I 

113TH CONGRESS 

1ST SESSION H. R. 2451 

To direct the Administrator of the Small Business Administration to establish 

and carry out a direct lending program for small business concerns, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 20, 2013 

Ms. VELA ́ZQUEZ (for herself, Mr. PAYNE, Ms. CHU, and Ms. CLARKE) introduced the following bill; which was referred to the Committee on Small 

Business 

A BILL 

To direct the Administrator of the Small Business Administration to establish and carry out a direct lending program for small business concerns, 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 ‘‘Strengthening Entre5 preneurs’ Economic Development Act of 2013’’. 


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1 SEC. 2. DIRECT LENDING PROGRAM FOR SMALL BUSINESS 

2 CONCERNS. 

3 (a) ESTABLISHMENT.—The Administrator of the 

4 Small Business Administration shall— 

5 (1) establish and carry out a loan program (in 

6 this Act referred to as the ‘‘program’’); and 

7 (2) establish a process under which an eligible 

8 small business concern may submit an application to 

9 the Administrator for the purpose of securing a loan 

10 under the program. 

11 (b) LOAN AMOUNT.—Each loan made to an eligible 

12 small business concern under the program shall be in an 

13 amount not to exceed $150,000. 

14 (c) REPAYMENT PERIOD.—An eligible small business 

15 concern that receives a loan under the program shall repay 

16 the loan not later than 6 years after the date on which 

17 such loan is disbursed. 

18 (d) NO PREPAYMENT PENALTY.—There shall be no 

19 prepayment penalty on a loan made under the program. 

20 (e) INTEREST RATE.—The maximum legal rate of in21 terest on any loan made under the program shall not ex22 ceed the sum of the rate prescribed by the Administrator 

23 pursuant to section 7(a)(4)(A) of the Small Business Act 

24 (15 U.S.C. 636(a)(4)(A)) for direct loans plus 5 percent. 

25 (f) BORROWER FEES.—With respect to each loan 

26 made to an eligible small business concern under the proVerDate Mar 15 2010 22:13 Jun 24, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2451.IH H2451

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1 gram, the Administrator may collect a fee from the bor2 rower using the formula established under section 

3 7(a)(18) of the Small Business Act (15 U.S.C. 

4 636(a)(18)). 

5 (g) UNDERWRITING STANDARDS.—Not later than 

6 180 days after the date of enactment of this Act, the Ad7 ministrator shall issue guidance regarding prudent under8 writing standards that must be used for loans made under 

9 the program. 

10 (h) LENDER PARTICIPATION.— 

11 (1) LENDERS.— 

12 (A) IN GENERAL.—The Administrator 

13 shall establish a process under which the Ad14 ministrator makes available to lenders each loan 

15 application submitted for the purpose of such 

16 lenders originating, underwriting, closing, and 

17 servicing the loan for which the applicant ap18 plied. 

19 (B) ELIGIBILITY.—Lenders are eligible to 

20 receive a loan application described in subpara21 graph (A) if they participate in the program. 

22 (C) LOCAL LENDERS.—The Administrator 

23 shall first make available a loan application de24 scribed in subparagraph (A) to lenders within 


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1 50 miles of the principal office of the loan ap2 plicant. 

3 (D) PREFERRED LENDERS.—If a lender 

4 described in subparagraph (C) does not agree 

5 to originate, underwrite, close, and service the 

6 loan applied for within 5 business days of re7 ceiving a loan application described in subpara8 graph (A), the Administrator shall subsequently 

9 make available such loan application to lenders 

10 in the Preferred Lenders Program under sec11 tion 7(a)(2)(C)(ii) of the Small Business Act 

12 (15 U.S.C. 636(a)(2)(C)(ii)). 

13 (E) AUTHORITY OF ADMINISTRATION TO

14 LEND.—If a lender described in subparagraphs 

15 (C) and (D) does not agree to originate, under16 write, close, and service the loan applied for 

17 within 10 business days of receiving a loan ap18 plication described in subparagraph (A), the 

19 Administrator shall, in accordance with the un20 derwriting standards promulgated under sub21 section (g), consider such loan for origination, 

22 underwriting, closing, and servicing by the Ad23 ministration within 10 business days. 

24 (2) ASSET SALES.—The Administrator shall 

25 offer to sell loans made by the Administrator under 


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1 the program. Such sales shall be made through the 

2 semi-annual public solicitation (in the Federal Reg3 ister and in other media) of offers to purchase. The 

4 Administrator may contract with vendors for due 

5 diligence, asset valuation, and other services related 

6 to such sales. The Administrator may not sell any 

7 loan under the program for less than 90 percent of 

8 the net present value of the loan, as determined and 

9 certified by a qualified third party. 

10 (3) LOANS NOT SOLD.—The Administrator 

11 shall maintain and service loans made by the Admin12 istrator under this paragraph that are not sold 

13 through the asset sales under this subsection. 

14 (i) DEFINITIONS.—In this Act: 

15 (1) ADMINISTRATOR.—The term ‘‘Adminis16 trator’’ means the Administrator of the Small Busi17 ness Administration. 

18 (2) ELIGIBLE SMALL BUSINESS CONCERN.— 

19 The term ‘‘eligible small business concern’’ means a 

20 small business concern that has less than 20 employ21 ees. 

22 (3) SMALL BUSINESS CONCERN.—The term 

23 ‘‘small business concern’’ has the same meaning 

24 given such term under section 3 of the Small Busi25 ness Act (15 U.S.C. 632). 


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1 SEC. 3. FEE FOR HIGH-DOLLAR 7(a) LOANS. 

2 Section 7(a) of the Small Business Act is amended— 

3 (1) by redesignating paragraphs (31) through 

4 (35) as paragraphs (32) through (36); and 

5 (2) by inserting the following new paragraph: 

6 ‘‘(31) FEE FOR HIGH-DOLLAR LOANS.—With 

7 respect to each loan in excess of $2,000,000 ap8 proved under this subsection, the Administration 

9 shall assess, collect, and retain a fee not to exceed 

10 a certain percentage, as determined by the Adminis11 trator, of the outstanding balance of the deferred 

12 participation share of the loan, as necessary to re13 duce to zero the cost to the Administration of mak14 ing loans under this subsection. As used in the para15 graph, the term ‘cost’ has the meaning given that 

16 term in section 502 of the Federal Credit Reform 

17 Act of 1990 (2 U.S.C. 661a).’’. 

Æ 


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