H. Res. 533

In the House of Representatives, U.S.,

June 27, 2000.

Resolved, That upon the adoption of this resolution the

House shall be considered to have taken from the Speaker’s

table the bill H.R. 2614, with the amendment of the Senate

thereto, and to have concurred in the amendment of the Senate with an amendment as follows:

In lieu of the matter proposed to be inserted by the

amendment of the Senate, insert the following:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Certified Development

3 Company Program Improvements Act of 2000’’.

4 SEC. 2. WOMEN-OWNED BUSINESSES.

5 Section 501(d)(3)(C) of the Small Business Invest6 ment Act of 1958 (15 U.S.C. 695(d)(3)(C)) is amended

7 by inserting before the comma ‘‘or women-owned business

8 development’’.

9 SEC. 3. MAXIMUM DEBENTURE SIZE.

10 Section 502(2) of the Small Business Investment Act

11 of 1958 (15 U.S.C. 696(2)) is amended to read as follows:
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1 ‘‘(2) LOAN LIMITS.—Loans made by the Ad2 ministration under this section shall be limited to

3 $1,000,000 for each such identifiable small business

4 concern, other than loans meeting the criteria speci5 fied in section 501(d)(3), which shall be limited to

6 $1,300,000 for each such identifiable small business

7 concern.’’.

8 SEC. 4. FEES.

9 Section 503(f) of the Small Business Investment Act

10 of 1958 (15 U.S.C. 697(f)) is amended to read as follows:

11 ‘‘(f) EFFECTIVE DATE.—The fees authorized by sub12 sections (b) and (d) shall apply to any financing approved

13 by the Administration during the period beginning on Oc14 tober 1, 1996 and ending on September 30, 2003.’’.

15 SEC. 5. PREMIER CERTIFIED LENDERS PROGRAM.

16 Section 217(b) of the Small Business Administration

17 Reauthorization and Amendments Act of 1994 (15 U.S.C.

18 697e note) is repealed.

19 SEC. 6. SALE OF CERTAIN DEFAULTED LOANS.

20 Section 508 of the Small Business Investment Act

21 of 1958 (15 U.S.C. 697e) is amended—

22 (1) in subsection (a), by striking ‘‘On a pilot

23 program basis, the’’ and inserting ‘‘The’’;

24 (2) by redesignating subsections (d) though (i)

25 as subsections (e) though (j), respectively;
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1 (3) in subsection (f) (as redesignated by para2 graph (2)), by striking ‘‘subsection (f)’’ and insert3 ing ‘‘subsection (g)’’;

4 (4) in subsection (h) (as redesignated by para5 graph (2)), by striking ‘‘subsection (f)’’ and insert6 ing ‘‘subsection (g)’’; and

7 (5) by inserting after subsection (c) the fol8 lowing:

9 ‘‘(d) SALE OF CERTAIN DEFAULTED LOANS.—

10 ‘‘(1) NOTICE.—

11 ‘‘(A) IN GENERAL.—If, upon default in re12 payment, the Administration acquires a loan

13 guaranteed under this section and identifies

14 such loan for inclusion in a bulk asset sale of

15 defaulted or repurchased loans or other

16 financings, the Administration shall give prior

17 notice thereof to any certified development com18 pany that has a contingent liability under this

19 section.

20 ‘‘(B) TIMING.—The notice required by

21 subparagraph (A) shall be given to the certified

22 development company as soon as possible after

23 the financing is identified, but not later than 90

24 days before the date on which the Administra25 tion first makes any record on such financing
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1 available for examination by prospective pur2 chasers prior to its offering in a package of

3 loans for bulk sale.

4 ‘‘(2) LIMITATIONS.—The Administration may

5 not offer any loan described in paragraph (1)(A) as

6 part of a bulk sale, unless the Administration—

7 ‘‘(A) provides prospective purchasers with

8 the opportunity to examine the records of the

9 Administration with respect to such loan; and

10 ‘‘(B) provides the notice required by para11 graph (1).’’.

12 SEC. 7. LOAN LIQUIDATION.

13 (a) LIQUIDATION AND FORECLOSURE.—Title V of

14 the Small Business Investment Act of 1958 (15 U.S.C.

15 695 et seq.) is amended by adding at the end the fol16 lowing:

17 ‘‘SEC. 510. FORECLOSURE AND LIQUIDATION OF LOANS.

18 ‘‘(a) DELEGATION OF AUTHORITY.—In accordance

19 with this section, the Administration shall delegate to any

20 qualified State or local development company (as defined

21 in section 503(e)) that meets the eligibility requirements

22 of subsection (b)(1) of this section the authority to fore23 close and liquidate, or to otherwise treat in accordance

24 with this section, defaulted loans in its portfolio that are
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1 funded with the proceeds of debentures guaranteed by the

2 Administration under section 503.

3 ‘‘(b) ELIGIBILITY FOR DELEGATION.—

4 ‘‘(1) REQUIREMENTS.—A qualified State or

5 local development company shall be eligible for a del6 egation of authority under subsection (a) if—

7 ‘‘(A) the company—

8 ‘‘(i) has participated in the loan liq9 uidation pilot program established by the

10 Small Business Programs Improvement

11 Act of 1996 (15 U.S.C. 695 note), as in

12 effect on the day before the date of

13 issuance of final regulations by the Admin14 istration implementing this section;

15 ‘‘(ii) is participating in the Premier

16 Certified Lenders Program under section

17 508; or

18 ‘‘(iii) during the 3 fiscal years imme19 diately prior to seeking such a delegation,

20 has made an average of not fewer than 10

21 loans per year that are funded with the

22 proceeds of debentures guaranteed under

23 section 503; and

24 ‘‘(B) the company—

25 ‘‘(i) has one or more employees—
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1 ‘‘(I) with not less than 2 years of

2 substantive, decision-making experi3 ence in administering the liquidation

4 and workout of problem loans secured

5 in a manner substantially similar to

6 loans funded with the proceeds of de7 bentures guaranteed under section

8 503; and

9 ‘‘(II) who have completed a train10 ing program on loan liquidation devel11 oped by the Administration in con12 junction with qualified State and local

13 development companies that meet the

14 requirements of this paragraph; or

15 ‘‘(ii) submits to the Administration

16 documentation demonstrating that the

17 company has contracted with a qualified

18 third-party to perform any liquidation ac19 tivities and secures the approval of the

20 contract by the Administration with re21 spect to the qualifications of the contractor

22 and the terms and conditions of liquidation

23 activities.

24 ‘‘(2) CONFIRMATION.—On request, the Admin25 istration shall examine the qualifications of any com-
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1 pany described in subsection (a) to determine if such

2 company is eligible for the delegation of authority

3 under this section. If the Administration determines

4 that a company is not eligible, the Administration

5 shall provide the company with the reasons for such

6 ineligibility.

7 ‘‘(c) SCOPE OF DELEGATED AUTHORITY.—

8 ‘‘(1) IN GENERAL.—Each qualified State or

9 local development company to which the Administra10 tion delegates authority under subsection (a) may,

11 with respect to any loan described in subsection

12 (a)—

13 ‘‘(A) perform all liquidation and fore14 closure functions, including the purchase in ac15 cordance with this subsection of any other in16 debtedness secured by the property securing the

17 loan, in a reasonable and sound manner, ac18 cording to commercially accepted practices, pur19 suant to a liquidation plan approved in advance

20 by the Administration under paragraph (2)(A);

21 ‘‘(B) litigate any matter relating to the

22 performance of the functions described in sub23 paragraph (A), except that the Administration

24 may—

25 ‘‘(i) defend or bring any claim if—
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1 ‘‘(I) the outcome of the litigation

2 may adversely affect management by

3 the Administration of the loan pro4 gram established under section 502;

5 or

6 ‘‘(II) the Administration is enti7 tled to legal remedies not available to

8 a qualified State or local development

9 company, and such remedies will ben10 efit either the Administration or the

11 qualified State or local development

12 company; or

13 ‘‘(ii) oversee the conduct of any such

14 litigation; and

15 ‘‘(C) take other appropriate actions to

16 mitigate loan losses in lieu of total liquidation

17 or foreclosure, including the restructuring of a

18 loan in accordance with prudent loan servicing

19 practices and pursuant to a workout plan ap20 proved in advance by the Administration under

21 paragraph (2)(C).

22 ‘‘(2) ADMINISTRATION APPROVAL.—

23 ‘‘(A) LIQUIDATION PLAN.—

24 ‘‘(i) IN GENERAL.—Before carrying

25 out functions described in paragraph
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1 (1)(A), a qualified State or local develop2 ment company shall submit to the Admin3 istration a proposed liquidation plan.

4 ‘‘(ii) ADMINISTRATION ACTION ON

5 PLAN.—

6 ‘‘(I) TIMING.—Not later than 15

7 business days after a liquidation plan

8 is received by the Administration

9 under clause (i), the Administration

10 shall approve or reject the plan.

11 ‘‘(II) NOTICE OF NO DECISION.—

12 With respect to any liquidation plan

13 that cannot be approved or denied

14 within the 15-day period required by

15 subclause (I), the Administration

16 shall, during such period, provide no17 tice in accordance with subparagraph

18 (E) to the company that submitted

19 the plan.

20 ‘‘(iii) ROUTINE ACTIONS.—In carrying

21 out functions described in paragraph

22 (1)(A), a qualified State or local develop23 ment company may undertake any routine

24 action not addressed in a liquidation plan
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1 without obtaining additional approval from

2 the Administration.

3 ‘‘(B) PURCHASE OF INDEBTEDNESS.—

4 ‘‘(i) IN GENERAL.—In carrying out

5 functions described in paragraph (1)(A), a

6 qualified State or local development com7 pany shall submit to the Administration a

8 request for written approval before com9 mitting the Administration to the purchase

10 of any other indebtedness secured by the

11 property securing a defaulted loan.

12 ‘‘(ii) ADMINISTRATION ACTION ON RE13 QUEST.—

14 ‘‘(I) TIMING.—Not later than 15

15 business days after receiving a request

16 under clause (i), the Administration

17 shall approve or deny the request.

18 ‘‘(II) NOTICE OF NO DECISION.—

19 With respect to any request that can20 not be approved or denied within the

21 15-day period required by subclause

22 (I), the Administration shall, during

23 such period, provide notice in accord24 ance with subparagraph (E) to the

25 company that submitted the request.
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1 ‘‘(C) WORKOUT PLAN.—

2 ‘‘(i) IN GENERAL.—In carrying out

3 functions described in paragraph (1)(C), a

4 qualified State or local development com5 pany shall submit to the Administration a

6 proposed workout plan.

7 ‘‘(ii) ADMINISTRATION ACTION ON

8 PLAN.—

9 ‘‘(I) TIMING.—Not later than 15

10 business days after a workout plan is

11 received by the Administration under

12 clause (i), the Administration shall

13 approve or reject the plan.

14 ‘‘(II) NOTICE OF NO DECISION.—

15 With respect to any workout plan that

16 cannot be approved or denied within

17 the 15-day period required by sub18 clause (I), the Administration shall,

19 during such period, provide notice in

20 accordance with subparagraph (E) to

21 the company that submitted the plan.

22 ‘‘(D) COMPROMISE OF INDEBTEDNESS.—

23 In carrying out functions described in para24 graph (1)(A), a qualified State or local develop25 ment company may—
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1 ‘‘(i) consider an offer made by an obli2 gor to compromise the debt for less than

3 the full amount owing; and

4 ‘‘(ii) pursuant to such an offer, re5 lease any obligor or other party contin6 gently liable, if the company secures the

7 written approval of the Administration.

8 ‘‘(E) CONTENTS OF NOTICE OF NO DECI9 SION.—Any notice provided by the Administra10 tion under subparagraph (A)(ii)(II), (B)(ii)(II),

11 or (C)(ii)(II)—

12 ‘‘(i) shall be in writing;

13 ‘‘(ii) shall state the specific reason for

14 the inability of the Administration to act

15 on the subject plan or request;

16 ‘‘(iii) shall include an estimate of the

17 additional time required by the Adminis18 tration to act on the plan or request; and

19 ‘‘(iv) if the Administration cannot act

20 because insufficient information or docu21 mentation was provided by the company

22 submitting the plan or request, shall speci23 fy the nature of such additional informa24 tion or documentation.
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1 ‘‘(3) CONFLICT OF INTEREST.—In carrying out

2 functions described in paragraph (1), a qualified

3 State or local development company shall take no ac4 tion that would result in an actual or apparent con5 flict of interest between the company (or any em6 ployee of the company) and any third party lender

7 (or any associate of a third party lender) or any

8 other person participating in a liquidation, fore9 closure, or loss mitigation action.

10 ‘‘(d) SUSPENSION OR REVOCATION OF AUTHOR11 ITY.—The Administration may revoke or suspend a dele12 gation of authority under this section to any qualified

13 State or local development company, if the Administration

14 determines that the company—

15 ‘‘(1) does not meet the requirements of sub16 section (b)(1);

17 ‘‘(2) has violated any applicable rule or regula18 tion of the Administration or any other applicable

19 provision of law; or

20 ‘‘(3) has failed to comply with any reporting re21 quirement that may be established by the Adminis22 tration relating to carrying out functions described

23 in subsection (c)(1).

24 ‘‘(e) REPORT.—
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1 ‘‘(1) IN GENERAL.—Based on information pro2 vided by qualified State and local development com3 panies and the Administration, the Administration

4 shall annually submit to the Committees on Small

5 Business of the House of Representatives and the

6 Senate a report on the results of delegation of au7 thority under this section.

8 ‘‘(2) CONTENTS.—Each report submitted under

9 paragraph (1) shall include—

10 ‘‘(A) with respect to each loan foreclosed

11 or liquidated by a qualified State or local devel12 opment company under this section, or for

13 which losses were otherwise mitigated by the

14 company pursuant to a workout plan under this

15 section—

16 ‘‘(i) the total cost of the project fi17 nanced with the loan;

18 ‘‘(ii) the total original dollar amount

19 guaranteed by the Administration;

20 ‘‘(iii) the total dollar amount of the

21 loan at the time of liquidation, foreclosure,

22 or mitigation of loss;

23 ‘‘(iv) the total dollar losses resulting

24 from the liquidation, foreclosure, or mitiga25 tion of loss; and
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1 ‘‘(v) the total recoveries resulting

2 from the liquidation, foreclosure, or mitiga3 tion of loss, both as a percentage of the

4 amount guaranteed and the total cost of

5 the project financed;

6 ‘‘(B) with respect to each qualified State

7 or local development company to which author8 ity is delegated under this section, the totals of

9 each of the amounts described in clauses (i)

10 through (v) of subparagraph (A);

11 ‘‘(C) with respect to all loans subject to

12 foreclosure, liquidation, or mitigation under this

13 section, the totals of each of the amounts de14 scribed in clauses (i) through (v) of subpara15 graph (A);

16 ‘‘(D) a comparison between—

17 ‘‘(i) the information provided under

18 subparagraph (C) with respect to the 12-

19 month period preceding the date on which

20 the report is submitted; and

21 ‘‘(ii) the same information with re22 spect to loans foreclosed and liquidated, or

23 otherwise treated, by the Administration

24 during the same period; and
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1 ‘‘(E) the number of times that the Admin2 istration has failed to approve or reject a liq3 uidation plan in accordance with subsection

4 (c)(2)(A) or a workout plan in accordance with

5 subsection (c)(2)(C), or to approve or deny a

6 request for purchase of indebtedness under sub7 section (c)(2)(B), including specific information

8 regarding the reasons for the failure of the Ad9 ministration and any delay that resulted.’’.

10 (b) REGULATIONS.—

11 (1) IN GENERAL.—Not later than 150 days

12 after the date of the enactment of this Act, the Ad13 ministrator shall issue such regulations as may be

14 necessary to carry out section 510 of the Small

15 Business Investment Act of 1958, as added by sub16 section (a) of this section.

17 (2) TERMINATION OF PILOT PROGRAM.—Effec18 tive on the date on which final regulations are issued

19 under paragraph (1), section 204 of the Small Busi20 ness Programs Improvement Act of 1996 (15 U.S.C.

21 695 note) shall cease to have legal effect.
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1 SEC. 8. FUNDING LEVELS FOR CERTAIN FINANCINGS

2 UNDER THE SMALL BUSINESS INVESTMENT

3 ACT OF 1958.

4 Section 20 of the Small Business Act (15 U.S.C. 631

5 note) is amended by adding at the end the following:

6 ‘‘(g) PROGRAM LEVELS FOR CERTAIN SMALL BUSI7 NESS INVESTMENT ACT OF 1958 FINANCINGS.—The fol8 lowing program levels are authorized for financings under

9 section 504 of the Small Business Investment Act of 1958:

10 ‘‘(1) $4,000,000,000 for fiscal year 2001.

11 ‘‘(2) $5,000,000,000 for fiscal year 2002.

12 ‘‘(3) $6,000,000,000 for fiscal year 2003.’’.

Attest:

Clerk.