) to determine the advisability and feasibility 
                of implementing a midsize loan program nationwide.
            ``(4) Eligibility for participation.--An intermediary shall 
        be eligible to receive loans under the Program if the 
        intermediary has at least 1 year of experience making loans to 
        startup, newly established, or growing small business concerns.
            ``(5) Loans to intermediaries.--
                    ``(A) Application.--Each intermediary desiring a 
                loan under this subsection shall submit an application 
                to the Administration that describes--
                            ``(i) the type of small business concerns 
                        to be assisted;
                            ``(ii) the size and range of loans to be 
                        made;
                            ``(iii) the geographic area to be served 
                        and its economic, poverty, and unemployment 
                        characteristics;
                            ``(iv) the status of small business 
                        concerns in the area to be served and an 
                        analysis of the availability of credit; and
                            ``(v) the qualifications of the applicant 
                        to carry out this subsection.
                    ``(B) Loan limits.--Notwithstanding subsection 
                (a)(3), no loan may be made to an intermediary under 
                this subsection if the total amount outstanding and 
                committed to the intermediary from the business loan 
                and investment fund established by this Act would, as a 
                result of such loan, exceed $1,000,000 during the 
                participation of the intermediary in the Program.
                    ``(C) Loan duration.--Loans made by the 
                Administration under this subsection shall be for a 
                maximum term of 20 years.
                    ``(D) Applicable interest rates.--Loans made by the 
                Administration to an intermediary under the Program 
                shall bear an annual interest rate equal to 1.00 
                percent.
                    ``(E) Fees; collateral.--The Administration may not 
                charge any fees or require collateral with respect to 
                any loan made to an intermediary under this subsection.
                    ``(F) Leverage.--Any loan to a small business 
                concern under this subsection shall not exceed 75 
                percent of the total cost of the project funded by such 
                loan, with the remaining funds being leveraged from 
                other sources, including--
                            ``(i) banks or credit unions;
                            ``(ii) community development financial 
                        institutions; and
                            ``(iii) other sources with funds available 
                        to the intermediary lender.
                    ``(G) Delayed payments.--The Administration shall 
                not require the repayment of principal or interest on a 
                loan made to an intermediary under the Program during 
                the first 2 years of the loan.
            ``(6) Program funding for midsize loans.--
                    ``(A) Number of participants.--Under the Program, 
                the Administration may provide loans, on a competitive 
                basis, to not more than 20 intermediaries.
                    ``(B) Equitable distribution of intermediaries.--
                The Administration shall select and provide funding 
                under the Program to such intermediaries as will ensure 
                geographic diversity and representation of urban and 
                rural communities.
            ``(7) Report to congress.--
                    ``(A) Initial report.--Not later than 30 months 
                after the date of enactment of the Small Business 
                Intermediary Lending Pilot Program Act of 2005, the 
                Administration shall submit a report containing an 
                evaluation of the effectiveness of the Program to--
                            ``(i) the Committee on Small Business and 
                        Entrepreneurship of the Senate; and
                            ``(ii) the Committee on Small Business of 
                        the House of Representatives.
                    ``(B) Annual report.--Not later than 12 months 
                after the date of enactment of the Small Business 
                Intermediary Lending Pilot Program Act of 2005, and 
                annually thereafter, the Administration shall submit a 
                report containing an evaluation of the effectiveness of 
                the Program to the Committees described in subparagraph 
                (A).
                    ``(C) Contents.--The reports submitted under 
                subparagraphs (A) and (B) shall include--
                            ``(i) the numbers and locations of the 
                        intermediaries receiving funds to provide 
                        midsize loans;
                            ``(ii) the amounts of each loan to an 
                        intermediary;
                            ``(iii) the numbers and amounts of midsize 
                        loans made by intermediaries to small business 
                        concerns;
                            ``(iv) the repayment history of each 
                        intermediary;
                            ``(v) a description of the loan portfolio 
                        of each intermediary, including the extent to 
                        which it provides midsize loans to small 
                        business concerns in rural and economically 
                        depressed areas;
                            ``(vi) an estimate of the number of low 
                        income individuals who have been employed as a 
                        direct result of the Program; and
                            ``(vii) any recommendations for legislative 
                        changes that would improve the operation of the 
                        Program.''.
    (b) Rulemaking Authority.--Not later than 180 days after the date 
of enactment of this Act, the Administrator shall issue regulations to 
carry out the amendment made by section 7(l) of the Small Business Act, 
as added by subsection (a).
    (c) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        the Small Business Administration such sums as may be necessary 
        for each of the fiscal years 2006 through 2008 to provide 
        $20,000,000 in loans under section 7(l) of the Small Business 
        Act, as added by subsection (a).
            (2) Availability.--Any amounts appropriated pursuant to 
        paragraph (1) shall remain available until expended.
Small Business Intermediary Lending Pilot Program Act of 2005 - Establishes a three-year small business intermediary lending pilot program under which the Small Business Administration (SBA) may make direct loans to eligible nonprofit lending intermediaries for the purpose of making fixed interest rate and mid-size loans ($35,000 to $200,000) to startup, newly-established, and growing small businesses. Authorizes the SBA, under the program, to make one percent, 20-year loans of up to $1 million, on a competitive basis, to up to 20 nonprofit lending intermediaries. Requires geographic diversity and representation of urban and rural communities under the program.
A bill to establish a pilot program to provide low interest loans to nonprofit, community-based lending intermediaries, to provide midsize loans to small business concerns, and for other purposes.