I 

116TH CONGRESS 

1ST SESSION H. R. 4915 

To amend the Small Business Act to provide loan guarantees for the acquisition of cybersecurity technology and services by eligible small businesses, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 30, 2019 

Mr. SCHNEIDER (for himself, Mr. FITZPATRICK, and Mr. CROW) introduced 

the following bill; which was referred to the Committee on Small Business 

A BILL 

To amend the Small Business Act to provide loan guarantees 

for the acquisition of cybersecurity technology and services by eligible small businesses, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Cyber5 security Enhancement Act’’. 

6 SEC. 2. LOAN GUARANTEES FOR CYBERSECURITY TECH7 NOLOGY AND SERVICES. 

8 (a) IN GENERAL.—The Small Business Act (15 

9 U.S.C. 631 et seq.) is amended— 


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1 (1) by redesignating section 49 as section 50; 

2 and 

3 (2) by inserting the following new section after 

4 section 48: 

5 ‘‘SEC. 49. LOAN GUARANTEES FOR CYBERSECURITY TECH6 NOLOGY AND SERVICES. 

7 ‘‘(a) DEFINITIONS.—As used in this section: 

8 ‘‘(1) CYBERSECURITY TECHNOLOGY AND SERV9 ICES.—The term ‘cybersecurity technology and serv10 ices’— 

11 ‘‘(A) means— 

12 ‘‘(i) computer hardware, software, and 

13 related technology that— 

14 ‘‘(I) supports the prevention of 

15 damage to, protection of, and restora16 tion of computers, electronic commu17 nications systems, electronic commu18 nications services, wire communica19 tion, and electronic communication, 

20 including information contained there21 in, to ensure its availability, integrity, 

22 authentication, confidentiality, and 

23 nonrepudiation; 

24 ‘‘(II) is purchased by an eligible 

25 small business; 


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1 ‘‘(III) provides for encryption of 

2 data, detection of malware, or protec3 tion of information and information 

4 systems from unauthorized access, 

5 use, disclosure, disruption, modifica6 tion, or destruction; 

7 ‘‘(IV) meets any requirements es8 tablished by the Small Business De9 velopment Center Cyber Strategy de10 veloped under section 1841(a) of the 

11 National Defense Authorization Act 

12 for Fiscal Year 2017 (Public Law 

13 114–328; 130 Stat. 2662); and 

14 ‘‘(V) meets any industry best 

15 practices standards; 

16 ‘‘(ii) an insurance product available 

17 for purchase by an eligible small business 

18 that provides coverage for losses caused by 

19 a cyber attack on such business; 

20 ‘‘(iii) services related to— 

21 ‘‘(I) the installation of computer 

22 hardware, software, and related tech23 nology described under clause (i); or 


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1 ‘‘(II) training on security prin2 ciples for employees of an eligible 

3 small business; or 

4 ‘‘(iv) has the meaning given such term 

5 by the Administrator; and 

6 ‘‘(B) does not include information tech7 nology whose sole use is financial management, 

8 maintenance of inventory of basic supplies, or 

9 appointment scheduling. 

10 ‘‘(2) ELIGIBLE SMALL BUSINESS.—The term 

11 ‘eligible small business’ means a small business con12 cern that— 

13 ‘‘(A) has 100 or fewer employees; 

14 ‘‘(B) has been in business for at least 1 

15 year; and 

16 ‘‘(C) has obtained training from a small 

17 business development center. 

18 ‘‘(3) PRIME RATE.—The term ‘prime rate’ 

19 means the discount window primary credit interest 

20 rate most recently published in the Federal Reserve 

21 Statistical Release on selected interest rates (daily or 

22 weekly), commonly referred to as the H.15 release, 

23 or any successor publication. 

24 ‘‘(b) LOAN GUARANTEES FOR ELIGIBLE SMALL

25 BUSINESSES.— 


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1 ‘‘(1) GUARANTEE PERCENTAGE.—Subject to 

2 paragraph (2), the Administrator may guarantee up 

3 to 90 percent of the amount of a loan made to an 

4 eligible small business for— 

5 ‘‘(A) the acquisition of cybersecurity tech6 nology and services for use in the business oper7 ations of the eligible small business; and 

8 ‘‘(B) the costs associated with the installa9 tion or use of such cybersecurity technology and 

10 services. 

11 ‘‘(2) LIMITATIONS ON GUARANTEE AMOUNTS.— 

12 The maximum amount of the principal of a loan 

13 guaranteed under this section may not exceed 

14 $50,000. The aggregate total amount of the prin15 cipal of loans guaranteed under this section in a 

16 year may not exceed $500,000,000. 

17 ‘‘(c) FEES.—With respect to each loan guaranteed 

18 under this section, the Administration shall assess, collect, 

19 and retain such fees as are necessary to reduce to zero 

20 the cost to the Administration of making guarantees under 

21 this section. As used in this subsection, the term ‘cost’ 

22 has the meaning given that term in section 502 of the 

23 Federal Credit Reform Act of 1990 (2 U.S.C. 661a). 

24 ‘‘(d) INTEREST RATES.— 


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1 ‘‘(1) FIXED RATE LOANS.—With respect to a 

2 fixed rate loan guaranteed under this section, the in3 terest rate for such a loan may not exceed— 

4 ‘‘(A) for a loan in an amount greater than 

5 $25,000, the prime rate; and 

6 ‘‘(B) for a loan in an amount less than or 

7 equal to $25,000, the prime rate plus 3.25 per8 cent. 

9 ‘‘(2) VARIABLE RATE LOANS.— 

10 ‘‘(A) IN GENERAL.—With respect to a 

11 variable rate loan guaranteed under this sec12 tion, the interest rate for such a loan shall 

13 equal— 

14 ‘‘(i) the prime rate plus the spread de15 scribed under subparagraph (B); or 

16 ‘‘(ii) the optional peg rate, as cal17 culated quarterly by the Administrator and 

18 published in the Federal Register, plus the 

19 spread described under subparagraph (B). 

20 ‘‘(B) NEGOTIATION OF SPREAD AND RATE

21 OF CHANGE.—The lender and the borrower 

22 shall negotiate the amount of the spread which 

23 will be added to the interest rate described 

24 under subparagraph (A) and select the fre25 quency at which the spread will change, which 


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1 shall be no more often than monthly and shall 

2 be consistent over the term of the loan. 

3 ‘‘(e) DEFERRAL PERIOD.—The Administrator may 

4 defer payment of the principal and interest on a loan guar5 anteed under this section for a period not to exceed 3 

6 years. 

7 ‘‘(f) TERMS AND CONDITIONS FOR LOAN GUARAN8 TEES.— 

9 ‘‘(1) IN GENERAL.—A loan guaranteed under 

10 this section shall be subject to such terms and condi11 tions as the Administrator may prescribe, includ12 ing— 

13 ‘‘(A) explicit standards for use in periodi14 cally assessing the credit risk of guaranteed 

15 loans; 

16 ‘‘(B) a requirement that the final maturity 

17 of such a loan may not exceed 7 years; and 

18 ‘‘(C) a requirement that such a loan may 

19 not be subordinated to another debt contracted 

20 by the borrower or to any other claims against 

21 the borrower in the case of default. 

22 ‘‘(2) RESTRICTIONS.—The Administrator may 

23 not guarantee a loan under this section— 

24 ‘‘(A) unless the Administrator determines 

25 that the lender is responsible, that there is a 


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1 reasonable assurance of repayment, and that 

2 adequate provision is made for servicing the 

3 loan on reasonable terms and protecting the fi4 nancial interest of the United States; 

5 ‘‘(B) except to the extent that appropria6 tions of budget authority to cover their costs 

7 are made in advance, as required under section 

8 504 of the Federal Credit Reform Act of 1990; 

9 and 

10 ‘‘(C) if— 

11 ‘‘(i) the income from such loan is ex12 cluded from gross income for purposes of 

13 chapter 1 of the Internal Revenue Code of 

14 1986; or 

15 ‘‘(ii) the guarantee provides signifi16 cant collateral or security, as determined 

17 by the Administrator, for other obligations 

18 the income from which is so excluded. 

19 ‘‘(3) GUARANTEES.—A loan guarantee provided 

20 under this section shall be conclusive evidence that— 

21 ‘‘(A) the guarantee has been properly ob22 tained; 

23 ‘‘(B) the underlying loan qualified for such 

24 guarantee; and 


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1 ‘‘(C) absent fraud or material misrepresen2 tation by the holder and the lender, the guar3 antee is presumed to be valid, legal, and en4 forceable. 

5 ‘‘(g) PAYMENT OF LOSSES.— 

6 ‘‘(1) IN GENERAL.—If, as a result of a default 

7 by a borrower under a loan guaranteed under this 

8 section, and after the holder of the loan has made 

9 collection efforts and instituted enforcement pro10 ceedings as the Administrator may require, the Ad11 ministrator determines that the holder of the loan 

12 has suffered a loss, the Administrator shall pay to 

13 such holder the percentage of such loss specified in 

14 the guarantee contract. Upon making any such pay15 ment, the Administrator shall be subrogated to all 

16 the rights of the recipient of the payment. The Ad17 ministrator shall be entitled to recover from the bor18 rower the amount of any payments made to the 

19 holder of the loan under this paragraph. 

20 ‘‘(2) FORBEARANCE.—Nothing in this section 

21 may be construed to preclude any forbearance for 

22 the benefit of the borrower which may be agreed 

23 upon by the parties to the guaranteed loan and ap24 proved by the Administrator, if budget authority for 

25 any resulting subsidy costs (as defined in section 


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1 502(5) of the Federal Credit Reform Act of 1990) 

2 is available. 

3 ‘‘(3) MANAGEMENT OF PROPERTY.—Notwith4 standing any other provision of law relating to the 

5 acquisition, handling, or disposal of property by the 

6 United States, the Administrator may complete, re7 condition, reconstruct, renovate, repair, maintain, 

8 operate, or sell any property acquired by the Admin9 istrator pursuant to this section. 

10 ‘‘(h) SUNSET OF AUTHORITY.—The authority of the 

11 Administrator to make new loan guarantees under this 

12 section shall terminate after the end of the 5-year period 

13 beginning on the date of the enactment of this section.’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 subsection (a) shall take effect on the date that is 180 

16 days after the date of the enactment of this Act. 

Æ 


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