SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Premier Certified Lenders Program 
Improvement Act of 2002''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The Premier Certified Lenders Program (PCLP) 
        established under section 508 of the Small Business Investment 
        Act of 1958 (15 U.S.C. 697e) has been very successful in 
        helping small businesses expand.
            (2) Increasing the number of premier certified lenders will 
        allow the Government to make available more resources to small 
        businesses even as the Small Business Administration downsizes.
            (3) The PCLP requires premier certified lenders to set 
        aside unnecessarily large amounts in loss reserve accounts.
            (4) Requiring premier certified lenders to maintain 
        unnecessarily large loss reserve accounts is inefficient and 
        limits the ability of lenders to serve additional small 
        businesses and of new lenders to join the PCLP.
            (5) Premier certified lenders should be required to 
        maintain loss reserve accounts in amounts commensurate with the 
        risk of loss associated with the PCLP loan portfolio of the 
        lender.
            (6) Changing the PCLP to require that premier certified 
        lenders maintain loss reserve accounts in amounts which reflect 
        the risk of loss associated with the loans of the PCLP will 
        protect taxpayers and improve the ability of the PCLP to help 
        small businesses create economic development.

SEC. 3. ALTERNATIVE LOSS RESERVE FOR CERTAIN PREMIER CERTIFIED LENDERS.

    (a) In General.--Section 508(c) of the Small Business Investment 
Act of 1958 (15 U.S.C. 697e(c)) is amended by adding at the end the 
following new paragraph:
            ``(7) Alternative loss reserve.--
                    ``(A) Election.--With respect to any calendar 
                quarter, any qualified high loss reserve PCL may elect 
                to have the requirements of this paragraph apply in 
                lieu of the requirements of paragraphs (2) and (4).
                    ``(B) Contributions.--
                            ``(i) Ordinary rules inapplicable.--Except 
                        as provided under clause (ii) and paragraph 
                        (5), a qualified high loss reserve PCL which 
                        makes the election described in subparagraph 
                        (A) with respect to a calendar quarter shall 
                        not be required to make contributions to its 
                        loss reserve during such quarter.
                            ``(ii) Based on risk of loss.--A company 
                        which makes the election described in 
                        subparagraph (A) with respect to any calendar 
                        quarter shall, before the last day of such 
                        quarter, make such contributions to its loss 
                        reserve as are necessary to ensure that the 
                        amount of the loss reserve of the company is--
                                    ``(I) not less than $25,000; and
                                    ``(II) sufficient, as determined by 
                                a third-party auditor employed by the 
                                company, to protect the Federal 
                                Government from the risk of loss 
                                associated with the portfolio of PCLP 
                                loans of the company.
                    ``(C) Qualified high loss reserve pcl.--The term 
                `qualified high loss reserve PCL' means, with respect 
                to any calendar year, any company designated as a 
                premier certified lender, if the Administrator 
                determines that--
                            ``(i) the amount of the loss reserve of the 
                        company is not less than $25,000;
                            ``(ii) the company has established a 
                        process for analyzing the risk of loss 
                        associated with its portfolio of PCLP loans and 
                        for grading each PCLP loan made by the company 
                        on the basis of the risk of loss associated 
                        with such loan; and
                            ``(iii)(I) in the case of a company which 
                        was a qualified high loss reserve PCL with 
                        respect to the preceding calendar year, a 
                        third-party auditor employed by the company has 
                        certified during each calendar quarter of such 
                        year that the amount of the loss reserve of the 
                        company is sufficient to protect the Federal 
                        Government from the risk of loss associated 
                        with the portfolio of PCLP loans of the 
                        company; and
                            ``(II) in the case of any other company, a 
                        third-party auditor employed by the company has 
                        certified during the preceding 90 days that the 
                        loss reserve of the company is sufficient to 
                        protect the Federal Government from the risk of 
                        loss associated with the portfolio of PCLP 
                        loans of the company.
                    ``(D) PCLP loan.--For purposes of this paragraph, 
                the term `PCLP loan' means any loan guaranteed under 
                this section.
                    ``(E) Calendar quarter.--For purposes of this 
                paragraph, the term `calendar quarter' means--
                            ``(i) the period which begins on January 1 
                        and ends on March 31 of each year;
                            ``(ii) the period which begins on April 1 
                        and ends on June 30 of each year;
                            ``(iii) the period which begins on July 1 
                        and ends on September 30 of each year; or
                            ``(iv) the period which begins on October 1 
                        and ends on December 31 of each year.''.
    (b) Conforming Amendment.--Section 508(b)(2)(D) of the Small 
Business Investment Act of 1958 (15 U.S.C. 697e(b)(2)(D)) is amended by 
striking ``subsection (c)(2)'' and inserting ``subsection (c)''.
Premier Certified Lenders Program Improvement Act of 2002 - Amends the Small Business Investment Act of 1958 to make loss reserve requirements of lenders under the premier certified lenders (PCL) program inapplicable to PCLs that ensure that the amount of their loss reserve is: (1) not less than $25,000; and (2) sufficient, as determined by a third-party auditor, to protect the Government from the risk of loss associated with the PCL's portfolio of loans. Designates such PCLs as qualified high loss reserve PCLs. Provides related loss reserve requirements.
To amend the Small Business Investment Act of 1958 to allow certain premier certified lenders to elect to maintain an alternative loss reserve.