SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Accounts Receivable Insurance 
Program Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Small manufacturers are hurt much more than their 
        larger competitors when delays in payments of accounts 
        receivable occur. These small firms hold millions of dollars in 
        outstanding receivables. Especially in an economic slowdown, 
        many larger firms delay payments to their downstream suppliers 
        causing disruptions in the domestic industrial supply chain, 
        creating a greater need to insure payment on terms.
            (2) As the number and size of accounts receivables 
        outstanding increases, these businesses have fewer resources to 
        buy raw materials, hire workers, and access adequate lines of 
        credit. Small manufacturers and their creditors need additional 
        assurance that customers will pay their accounts on reasonable 
        terms.
            (3) Failure of payment to downstream suppliers in a 
        reasonable amount of time has had a significant negative impact 
        on the cash flow of small suppliers. The moment a lender sees 
        that a supplier is involved in a financially troubled industry 
        such as the auto industry, they move the supplier into a high 
        risk category or will not extend credit. Government guaranteed 
        account receivables insurance would allow the middle-market 
        companies access to credit lines they need to continue day-to-
        day operations.

SEC. 3. DEFINITIONS.

    For the purpose of this Act the following definitions apply:
            (1) Financial institution.--The term ``financial 
        institution'' means an establishment engaged in financial 
        transactions (transactions involving the creation, liquidation, 
        or change in ownership of financial assets) and/or in 
        facilitating financial transactions.
            (2) Insurance institution.--The term ``insurance 
        institution'' means an establishment that is primarily engaged 
        in one of the following:
                    (A) Underwriting (assuming the risk, assigning 
                premiums, and so forth) annuities and insurance 
                policies.
                    (B) Facilitating such underwriting by selling 
                insurance policies, and by providing other insurance 
                and employee-benefit related services.
            (3) Guarantee.--The term ``guarantee'' has the same meaning 
        as is given the term ``loan guarantee'' in section 502(3) of 
        the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(3)).
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.

SEC. 4. ACCOUNTS RECEIVABLE INSURANCE.

    (a) Establishment of Program.--There is established within the 
Department of the Treasury a government-backed private accounts 
receivable insurance program to assist small manufacturers in the 
underwriting and guarantee of payment on terms through the insurance of 
their accounts receivable.
    (b) Terms and Conditions.--
            (1) Guarantee.--The Secretary shall, to the extent amounts 
        are made available under subsection (c), insure accounts 
        receivable underwritten by financial or insurance institutions 
        for small manufacturing businesses.
            (2) Application.--
                    (A) A small manufacturing business shall submit an 
                application to a financial or insurance institution for 
                participation in the program established under this 
                section at such time, in such manner, and accompanied 
                by such information as the Secretary may require.
                    (B) A financial or insurance institution shall not 
                deny an application solely based on a small 
                manufacturing business's lack of short term positive 
                cash flow or solely on the nature of their customers' 
                industry classification.
            (3) Default.--If a small manufacturing business defaults on 
        any portion of an obligation guaranteed under paragraph (1)--
                    (A) the financial or insurance institution shall 
                have the right to demand payment of the unpaid amount 
                from the Secretary in exchange for payment of a fee 
                equal to .5 percent of such amount; and
                    (B) within such period as the Secretary shall 
                specify, the Secretary shall pay to the financial or 
                insurance institution the remaining balance of the 
                obligation, unless the Secretary determines that such 
                small business or institution has not taken reasonable 
                steps to seek collection of such obligation in a 
                reasonably timely manner, which steps shall include--
                            (i) exhausting all efforts to enforce all 
                        terms and penalties set forth in the underlying 
                        contract;
                            (ii) making successive efforts by 
                        registered mail or other similar method on a 
                        regular schedule; and
                            (iii) pursuing legal action.
            (4) Limitation.--A financial or insurance institution shall 
        not be eligible for a guarantee under paragraph (1) if such 
        institution insured the accounts receivable of a small 
        manufacturing business for less than 80 percent of the value of 
        such accounts receivable insured.
    (c) Funding.--Funding as may be necessary, not to exceed 
$500,000,000, for the cost of guarantees under this section shall be 
available to the Secretary, without further appropriation or fiscal 
year limitation, for the costs of such program. All funds received by 
the Secretary in connection with purchases made pursuant to paragraph 
(1), including interest payments, dividend payments, and proceeds from 
the sale of any financial instrument, shall be paid into the general 
fund of the Treasury for reduction of the public debt.
    (d) Sunset.--The Secretary may not enter into any contracts or 
agreements with financial institutions to make any guarantees under 
this section after December 31, 2011, or on the date that is 1 year 
after the date of the enactment of this Act, whichever is later.
    (e) Regulations.--Not later than 90 days after the date of the 
enactment of this Act, the Secretary shall issue regulations to carry 
out the purposes of this section.
Accounts Receivable Insurance Program Act - Establishes within the Treasury a government-backed private accounts receivable insurance program to assist small manufacturers in the underwriting and guarantee of payment through the insurance of their accounts receivable. Directs the Secretary of the Treasury to insure (guarantee) accounts receivable underwritten by financial or insurance institutions for small manufacturing businesses and, if a small manufacturing business defaults, to pay such an institution any remaining balance of an obligation of a small manufacturing business that is covered under the insurance. Prohibits a financial or insurance institution from being eligible for a guarantee under the program if the institution insured the accounts receivable of a small manufacturing business for less than 80% of their value.

Provides program funding. Prohibits the Secretary from entering into guarantees with institutions under the program after December 31, 2011, or one year after the enactment of this Act, whichever is later.
To support and strengthen small businesses manufacturing in America, and for other purposes.